Fuel for Thought
The Good Load
Fuel prices are up. Maintenance costs are continually rising. Consumer goods are cutting deeper into your pockets. Insurance rates continue to climb. Some say we are in a recession, others say that a recession is on the horizon. Either way, many drivers are feeling the pinch that our economy has wrought on all of us. What can an owner operator do?
As a business owner, you want high rates, low overhead and more profit. You can focus on the rate per mile and insist on higher rates. You might get it or you might not. If you get your higher rate, good for you, but what about when you do not? If you are willing to lower your rate slightly, you have a better chance of hauling more loads and turning a profit. Would you rather haul a $10 per mile load 50 miles ONCE or a $5 per mile load 1000 miles once or twice a week? Rate per mile can be a useful tool but it shouldn’t be the only factor in your decision to take a load.
You can sit on principal (if you can afford to do so) or you can adjust your business model to include a multitude of opportunities to keep your business and your family afloat.
Keeping your overhead low can be the best way to stay in business in any economy. Especially now, with the high cost of, well, just about everything, living below your means is crucial. Living on less than you earn is a novel idea to some, but success dictates that if you spend more than you earn, you will eventually run out of credit and fail. If you haven’t planned for this rainy day, start now. Cutting costs doesn't mean cutting corners either. For example you can’t buy less fuel than needed to complete your trip.
Additional profit comes when you control your overhead and accept rates above your costs. In order to do this, you MUST know your operational costs. Figuring this out can seem daunting as it requires an honest look at your finances and your behavior towards money. Only you can be honest with yourself about your spending in order to improve it. More often than not, you may have to leave your comfort zone in order to achieve higher profits. Think about it, if what you are comfortable doing right now isn’t working to your advantage, then maybe you should get out of that comfort zone and go get what you want elsewhere. Don’t expect the economy to conform to your wishes, go out and make it happen.
We have all heard to work smarter, not harder. Well, it doesn’t mean you should work less, it means that you should work smart. The smart thing to do is keep your costs in check and provide the amount of work necessary to exceed your costs so you can profit from your labor. There are too many factors involved to list here, but rate per mile should definitely not be the only factor.
See you down the road,