Start with a simple business plan that is updated as your small business develops
You wouldn’t begin a trip without knowing where you’re going or how you are going to get there. The same goes for beginning your career as an owner-operator. All the same, Chris Harrington, business services consultant at ATBS, estimates that 90 percent of owner-operators launch their business without writing a business plan. “Everyone’s eager to get in a truck, but running a business is different from knowing how to drive a truck. We consider a business plan one of the most effective tools they could use in running their business.”
Ask yourself, “What is my plan for starting my business, and how will I make it successful?”
While many experts advocate a business plan with a mission statement, marketing plan, industry description, type of business structure and other details, Harrington advises to keep it simple. “It doesn’t have to be complicated,” he says. It can be as straightforward as stating you will specialize in hauling general freight within a 1,000-mile radius of your hometown.
Harrington describes a business plan as a roadmap for navigating your business from day one. “It allows you to track your business, your expenses, your income and to set your goals, so that every month you’ll know if you’re hitting your goals.” A business plan for an owner-operator thus begins with a good set of numbers to plug into a budget. Get an idea of what your expenses and income sources are going to be. Search out industry averages for items such as maintenance, insurance and fuel. If you want to lease to a carrier, ask carriers about their costs and their pay rates. If you plan to do a truck lease-purchase, ask about weekly or monthly payments and insurance rates.
Once you have a realistic budget in place, you can set goals for your business. These will be the bedrock of your business plan. For example, you might write in that you expect to run 2,200 miles a week and get at least 6 mpg. Or you might project that you plan to take home $3,000 a month.
“With those numbers, you’re going to develop a break-even point,” Harrington says. “If you add in your home bills with your business expenses, you’re going to know this business has to do this much every week or month to break even.”
Phil Mussa, an owner-operator from Statesville, Ga., leased to Celadon, is specific about his goals. “My goal is to drive about 2,500 miles a week and, after making my truck payment, insurance and other expenses, to take home $935 to $1,000 a week,” says Mussa, who’s returned to being an owner-operator after stints as a company driver.
Mussa says he hits his goals about 85 percent of the time. It was challenging last summer as fuel prices ballooned. “I was getting the miles, but I was only taking home about $800 a week,” he says.
You should update your business plan at least monthly, Harrington says, to see if you’re on track in meeting your goals. If you’re falling short, you may need to assess whether your goals are realistic or whether you need to change your operating habits. On the other hand, if you’re fortunate in achieving your goals, you may want to expand your plan to consider adding a truck and hiring a driver.
In a tough economy, following a business plan is crucial, Harrington says. The numbers will show if your business is meeting your goals and what you need to do to keep pace. “Understanding those numbers is going to help keep people in business,” he says. “You can look at the scorecard and win the game.”
Creating and Maintaining Your Plan
Set your goals.
Create a realistic budget.
Track and analyze business performance.
Make changes based on your performance.
Business Plan Resources
U.S. Small Business Administration,
Score, Couselors to America’s Small Business, www.score.org