Creating your own company and being entitled as your own boss is the best reward you could ever have. Considering the fact that you prefer getting down on the trucking industry, it simply signifies that you are on your first step of becoming a successful entrepreneur in no time. There are millions of commercialized truck drivers that runs heavy-duty vehicles all over the United States which demanded more truck drivers at a hasty speed.
A trucking company complements the necessity for commercial goods and products to be delivered at a certain place to another. So, the need for a business to hire a truck is very high. If you consider all the initial and ongoing costs, your achievement of making your way on top is highly attainable even if the market serves as the arena of the enormous amount of trucking companies of the nation.
To give you a head start, there are only two main types of expenses, fixed and variable. Fixed expenses are stagnant and paid regularly. However, variable expenses are the exact opposite of fixed, there’s no specific time and manner when will it change.
Let me give you a better picture of it by checking the comparison below.
In order for you to benefit from your own trucking company, you should set the expected expenses including insurance coverage, the mortgage on the truck, permits, licenses, and accounting services before rolling out the vehicles on the road. Fix the schedule and give it time to rest, make sure that client order is inclined to your profitable action plan. Figure out your business daily budget and exclude it right away from other prominent expenditures.
Setting an expectation from stagnant expenses will help you categorized your strategy very well. If you will allow one of your truck to travel for an amount that could only pay the truck’s expenditure for that day, then you should rethink and be more decisive to your business. We are talking about monetary terms and not just promised words you can always rely on your clients. You want everything to compromise to each other’s need and want but you won’t reach your own target with this kind of overview. Break out from your walls and expand your opportunities by weighing risks one by one. It’s a matter of will and determination to accomplish your goal slowly but surely.
This is the type of cost where truck maintenance and repairs, meals, lodging, and expenses like fuel falls under. The crucial part about it is you will never know when is the exact day it will change and you can never prepare for this, but at least create your own analysis on the changes of product items by placing everything up in a spreadsheet to make it easier for you to understand and comprehend.
- Fuel: Let’s say that a common fuel tank on Class 7 truck holds 140 gallons. Usually, trucks need to be refilled for about 11 times per month. Calculating the math given, approximately this truck spends 18,480 gallons per year which will cost you $46,200 (let’s assume that the fuel is priced $2.50/gallon). But with the swinging fuel prices, it’s better to cut off 25-40% of your operating expenses for your planned fuel accounting to avoid a surprising surge of returned money because of it.
- Maintenance/Repair Costs: According to a research conducted for Operational Costs of Trucking, there’s a certain formula that is easy to learn and follow. For example, an average cost per mile for maintenance and repair for a single Class 8 truck is $0.158. If this truck travels 105,000 miles a year, its annual repair and maintenance will cost you around $16,590. But that doesn’t include some extra charges we are yet to be certain, and placing a good rule thumb on spending 10% of the overall expenses on repairs and maintenance is a good thing to do.
The Bottom Line
Now that you have a clearer picture of how expenditures work in handling a trucking company, it will be easier for you to rearrange or strengthen up your strategy on your business plan. Being financially wise in this matter is a must, and if you any problem in establishing your business just because of the lack of funds, always consider applying for a capital loan.
Nonetheless, great tactic and well-planned strategies will help you earn more profit rather than losing all the capital you invested in.