You are probably wondering why I am talking about evaluating your operation in the month of April. Two reasons; Tax time is finishing and you are either grumbling about paying taxes or jumping for joy about your refund. Either way is bad because as an owner operator you shouldn’t be getting a refund if your accountant did his job correctly. So for those of you that are Sole Proprietors you know the outcome of your tax situation. If you’re incorporated you may have a different year end and that may be the time that you reflect on your business. Mine personally is at the end of October so that is when I do a lot of my year end evaluation. Whenever your year end is for you it is important that you evaluate your business. I think you should be evaluating your business on a quarterly basis and I revise my business plan on a semi-annual basis but the point is that you should do it regularly.
Now there are five areas that you should look at and evaluate to make your business a better operation. First look at the income, did you get all of the miles promised, are you laying over too much in one area, etc? Maybe you took too much vacation and should have been running a little harder, or maybe the freight you’re hauling is keeping you delayed at the receiving end. The next area for revue is the variable expense area; look at your fuel costs first since this area will have the most impact. Check your truck fuel mileage against your fuel costs, do they match and if not how come? Were you going too fast, dead heading to the house too far, or buying fuel in the wrong areas? Next comes the maintenance area, is it starting to cost too much to keep the truck, was a lack of preventative maintenance causing problems on the road? Now the next two areas are smaller but can be just as much of a problem as others if not kept in check. Check your phone usage, and food costs. Are you spending too much in those areas? If you’re not sure where to find this information it should be in your profit and loss statement. If you don’t have a profit and loss statement then that is your first course of action.
Once you have evaluated all of those areas then it is time to put an action plan together to tackle the problems and start being profitable. Some area will be easier to fix than others. Cell phone plans and food can be fixed quite easily by watching your habits, but if maintenance is a problem, lower shop costs or purchasing another truck may be more complicated. That being said however, ignoring it will get you nowhere and if you’re losing money based upon ignorance then unfortunately no one can help you.
About the Author
Bruce Outridge is a business and leadership coach in the transportation industry. He can be reached for more information through his website at www.outridge.ca. For more about Fleet Tax Services please visit their website at www.fleettaxservices.com