Being prepared does not happen overnight; it takes time and patience. When times are good, save for when times are not so good.
As a business owner for many years when I hear that another “business” owner has to borrow money to replace a tire, I wonder about their business plan or lack of a business plan.
Recently we had a series of things go wrong. After selling our current truck and our new truck not ready yet, we found we were going to be off work for at least three months, possibly longer. The truck was completed on time, the ARI sleeper was completed on time, but the freight box is the holdup that has put the whole build at a standstill. As you know, fixed expenses go on and on and on. Here are some ideas on how to plan for the unexpected so as not to be financially devastated.
Create a budget for each month of fixed expenses for your business, and include in that budget line items for retirement as well as savings. There needs to be a line item for an emergency fund as well as how much you plan to pay yourself. Anything left over, and I mean ANYTHING, should go into the emergency/savings fund. This is not money for chrome or buying something fun, it is for when things go wrong, or when freight is slow. Keep expenses down and plan for having less income.
The money you pay yourself should be treated the same way. Even if it is only a few bucks a month, start the habit of budgeting and saving. There is no sense going about micromanaging and having a plethora of accounts. Create what makes sense. I have a savings account for vacations, house fixups, and an emergency account for the house. There is a cap on the house emergency fund, and once that cap has been reached, that money goes into the account for home improvements. We just added a full bathroom to our basement, which then involved additional painting, newer fixtures, a new back door, etc. That money all came out of the improvement account, and if the money had not been there, we would not have started the project.
Back to our problem of selling our truck and the new truck not being completed. We did have some options while we were waiting on our truck. We could run a truck for someone else, or we could take care of a lot of stuff we have been putting off around the house. We have chosen to do both, work in our home and enjoy having the time to do this, and we also work for an IndyCar Team when they need another driver. Staying busy is always an option when truck drivers are in high demand.
Our business expenses are practically non-existent right now without a truck. We still have certain costs, and we have purchases that we want to make for the new truck. The lower sides of the new truck will be lined with belly boxes. We will also have a four-sided recording camera system with another camera in the box, and a new tire pressure monitoring system. The funds for all of the truck projects will come out of the maintenance fund for our new truck. Nothing will be bought on credit. If we did not have the cash, then we would put off buying anything for the truck.
All of this took time to build, and as soon as the truck goes to work, these funds will start getting an influx of cash again. When we first started trying to get to this financial point, we lived paycheck to paycheck, and if anything went wrong, we used a credit card. If we wanted something we couldn’t afford, we used a credit card. One day all of this started catching up with us, and it was time to put the credit cards down and live in the moment. It took a while, but now we are enjoying the rewards of that self-discipline.
You can do it as well by taking one small step at a time. If you slip, get back up and start again.