by Tim Brady
, Business Editor
Since most businesses, especially trucking, are not “static” operations, i.e., lacking in activity, change, movement, or progress, it’s very important to go over your business plan regularly, analyze it, and make adjustments to reach your ultimate business objectives.
You should review your business plan when there’s a major change in your business environment. There are certain events that occur in the life of any business that require a change of course if you wish to keep your operation running smoothly and profitably.
In trucking, the first one that comes to mind concerns the ever-changing regulations coming down from federal and state governments. These include the latest changes to the hours-of-service (HOS) rules and the newest mandate from the California Air Resources Board you must meet if you want to haul freight within California. Business changes may also occur if a bigger market share competitor enters your freight hauling segment; a major customer changes the way they ship or adds a new product line; or a large upturn or downturn ripples through the economy.
If any of these or other events happen, you need to look at the business plan. Depending on the severity and/or scope of any change, a slight adjustment to your current plan may be required, or it may demand a full revamping of what you do, what you haul, and with whom you do business.
Review the business plan when there is a change within your business, for example, a new partner buys into the company; you want to shift from a company-driver model to one that includes owner-operators; a divorce or marriage of a major partner; a death or major illness involving the owners; or you want to add trucks and trailers to expand the business.
USING AVAILABLE TOOLS
All of these internal events require a business plan review. One mistake many business owners make is to spend the time assembling a business plan at the very beginning, use it to acquire funding, then toss it in an obscure file and never look at it again. They’re setting aside one of the greatest tools they have for keeping their business vibrant, up-to-date and profitable.
Another important time to review your business plan is when there has been an increase in costs. Why have the costs increased? Has a vendor raised prices? Have your business procedures changed in a way that resources are not being used as efficiently? Perhaps there has been a significant change in fuel costs due to increased violence in the Middle East, severe weather, or an industrial accident?
Were there unexpected and costly repairs on a piece of equipment? What about newly acquired costs that didn’t exist before? All of these types of events should trigger a business plan review to determine better ways to deal with the increased costs.
If decreased revenue is hurting your profit margin, start with a review of the business plan and look for possible causes. Are there too many driver HOS violations causing shippers to lower what they pay? Was there a change in the economy that caused rates to decrease? Did a shipper or broker lower the rates they are willing to pay because a competitor is trying to gain market share by lowering his rates?
Even if there are no immediate circumstances that warrant a review of your business plan, you should still be looking at it every six months. Subtle changes to the business environment or shipper/broker feedback may prompt you to make some adjustments. If you review your business plan regularly, you should be able to keep it current and stay ahead of the market, your competitors and the regulators.
Creating and maintaining an effective business plan takes a lot of work, but if you consistently invest the time in doing so, it will be a valuable tool in keeping your business on track.
Following are some ways to make the process of reviewing your business plan less time-consuming:
- Maintain a vendor price log of what you pay for different products and services over the course of each year. With each invoice you receive, log what’s owed, the date and any price change.
- Maintain a repair and maintenance file on each piece of equipment you own. Log the date, vehicle mileage or hours of each maintenance event, the cost, and the vendor who provided the service. Don’t forget tires.
- Maintain a weekly fuel log. Include the price per gallon of the fuel used by your trucks, total gallons purchased, total cost paid for fuel, and average cost per gallon for your fleet.
- Maintain a weekly load history log. List brokers/shippers, type of freight, distance traveled, deadhead miles (if any), number of days required to pick up and deliver, and total revenue received on each load.
- Maintain a file of industry and business articles and white papers pertaining directly to your hauling segment. Include economic forecasts, technology trends, regulatory changes and events, and other events occurring in the industries of your shipping customers.
These logs and files will become the research you need when evaluating your business plan. By reviewing these logs and files monthly, you’ll spot trends and changes you may have otherwise missed.
All of these make that business plan update much smoother and far more useful in driving your trucking business to greater profitability.
Contact Tim Brady at firstname.lastname@example.org or call 731-749-8567. Join Brady in the Trucking Business Community at www.truckersu.com