Dollars & Sense
The ABC's of Successful Expediting
The following article was originally published in Big Rig Owner magazine. It appears here through the kind permission of the author.
In my never humble opinion, expediting is the toughest market to consistently be successful. On the other hand I also think expediting offers the greatest rewards to the owner operator who understands exactly how to be successful. I tell all owner operators, buying and specâ€™ing your truck is the number one most important decision you will make, so make it smart!
For expediters this is even more important and also requires more time and planning. Here are a few reasons why. Specâ€™ing any truck requires a lot of thought because of all of the decisions to be made and the fact that every decision can affect your bottom line. When it comes to expediting there are even more decisions to be made and they are critical to your success.
Take for example the choice of what size truck to buy. For truckload owner operators, there isnâ€™t much to think about, itâ€™s going to be a class 8 vehicle. For expediting it could be anything from a passenger size van, all the way up to a class 8 tractor or straight truck. This is why as an expediter, it is critical to understand your market.
You have to have a very clear understanding of the product you will haul and the geographical area you will spend the most time in. Once you understand that, you will be able to make a smart decision on how to set up your equipment. I could write an entire article on all of the details of that decision alone.
You want to make sure that when it comes to size, (vehicle size as well as all component size) that you donâ€™t over buy or under buy. Specâ€™ing a truck that is too small for the job will shorten vehicle and component life, while a vehicle that is too large for the majority of the loads is simply not efficient and will cost you money.
It is also critical that you spend plenty of time making an informed decision about the carrier you will contract to. You will be much more successful if you make this decision right the first time and avoid changing carriers.
Be proactive in controlling costs. I have worked with many expediters who were making a lot of money as far as gross income was concerned, and yet they were always broke and struggling just to stay in business. This is because they were not spending any time proactively controlling costs.
Specâ€™ing the truck properly is the first step in controlling costs, after that you have to be proactive in your everyday operation. I have found that the three biggest areas that will rob you of profit are; Fuel, Taxes, and Maintenance.
I have worked with many expediters who were spending up to $6,000 too much in these three areas, just by not managing them correctly. Think about that, thatâ€™s $6,000 that should have been on their bottom line, and more importantly in their pocket, but it was gone, wasted, due to the fact that they were too busy making money to proactively manage their expenses.
You have got to decide today that you are going to get control of these three expenses. Understanding how to control these costs and put the money back where it belongs, (in your pocket) takes up far more room and time then I have available in this column. That is why we have published our 3 booklet set. We also offer a comprehensive personal business review. (For more information contact our office)
Cash Flow is King. (Donâ€™t let the term cash flow intimidate you; it is nothing more than having the money to pay your expenses when the expenses are due.)
Cash flow is critical to every business and every owner operator, but it is even more critical for expediters. The biggest reason it is so important to expediters is that expediting fluctuates more drastically than regular freight. You have got to be prepared to manage your cash flow closely in order to make it through the slow times. The money you earn today cannot all be spent now.
Part of the money you earn today will be needed in the future for things like, tires, taxes, license, repairs, income during slower times etc. Some expenses are easier to manage because they happen on a regular basis. Others only happen at certain times of the year, and yet others cannot be predicted.
In a perfect world we would know all of our expenses ahead of time and when we would have to pay them. This isnâ€™t a perfect world! Thatâ€™s why you have got to be proactive in understanding your cash flow needs and planning for them accordingly. This takes time and effort and some knowledge of how cash flow works.
If you are not able or donâ€™t have the time to get your cash flow needs in order you really need to work with an accountant or Certified Financial Plannerâ„¢ that can help.
Anybody can call themselves a financial planner, even if they have no background or training. You want to make sure that you are working with a Certified Financial Plannerâ„¢. In order for an individual to use that title they have had many years of financial training and have also passed a very difficult national exam as well as being required to take an additional 30 hours of continuing education every two years.
Making smart decisions is the first step on your Road to Success. If you would like to learn more about how to be successful as an owner operator, call now to buy one of our success booklets â€œHow to Get Started as an Owner Operatorâ€ â€œ10 Steps to Success as an Owner Operatorâ€ or â€œFinancial Planning for Owner Operatorsâ€ they are $7.95 each or buy the set of three for $19.95 plus shipping and handling.
This article has been written by The Alliance. The Alliance provides bookkeeping, tax preparation and financial planning specifically for owner operators. The Alliance was created to help owner operators succeed, you can become an Owner/Partner in The Alliance for as little as $10 per month. To learn more about The Alliance and how it can help you succeed call toll free 1-866-43TRUCK, thatâ€™s 1-866-438-7825 Or check out our website www.43truck.com