We’ve been focusing some of our blog posts on goals and goal setting.
- SMART goal setting
- SCHEMES to figure out your action plan
- Measurements to determine where your strengths and weaknesses are
- Staying Motivated on Your Trucking Business Goals
This multi-part series will continue to help truckers reach their dream of success as owner-operators.
Mile Markers Tell Us Where We Are
As truckers, we use mile markers in many ways. To measure how far we’ve come, how far we have to go, where the broken-down car was when we call for help, even where we might want to park for the night. Markers give us some perspective on our journeys. They help us anticipate what might be coming ahead, or what we’ve already passed.
When we talked in July about staying motivated, it was all about sticking to the goal despite the detours and frustrations we find on the way. It’s the decision to stay on track.
Victor H. Vroom (1964) defines motivation as a process governing choices among alternative forms of voluntary activities, a process controlled by the individual. The individual makes choices based on estimates of how well the expected results of a given behavior are going to match up with or eventually lead to the desired results. Motivation is a product of the individual’s expectancy that a certain effort will lead to the intended performance… Source
So motivation comes from our expectation that what we do now will have a payoff at the end. That’s a life lesson we all have to learn at some point. We’d love to teach our children to understand that pretty early, just to spare them, because sometimes there’s a lot of pain in the process. But once we understand the rewards, endurance comes a little more easily.
What also makes it easier to stick with goals is to see progress. I think it’s easy to look back and see progress, once we’re done. Being able to measure it while we’re in the process encourages us during the journey. That’s the value of benchmarks.
A benchmark is simply a standard to examine one’s progress. Like a mile marker on the highway, it’s a measure. It shows you how far you’ve come toward your goal.
How Do You Set Your Benchmarks?
Some recommend using industry standards regarding time, product, or cost. How would we apply it to trucking?
The simplest way I can see to set a benchmark is to look at the goal you’ve set and the time in which you want to accomplish it. The addition of benchmarks lets us see clearly if we’re getting closer to that goal. If I’m consistently missing the benchmarks, then I know I need to make changes. I can study my history to discover what’s stopping me from moving forward the way I want.
Using last year’s data can be the basis for setting benchmarks. Are we doing the same or better than we did last year? Maybe last year wasn’t a stand-out year, so doing better will be easy. Maybe last year was an outstanding year – then that’s the challenge to do as well and better.
For owner-operators, there are two things we have control over – expenses and revenues. How can we benchmark these?
Can You Benchmark Revenues?
A driver with dedicated lanes doesn’t have to worry as much about downturns in the economy. These stable loads will continue to bring in the money on a consistent basis.
Drivers who are getting loads from load boards face a lot more challenges and decisions. Everyone wants the $3.00 per mile load. Do you know what your expenses per mile are so you know what your minimum per mile price ought to be?
Truckers aren’t always able to get the fees they want per load, so it’s better to look at the bigger picture. Add together a week’s worth of loads and revenues and track that, rather than a per load revenue. Considering the seasons of trucking, this kind of tracking is best when you’re comparing to last year’s data. How do you compare? Are you doing better or worse?
Maybe you don’t have last year’s data. I tried to come up with another way to compare your revenues from this year to last year, but the simple fact is no other number than revenues per mile can give you a good sense of how you’re doing. Prepare for next year by collecting your information this year.
Benchmark and Control Your Expenses
Who doesn’t want to find fuel at the cheapest price? There are apps for that. But that’s not the only expense you can control.
Breaking Down Your Emergency Expenses
The service call charges alone can break the bank. Buy a set of tires at a tire store and you know what you’ll pay and you know the quality of what you’ll get, because the store wants to keep you as a customer. On the road? You get what they bring you and you’ll pay for it too. Clutch replacements, engine repairs, hoses leaking – most of these things give you warnings if you’re paying attention. The key is regular maintenance and inspection. Replace parts that wear out on a schedule, rather than waiting for that last possible moment just to save a few bucks now – and pay a lot more down the road.
A good benchmark might be to reduce on-the-road maintenance and repairs. By scheduling regular maintenance tasks at places where you have confidence in the technicians and can negotiate the prices, you can cut your repair costs. Building a good relationship with a garage isn’t just about being able to schedule an oil change when you want; it’s about trusting them to know your rig, to use the best parts, and doing the job right the first time. You can’t always avoid the blowout on the road, but you can avoid the blowout of your budget by being prepared.
Interested In Payoffs
Most truck loans are for five years. Like car loans, a significant part of the monthly payment goes to interest – a full 25% of the first year’s payments! Since the length of the loan is so short, prepayment doesn’t have the big impact. I did some rough calculations and figured that an extra $50 per month on a $50,000 loan only shaves a few months off the loan. If the loan has a prepayment penalty (read the fine print!) it may not be worth adding any extra money to the payment. Instead, pay off the credit cards every month. This could be a benchmark that would be easy to monitor every month – and save you some interest as well.
Credit cards give us a sense of security. They are extremely useful in helping us track our expenses. Do they contribute to you spending more? The only way to tell is to go all cash for a month. This might take some extra management (and maybe some ATM fees) but the experiment might pay off in saving you money.
Paying for unexpected expenses can be a harrowing thought. One way to plan ahead is to have a debit card with a large amount of money on it that will be used only in emergencies. I’d say that a minimum of $5,000 emergency fund will probably help any trucker avoid having a crisis that might force them off the road permanently. Building up the emergency fund can be done with discipline by using the money you’re not paying in interest payments on a credit card bill.
These are only a few ideas how to use benchmarks to see how you’re moving toward your goals. The key isn’t to set the benchmarks, it’s to set a goal and check in on a regular basis to see if you’re moving in the right direction. The mile markers only tell you how far you’ve come – you need a map to be sure you’re on the right road.