9,300 fewer trucking companies – in one month. That’s what happened in May, according to FreightWaves.com, 9,300 trucking companies folded. We’ll let you read the article instead of trying to cover the information (they did a great job reporting on it.) Can you imagine your trucking business closing? Something better to imagine is not becoming a statistic. TruckingOffice PRO can assist you in avoiding your trucking business closing.
Is Your Trucking Business Closing?
Are we in a recession? Depends on who you ask, but truckers can tell you one thing: the rates are dropping. Not a little. A lot. Getting a spot load that will cover the cost of fuel is getting harder. Finding a load that will pay the same as it did last year is impossible. With all the trucking business closing we hear about, we might think that with less competition, the rates will go up. But instead, they’re dropping.
The questions we need to ask ourselves are simple.
- Did we make money last month?
- What is the value of our services?
Simple questions but may be complicated to answer.
Did you make money last month?
Most businesses can tell you to the penny what they billed last month. Or, if they work on a cash basis, how much they collected last month. That’s good to know. It’s the start of making sure that you’re not going to be closing your trucking business. Even if you’re leased on to a transportation company, you have to know how much money went into your pocket in a month.
Why a month? Because we all have bad days.
- Deadheading home.
- Taking a convenient load to get to a better market to pick up a profitable load.
- The shipping department took too long to load/unload.
- Ran out of hours and had to stop.
Why not a week? Because a month gives us a larger spread to balance out the good and the bad days. We can come up with a good average to know how well we’re doing. A month is enough to compare the income to the expenses.
If most businesses know how much came in, sadly, most businesses don’t know how much went out. Some things are easy to track because we buy them often enough that we can maybe keep a rough estimate in mind, such as fuel. But that quarterly IFTA payment you made for last quarter? How do you compute what you spent per day over 90 days? It makes our heads hurt to try to track that.
Tracking expenses isn’t just so we can get deductions from our taxes. Expenses are probably the biggest factor in a trucking business closing. But expenses are like a piece of metal stuck in your tire tread: maybe it’s not going to hurt now, but give it time. Out of control expenses will drive a trucking business off the road. There are only so many loads we can sell to a factoring service before there’s no money left.
Let’s break down expenses.
- Cargo insurance.
- Vehicle insurance.
- Business insurance.
- Quarterly income taxes.
- Medical insurance
- Loan payment on truck equipment
- Internet/Communication systems
- Parking and tolls
Unless you know your worth by knowing how much it costs to stay in business, you risk your trucking business closing.
Because if your monthly income doesn’t cover your monthly costs, you can’t stay in business, no matter how much you want to. The numbers will win.
Any business accounting software can compute monthly expenses – except when they can’t. Like that IFTA and IRP? The average business accounting software doesn’t have a “compute my IFTA report” button.
That’s the difficulty in using QuickBooks or another business accounting software package. There are too many things in trucking that aren’t normal in other businesses that we have to manage.
When it comes down to it, the actual numbers we need aren’t per month.
We need to know our per mile expenses.
Since that’s how we get paid, we need to know to the mile what our expenses cost us. That’s the number we need to know.
When you know your numbers, then you can survive the crazy business economy.
Crazy business economy, but it’s always been crazy.
What’s going on now is… just like it’s always been, honestly. We’ve been through this type of business cycle before in the trucking industry. Recessions and low rates happen.
So what can you do?
- Know your worth. Know when to say no. Don’t take the load that costs you money to move it. Parking your truck sounds like a stupid thing to do, but it’s smarter than taking a load that hurts your bottom line. You’re not always going to get the golden ticket loads. When you know how much you need per mile to make a profit from a load, you won’t underbid what you need.
- Save for the future. Build yourself a cushion of a couple of months of expenses so that when things slow down, you don’t have to panic. We may not see rates like we’ve seen in the past year again for a long time. Making sure you’re prepared for less prosperous times is smart.
Know your numbers. That’s what will keep you in business when other trucking business closing make the headlines.
Save For the Future Now
When you know your numbers, you can safely save for your future. You know your expenses. You know what you need to get for a load. You know what it will cost you to take a load.
How do you know those numbers? You need a trucking software system, not a regular business accounting software. That’s what TruckingOffice PRO trucking software provides. You won’t have to compute your numbers on a spreadsheet. You can push a single button and get those numbers so you’ll know what to bid for a load.
You need TruckingOffice PRO to survive this economy. And we will be glad to give you a free trial of TruckingOffice PRO to discover what your numbers are and how to stop your trucking business closing. Sign up today – not credit card or debit card needed.