Industry Outlook

New Video! Part 2 of setting up your business plan

Sprinter vans in the expedite industry are all the rage. But do you have all the right info you need to get started?

Today's episode covers the need for a proper budget and financial plan.

Follow along 👇👇 with Rob Podeszwa of Jung Express, and host Brandon Baxter, as they discuss the ins and outs of Sprinter van ownership within the world of Expedite.

It's ExpediteNOW!

Transcript:

Brandon Baxter: Welcome to the Expedite NOW podcast presented by Expediters Online and Jung Express. I'm your host Brandon Baxter. My guest as always is Rob Podeszwa. Rob, he's a recruiter with Jung express and he's here to discuss the ups and downs of running sprinter vans in the expedite industry. Rob, thank you again for joining me today

Rob Podeszwa: You're welcome, Brandon always good to be here.

Brandon: So far, you know our first episode it really was the tone setter, right? It set the tone for what this series is about which is how somebody might get into the expedite industry as a sprinter van owner operator, and then as for episode number two, right, was it was really, it was really part one and today being a continuation of that episode, you know, part two. But it was how to get started right focusing on putting a business plan together and really doing it the right way, setting the tone for becoming a competent sprinter owner operator. So, Rob, with that being said and with those recaps out of the way, let's jump right into part two of creating a business plan.

Rob: You basically start off with your loaded miles. I spoke last time figuring out what are the loaded miles? What are your paid miles gonna be over a year's time and that's again, you're getting those numbers from the companies you talk to or from your research. Don't just pick numbers out of the air; use realistic numbers.
Okay, so let's just say for an example that I put together, let's say 110,000 miles, okay. Very realistic of what a driver should be able to do if they're willing to put in the time. You've also got your numbers as to what should be your average rate of pay. Again, average, not what's the best or anything like that. What's an average? Let's use 85 cents a mile. Okay again as a realistic number, that puts you then as a gross yearly income of $93,500. That's a gross number.
What I always recommend to people starting off their business is a 50% rule. 50% of that income stays in your business account; 50% goes to your personal account. Because again, you have to look, you're starting your business. You have to keep that business up and running. A huge mistake that I see drivers make is they don't do that. They're shifting all the money right into their personal account, paying their personal expenses and stuff like this, and then they don't have the money for their business account. You need to get that business up and running. Again, think of it as a startup business. You need to get it up and running. If down the road, once you build up that business account now, you want to start siphoning off more to your personal account? Okay. But get that business account up and running.
So that means 50% of that, $46,750 goes to your personal to pay your personal bills, $46,750 stays in your business account. Divide that out monthly. That means your gross monthly income to your business is $3895 and change. So now that's what our income is going to be, average.
So now let's look at what our expenses are. We talked about 110,000 loaded miles, right? I mentioned in the research what is your percentage deadhead? There's gonna be deadhead involved. You need to figure that out. On average, typically ten percent for an over-the-road driver, ten percent deadhead is very realistic. That means you're putting, total miles on your van of 121,000 miles a year on your van. For our example here we're gonna use a gas model Sprinter-style van, whether it's a Ford Ram or whatever. We'll use a gas once again. If you have a diesel that's gonna change it, but for this we're gonna use gas. Let's use 18 miles to the gallon. That should be fairly reasonable.
That means at 121,000 miles a year, that means you're going through 6,722 gallons of fuel. Now you figure out what's your average cost of fuel. Again, let's use $3. You can put in whatever you want. That means that you're gonna be going through you're gonna be spending a little over $20,000, $20,167 dollars a year on fuel. Monthly, that's about $1,680 and change monthly for fuel. So, there's your fuel cost monthly.
Maintenance. Again, we talked about, you're putting 121,000 miles a year on that van, you're doing a lot of maintenance. You're doing your oil changes, your tires, your brakes, all of that. I talked about breaking windshields. And I recommend using $400 a month. But again, you can adjust this depending on something but put it around $400 a month for maintenance because you have to plan for maintenance. If you don't have it in your business plan, you're gonna fail.
Insurance. Again, insurance costs vary. Again, in your research, get your insurance quotes. It's a dramatic difference around the country as to what insurance your premiums are gonna be. Because it's all your insurance premiums are gonna be based on your garaging zip code, your driving history, your credit history, and the age of the van. For our example right now, I'm just gonna be using $500 a month. Now again, some people are gonna be like that's crazy I can't get it for that, but I have drivers who pay less than that. I have drivers who pay more than that.
Now also looking at your van payment. Now whether you have, again in terms of somebody's financial situations, even if they pay cash for the van, they have to plan. I still say put a van payment in your business plan because sooner or later, you're gonna have to replace that van, right? And if you take a loan, great, you have to put that payment in there and everything. So, let's just say, you took a loan of $40,000. We're just gonna use this as an example, but you took a loan at $40,000, you figure out your interest rates of what it is, and then you're putting in your term. Again, I always recommend that you pay it off within three years. So do a 36 [month] term. So, for our example, we use a $40,000 loan amount at 5% interest. That puts you at a van payment of just under $1,200 a month $1,198 and change.
So, if we add up those expenses those expenses come to $3,779 and change Again, our gross income was $3,895. That gives you a net profit of roughly $116 a month, right? These are the numbers that you need to put down to show that hey, you're gonna be… now are there other things involved? You know little expenses here and there? Yes. Again, if you sign on with a company where you're getting the insurance through that company. But again, these are all the numbers that you need to put down and make sure that you're gonna be making money. That it's going to be profitable for you. To make this determination, are you supposed to get into this, if you put all these numbers down on paper and it comes out as a negative, you need to either adjust it, or maybe it's not the right thing for you. Again, it depends on what people's expenses are

Brandon: How important is putting a business plan together? I mean, do we actually, do we really need to have something like that, or is this something where you know, somebody like myself could just go out there and wing it?

Rob: You can. More drivers who do that then don't do that. I get so many drivers that they last a year, two years the most and they get out of it and that's because their numbers are negative and so they started with this money that they put into this business and they're just chopping down that money, chopping it down, chopping it down, and it all of a sudden it's to zero and they have to get out of it. They have to sell their van It hasn't worked out because they did not have a plan to succeed.

Brandon: If you don't mind talk a little bit about the difference right between short-term versus long-term thinking when it comes to really this particular venture.

Rob: if you want your business to succeed, you need to look at it long-term. Where is it going? What are my plans down the road? As I said, if you put together a good business plan, right, and you work hard to achieve those numbers, okay, maybe then a couple years down the road… when we talked about your monthly profits, having that monthly profits, if all of a sudden you get to the point where now you have that $10,000 cushion in your in your business account, well, now if you want to start siphoning off more money to your personal account or things like this you have options. But if you don't, if you run it down to the bone, you're just, you’re, you're flirting with disaster because again, that van is your moneymaker. The van’s got to stay on the road and if you don't plan for something happening to that van, that something eventually, something will happen to the van. If you don't plan for it, you're gonna fail and you're gonna get out of the industry.
The other issue that happens is I get drivers who get in this industry and again, they don't have that good business plan, and so now all of a sudden, they're freaking out because they're not making the money. They're not paying their bills and so now they just want to, they'll take freight as cheap as possible. You know, they're out there bidding their own freight, and they're bidding it at 50 cents a mile because they just got to make some money and that hurts everybody in the industry.

Brandon: Yes. Yes, it does.

Rob: If we have drivers who put together good business plans, who are successful with it, that’s gonna help everybody in the industry.

Brandon: Talk about how important it is to have some cash to help jump-start your business

Rob: All the numbers that I've been talking about our average numbers okay, so that means there's going to be some months high, some months low. If you get into this business and you have no startup capital behind you and you happen to have a low month to begin with, so it below the average, now all of a sudden, you're not paying your bills and everything. So I mean It is I've had drivers already start with us. They take their first load out to California and then they say they can't run another load until they get paid because they have no money for fuel. We speak in averages: there are highs, there are lows. If you happen to start at the low point, you have to be able to get through that in order to get to the high point.

Brandon: Rob, anything else you'd like to say?

Rob: No, just thanks for watching and hopefully this is helping you out and it's a great industry. Just get set up correctly and you will succeed.

Brandon: Fantastic. Thank you so much, Rob.
This has been Expedite NOW presented by Expediters Online and Jung Express. I've been your host, Brandon Baxter.
Until next time.