How to Keep Your Trucking Company Running Part 1

Is it just us, or does it seem like owning a trucking company is getting harder and harder? We just learned that trucking companies went out of business four times more in 2019 than 2018. So this video is intended to give you some tips on how to avoid the pitfalls to keep your trucking company running smoothly.

There are three main reasons why trucking companies fail. Poor expense management, lack of support or unorganized back office, and poor cash flow management. So, let’s talk about how to avoid them.

In part one of this two-part video series you’ll learn how to manage expenses and calculate cost per mile to ensure business success.

I’m Jaime with Apex Capital. Apex has been factoring freight bills for 25 years and we’ve helped thousands of trucking company owners achieve financial stability and successfully grow their businesses.

One thing we know for sure, is that if you want a successful trucking company, you need to manage your expenses and monitor your operating costs.

Costs can be fixed, variable, direct, and indirect and knowing the difference between each type makes managing your operating expenses easier.

A monthly truck payment is a good example of a fixed cost because it’s the same dollar amount every month, making it easy to predict and budget for. Your fuel costs, on the other hand, are a variable cost. The price of fuel is constantly changing and you’re probably not purchasing the exact same amount each month either. Variable costs are a little harder to estimate.

Costs are also either direct or indirect. Meaning they’re either directly related to generating revenue or they are a byproduct of running your business. For example, fuel and tires are a direct cost because you need them to run your truck to produce revenue, while things like food, lodging, or permits are essential to your business, but they won’t produce revenue.

Next you have to know your cost-per-mile!

We can’t stress this enough because if you don’t know your cost-per-mile, how do you know if you’re getting paid enough? To come up with your cost-per-mile, just add up your total costs for the month, quarter, or year and divide it by the total number of miles driven in that same time period. Once you’ve got it, then you’ll know what rate-per-mile to accept or negotiate to with your customers. Since costs vary, we suggest you monitor your cost-per-mile on a regular basis.

If you need help getting started with your cost-per-mile and rate-per-mile then head over to our website to download our Cost-Per-Mile Calculator.

The last part of successfully managing expenses for your trucking company is knowing the difference between your revenue and your profit. Revenue is the amount of money that comes into your business from hauling freight, but your profit or net income is what is left after you’ve paid all your expenses.

A profit and loss statement can help you keep up with your operating costs. Head over to our website to download our simple P&L statement in the description box, it’s our free gift to you!

Those are our tips to help you avoid one of the reasons why trucking companies fail but remember there are two more reasons we still need to talk about, to get help with support and cash flow management check out part 2 of this video series!

To learn more about factoring and fuel card savings visit our website or give us a call at 855-211-0929. We look forward to hearing from you!