The Business of Trucking
To stay profitable, follow the money
Let’s talk about tracking your business numbers. I’m going to cover tracking your business performance and how you use those numbers to improve the bottom line and put more money back in your pocket. After all, isn’t that why you’re in business? If you’re going to work as hard as you do, don’t you want to make as much money as possible? You can’t improve something if you can’t measure it first.
I speak to thousands of owner-operators every year, and less than 10 percent of them accurately track their cost-per-mile or percentage of income. I think the biggest reason so few owner-operators do this is because they just don’t understand how to do it, or they don’t have the proper tools to do the job easily. In the next couple of issues I’m going to show you how to track these numbers with a pencil and a calculator, because I think it helps to have a basic understanding of how to calculate the numbers manually. Then I will introduce you to a new software program that I am putting the finishing touches on that will track all of these numbers with the least amount of effort on your part.
I teach owner-operators how to lower costs in all areas of their business—fuel, maintenance, taxes, interest costs and many more—but if you don’t know how to track and analyze those numbers, it’s hard to improve them. So keep reading and I’ll show you how easy and profitable this can be. In the meantime, let me give you a head start on the process.
In order to track your cost-per-mile, you need to know your mileage for a given period, so start writing down your odometer reading at the start of each month. When we decide to set up a system to keep our records, we need to know why we’re keeping them in the first place. There are really only two reasons to keep all of that paperwork around. The first is that the IRS requires us to be able to prove our income and expense in case of an audit. The second reason is so we can measure and improve our business performance.
The IRS wants paper, actual receipts and documents; for our business performance, we want numbers and reports. The IRS wants totals for the entire tax year, and we want monthly and year-to-date numbers. Our system needs to have two parts so that we can achieve both objectives. The system will have a paper-based filing component and a computer software program to crunch the numbers. Check back next month and I will show you how easy it can be to set this system up. If you want a head start on this process, check out my Web site at www.masterthejourney.com.
Remember, be safe, be profitable and “master the journey.”