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Expediters Online.com Business Planning This article first appeared in Expedite NOW magazine Issue 3.4.
Part III
Part one of this series talked about the benefits of having a business plan. Part two described what a business plan may contain. This part defines "business plan" and discusses the business description component.
Before you start writing your business plan, you should clearly understand what a business plan is. Pause for a moment to think about this question.
What is a business plan?
If you are not sure, this is the time to develop your answer.
Notice, we did not say this is the time to develop "the" answer. We said, this is the time to develop "your" answer.
That is because expediting is a tiny and highly-specialized segment of the trucking industry. Less than one percent of the commercial vehicles on the road are expediters. Very few people talk online about business planning for expediters.
Most expediters are self-employed. Expediting trucks range from cargo vans, to straight trucks, to eighteen-wheelers. Expediters run solo or team, all hours of the day and night, and all days of the week. Some run regionally, some run coast-to-coast. Most expediters own and operate their own trucks. Others drive trucks owned by fleet owners.
With so many variables, no one can write a meaningful business plan for all expediters. The good news is, you don't have to. Whether you are an owner-operator or a fleet driver, you only need to write a plan for your business and the kind of expediting you do. The question, "What is your business plan?" is easier and more important to answer than, "What is a business plan?"
The U.S. Small Business Administration says, "A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals."
Applying that description to yourself, you can say, "My business plan precisely defines my business, identifies my goals, and serves as my business resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps me allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about my business and how I will repay borrowed money, my business plan is a crucial part of my loan application. Additionally, it informs my sales personnel, suppliers, and others about my operations and goals."
Your business plan is not something you write once and file away. It is a living document that you will continually update. When writing your business plan, don't think sequentially like you would if you were building a house. Instead, think randomly, like you would if you were piecing together a puzzle.
Once you have the blueprints in hand, the physical act of house building starts with the foundation, then the frame, then the plumbing and electric, etc. Each component must be completed and put in place before subsequent components can be.
Puzzle completion is different. It starts wherever you begin. If some parts are troublesome, you simply set them aside and focus on others. As the easy parts come together, the difficult parts become easy too. As you piece things together, the end result comes more clearly into view and your work speeds up.
Before you start a puzzle, it helps to have the finished product in mind. That is why puzzle makers put the picture on the box. For business planning purposes, your picture on the box is the vision you have of your expediting business. In your business plan, your vision — the image you have of yourself and the industry — is the section entitled, "Business Description."
What your business description says and how detailed it should be depends on who you are writing it for. Part two of this series presented three hypothetical business descriptions. While they are brief and basic, they nevertheless help the reader know a fair amount about the business owners.
In some cases, a basic business description may be all you need. But if you are writing for a banker or to maximize your return on the time and effort you pour into expediting, a more thorough business description is in order.
Some business planning experts say a business description should describe your present circumstances, management skills, the products you sell, how you plan to market them and your business, the marketplace you are in, your competition, the risks you take and much more.
Those experts are not wrong, but for one-truck fleet drivers or owner-operators, they are not altogether right either. If you run for a common carrier (as opposed to having your own authority), one-truck expediting is a relatively simple and straightforward business.
You don't have employees to hire, fire, manage and pay; an inventory of products to maintain; buildings and parking lots to keep up; business property tax to pay; customers streaming in and out who might injure themselves or shoplift your goods; or advertising to buy and buy again.
Because expediting is a less-complex business than those of grocery store, bowling ally or gas station owners, your business description can be less-complex too. Nevertheless, a one-truck expediting business description requires a fair amount of thought.
Remember, writing a business plan is more like putting together a puzzle than building a house. A business plan is a living, breathing document. You can expect to rewrite your business description several times as your business plan comes together and is revised over the years. As your business skills and understanding of the expediting industry grow, your business description will grow too.
The business description samples in part two are a good start. To further develop your business description, think about the who, what, where, when, and why of your business.
For example, (who?) Joe Expediter, (what?) hauls expedited freight for carrier X, (where?) mostly east of the Mississippi River, (when?) 48 weeks per year, (why?) to earn money with which to support his family and provide for a comfortable retirement.
Notice that the first answers to the who, what, where, when, and why questions will prompt more questions, especially if a banker is reading your plan, or if you are writing your plan to improve your own management practices and results.
While the above description tells us Joe Expediter's name, it is more informative to say something like, "Joe Expediter, a sole proprietor with three years of expediting experience…."
Those few additional words paint an entirely different picture. Joe Expediter is not just some guy running around in a truck. The additional words instantly tell a banker that Mr. Expediter's business form is a proprietorship (instead of a partnership, or corporation) and that Mr. Expediter has an income history that can be considered in a loan request.
In describing what Mr. Expediter does, try the words, "…uses a specialized truck to haul emergency and/or high-value freight for carrier X, the fastest growing carrier in the expediting industry."
Those words say a lot more than what they seem. They tell the banker that Mr. Expediter is no ordinary trucker. Instead, he is someone who is trusted to transport important freight. The words also tell the banker that Mr. Expediter knows something about his carrier and the carrier's competition.
Mr. Expediter can further demonstrate his understanding of the industry with the way he describes where he works. For example, "Mr. Expediter operates mostly east of the Mississippi river, and especially along the I-95 and I-80 corridors, where expedited freight is more-frequently shipped."
While "…48 weeks a year…" indicate Mr. Expediter is a steady worker, further describing when he works can make him look better still. For example, "Mr. Expediter works 48 weeks a year; taking one week off in November for deer hunting, two weeks off in July for a family vacation, and one week off in January for annual truck maintenance. Except for deer hunting, the selected weeks coincide with the slower times in the cyclical expediting business."
The why part of a business description can further demonstrate an expediters grasp of the industry and economics. In this case, Mr. Expediter could write, "Mr. Expediter's gross income from expediting has averaged $95,000 per year in the last three years. To continue achieving his short and long-term financial goals, and with fuel prices and fuel surcharges increasing as they have, he has increased his annual gross revenue target by fifteen percent.
While things like annual revenue goals, short and long-term financial goals, fuel prices and fuel surcharges can be further explained elsewhere in the business plan, these words in the business description section tell the banker that Joe Expediter is a truck driver who knows what he is doing and why he is doing it.
Of course, to write words like these in your business plan, you too must know what you are doing and why you are doing it. What is your business form and why did you choose it over others? What carrier did you select and why? How does this carrier compare to others in the industry? Where do you run most often and why? What weeks of the year do you take off and why?
Again, writing a business plan is like piecing together a puzzle. You don't need to know all at once how all the pieces fit together. You can instead start with the easy parts and move on from there.
In part two, we said the business description section of your business plan should answer the question, "Who do you think you are and what do you think you are doing?" This part builds on that by talking about the who, what, where, when and why of your business. Business descriptions will be further discussed in part four.
Phil Madsen is the Senior Field Editor with Expediters Online. He and his wife Diane are a straight-truck expediting team. In 2003 they left their white collar careers and became expediters to increase their income, simplify their lives, spend more time together, share a business project, and see the country. They are pleased to say, “It’s working!” Phil can be reached at ATeamTransport@yahoo.com. Copyright 2005 by Expediters Online.com |
