The first part of this series deals with whether you should go into business. Even if you are already in business, there is valuable information for you. The success of a business can depend, in large part, on the financial foundation on which the business expects to run and its business plan.
Seven important questions that you should consider before going into business:
(1) Are you unhappy working for others? (2) Are you a responsible individual, organized and dedicated? (3) Are you willing to take risks because you are taking a bigger risk running your own business than being a company driver? (4) Are you going to be able to make the difficult decisions that arise? (5) Are you able to afford to give up the benefits of working as a company driver such as healthcare and retirement plans, guaranteed vacations and sick pay? (6) Are you willing to work longer hours because that is what you will be doing? (7) Are you sales oriented and capable of handling paperwork and record keeping? Additionally, you will need to maintain a large cash balance which is your working capital and which we will discuss later.
Once you make the decision to go into business, you will have to have an organizational plan. Starting your own business entails a multitude of decisions; decisions which may seem overwhelming without the right players on your team. We suggest you equip yourself with the expertise of specialists. Choosing the right advisors can eliminate a host of problems and potentially costly errors as you build and maintain the financial foundation of your successful business. It is cost effective.
You want to succeed and you can. Select advisors familiar to the trucking industry. This may include a tax preparer/bookkeeper, an attorney, an insurance agent, your spouse, or someone you know who is successful in the transportation business. Talk to other owner/operators and familiarize yourself with their operation. Ask them how they got started, how they chose their rig, and how much did they pay? What do they haul? How much money do they make? How many hours do they work? Who advises them?
Now you need to have some idea of how much money you can make by going into business and if this meets your desired amount.
You need to know what your potential net income will be and how that compares with how much you would net by being a company driver. You need to consider the effect of income taxes. You also need to compare the expected results if you lease on with a motor carrier or if you decide to go into business as an independent with your own authority. Project your gross income and your expenses. Will you make enough money? Do your research! Do your homework! Your specialists can help you.
Finally, you need to know what your goals are. Be realistic! How much money do you want to make? How many rigs do you want to operate? How many hours do you want to work? If you are single now, do you want to marry some day and have a family? In other words, take your time to analyze your goal. Our next article will discuss how to get started.
This article has dealt with whether you should go into the trucking business and with building the business foundation. This article has been presented by PBS Tax & Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century.
If you would like further information, please contact us at (800) 697-5153 or visit, www.pbstax.com.
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