It takes a lot of money to operate a truck these days. It is no surprise that people often refer to our industry jokingly by saying, “Big Trucks, Big Bucks”. Do not be fooled however, into believing that there’s no money to be made in trucking these days, which can easily be heard in your average truck stop fodder around the driver’s lounge. Truth of the matter is, a lot of the reasons that so many try and fail at being owner-operators is their inability to plan ahead for large expenses, whether planned or unplanned.
One major key to succeeding is identifying, planning for, and managing large expenses. Some of these things you may know of in advance, such as equipment purchases, fuel and/or routine tractor/trailer maintenance. These are not normally the types of spending that hurt someone’s business enough to cause failure, since they are known variables in the equation of success. Surprise expenses are typically those that cripple a trucking company to the point of closing its doors, especially small carriers that may lack the cash flow to recuperate from these expenditures. A little caution and planning can lessen the impact on the bottom line, and likewise the impact on overall success as a result.
Even though I label one category as “surprise” expenses, you can be certain many of these surprises can be planned for ahead of time as well. These can include things such as breakdowns, flat tires and even your own unplanned time away from the truck (injury, personal time, etc.). Knowing exactly what your expenses are and being prepared for them can easily mean the difference between success and going “belly-up”.
It is all too often I run into drivers who do not set aside money from their business account before paying themselves their “net profit”. Soon enough, operating in this manner will catch up to anyone, regardless of the cash flow of daily operations. All it takes is a blown turbo, one bad injector, or blown tire to wipe out a trucking business operating with no emergency buffer! If a $1000 setback could do this to an unprepared owner-operator, imagine what a $3000 set of drive tires or $3000 quarterly tax estimate might do! Even someone saving just a few cents per mile for these unexpected expenses can have a distinct advantage over a driver that does not do so.
Drivers that operate without knowing exactly what their expenses are can usually plan on ending up on the negative side of a trucking statistic. A hands-on owner-operator should have the basic knowledge of what it takes to run a truck and be able to plan ahead for these types of “surprise” expenses if he/she wants to operatore their business successfully. Historically, I have learned to set aside a minimum of 10% of my gross earnings in a separate buffer account, to help plan for these exact types of maintenance expenses, which of course will vary for you based on your particular operation. At first an amount that size can seem like a large part of what you “thought” was your "profit" if you are not used to setting funds aside in this manner, but when the time comes that you actually need those emergency funds to be there, you will be more than glad when they’re there to save your rear! Leverage your earning and saving as to not become another negative business statistic by dipping into the emergency funds!