Cost control is an important factor in building a successful operation. Any small business owner needs to track expenses, large and small. Proper planning, budgeting and cost control will not only help you stay in business, but will help you to succeed.
You always want to have the most accurate picture possible of your operation through detailed record keeping. Having an accurate record of your income and expenses month to month allows you to manage your money in a realistic and informed way.
First you must have a written budget reflecting your anticipated income and expenses each month. At the end of each month compare actual costs with your projected or budgeted costs. If you were over budget, figure out why and adjust accordingly for next month. Is there anything you can do differently to stay on target or did you simply under estimate?
Be sure to separate business and personal expenses and set up a budget for both. Calculate out what you need to meet all your personal expenses and put yourself on a monthly allowance. You’re going to have to figure out what you need to take out of the business each month to meet all your financial obligations at home so you can accurately budget your business income. Then you’ve got to watch your business spending.
Cutting costs takes time and discipline. Here are some tips.
Use credit cards as little as possible unless you are able to pay off your balance every 30 days to avoid interest charges. If you’re unable to pay off the card every 30 days you just added another 18% or more in interest to the cost you already paid.
Be smart about fuel purchases and don’t just look at the pump price. Always consider the state fuel tax amount when you buy fuel since each state charges a per gallon fuel tax. Depending on the state, per gallon tax can be anywhere from 3 cents to 30 cents. Reducing deadhead miles increases your paid miles. Cutting deadhead is sometimes difficult, it may mean sitting a day waiting for a better load, but in the long run it may well prove worth it. You really have to look at the miles paid vs unpaid and calculate the value of each load you take. In certain circumstances you may be able to negotiate a higher rate for a load no one wants to take, but you have to ask for the increase. Getting a fair price is critical to staying in business.
Take care of your equipment. Preventative maintenance will help reduce the chance of costly breakdowns and repairs. Always check tire pressure to ensure maximum life. Maintain the speed limit for maximum fuel efficiency. Avoid excessive braking to reduce wear. If maintenance and repairs are costing you 15% of your gross it’s time to consider newer equipment.
Watch your advances. Needing an advance is an indicator that your budgeting is off and you need to get back on track. Occasionally costs come up that are simply unavoidable but you can be prepared for unforeseen expenses by putting away a small amount each month in an emergency fund.
Always shop for the best price even on small items and remember additional costs such as sales tax, and shipping and handling. Get the best rate on recurring billing such as, cell and internet service. Review billing frequently and call service providers and ask if less expensive plans are available to you.
Be in control of your spending and don’t spend more than you need to. Controlling costs can be a small thing that you do everyday that can make the difference between success and failure.
This article has been presented by MBA Tax & Bookkeeping Service, a company proud to provide Corporate/LLC filings, income tax, bookkeeping and IRS problem resolution services to truckers in all states. If you would like additional information or have questions, calls are always welcome. Contact us at (888) 407-1669 or visit our website at www.mbataxhelp.com or www.mbabizservices.com.
This article is provided for informational purposes only and is not intended as legal or tax advice. Each individual business situation is different and the information contained herein is meant for general information purposes only. Specific tax and legal recommendations can only be made after an individual has consulted his or her qualified tax or legal professional.
Find more news and analysis from The Trucker, and share your thoughts, on Facebook.