With the year underway it might be time to ask: How am I going to make more money this year?
We have new CSA safety regulations in the mix along with the not so great economy. Reports that 9 percent unemployment will last for several years and that companies aren’t hiring new workers linger over our heads, making decisions more difficult.
Will it be better for your family if you move from the East or West Coast to middle America, preferably to a state with no income tax like Tennessee or Texas? Or should you try to ride out the storm where you are?
The economists are all over the board on their predictions of where this economy is headed, but I can tell you one thing: Entrepreneurs will make money no matter where this economy is headed.
Let me tell you how they do that. It’s the budget. A budget helps you understand how and when you should spend your money. Some drivers and owner-operators don’t measure their performance where and when it matters most so changes aren’t made at critical times. Changes must come before it’s too late, not after the fact. Mistakes are clear after the fact (like at tax time), but some check their financial success by the amount on their payroll or settlement check. Some will check their performance by the cash they have in the bank, by comparing their checks with other drivers, or even by their tax bill. But that’s only a small part of the picture.
All this information will apply to both company drivers and owner-operators, but I will focus on owner-operators for the rest of this article. An owner-operator has to make changes to his operation when the changes mean the most — during the year, not just at the end. A budget is a financial road map just like the Road Atlas or computer. It tells you which roads to travel, which roads to avoid and where to stop for rest breaks. A budget tells you what you can expect to make each week, each month and each year based on how you operate your truck. A budget is your plan for your financial trip and how you will get to where you want to go.
A budget takes into account all of your expenses including your personal expenses. It tells you how many miles you need to operate each week, each month, and each year to break even.
Stop reading right now and write down how many miles or how many dollars you need to break even this month. Can you do it? With a budget you could do this at any time. The budget is your plan for success in your business. A budget eliminates the guesswork from your financial health.
Compare your budget monthly to your profit-and-loss statement. Think of your job as a football game. You can only win the game during the game, not after the game is over. Your budget is your plan. Your profit-and-loss statement is the scoreboard and tells you if you are meeting your goals to get the most that you can. Like the road map it also tells you if you’ve gotten lost. You can adjust your operation frequently to meet your goals and you can adjust in time to make the most out of your investment.
Don’t live paycheck to paycheck hoping that it will all somehow turn out OK — that’s “managing tough.” Instead, get your personal budget from your wife, your accountant or someone you trust with your money. Then compare your budget — your financial road map — to your monthly profit-and-loss statement and adjust your operation monthly to achieve the most profit.
I think there are three areas where truck drivers, and especially owner-operators, must have competent assistance available to them in order to survive: legal, accounting and insurance. Survival requires competent legal assistance because you need to make every effort to protect your investment of your CDL and your truck. If you lose your CDL and cannot drive, then you will probably lose your job and your truck. The laws are changing right now. CSA is now live and will have a powerful effect on your driving. New Hours of Service rules are being proposed by the Federal Motor Carrier Safety Administration. But do you know what each state is doing every day that has an effect upon truck drivers? A lawyer who knows the trucking industry and CDL laws can be your best friend.
Survival requires competent accounting assistance because you need to have current financial information in order to determine if you are making a decent living. Nobody wants to work hard all year for free with nothing to show for it. An accounting firm that knows trucking can make sure you know what you need to do and when you need to do it in order to make a profit. Use that information to take control of your future.
Survival also requires a friend in the insurance business, someone you can trust to help you make the best decisions on purchasing your insurance. You need some type of health, life, bob-tail, liability and umbrella insurance to protect you if and when you need help. The chance of some type of loss is just too great to not have someone from the insurance sector in your corner who knows trucking. Shop wisely and protect your assets.
You are the coach for your money game. What is your plan and how will you know if you are on track to win? What are you going to do today to make sure you keep driving?
Jim C. Klepper is president of Interstate Trucker Ltd., a law firm entirely dedicated to legal defense of the nation's commercial drivers, and of Drivers Legal Plan, which allows member drivers access to his firm’s services at discounted rates. He is a lawyer who has focused on transportation law and the trucking industry in particular. He works to answer your legal questions about trucking and life over-the-road and has his CDL.