The most common question I’m asked by owners/managers of small motor carriers is:
“How do I grow my trucking company?”
Moving your business to the next level isn’t based on luck. Growing a trucking company requires dedication and leaps of faith, but most of all it requires a solid business plan. This plan looks at the company’s potential, projects its revenue needs (over the next 5 and 10 years), and then determines where growth plateaus will occur, thus being prepared with both cash and assets as each plateau is reached.
One of the biggest mistakes many companies make is trying to grow too fast. The first rule of growth is being prepared with the capital investment needed, yet at the same time ready for the drain of cash while new equipment starts producing enough revenue to support itself. As any successful businessperson will tell you, growth initially drains assets both in cash and in personnel, so you must plan growth very carefully.
Try these pointers:
- Have a complete business plan. Know the numbers (expenses versus income). Be sure your growth has a real opportunity for success.
- Evaluate your market and know it will support your growth.
- Have a vision of how you’ll reach each plateau in your growth plan.
- Set revenue goals. Have the facts and figures of what you’re doing based on your plan at hand. If it’s working, stay the course; if it’s not working, adjust or scrap the portion which isn’t achieving its goals.
- Know your break-even point, the figure which changes every time any expense increases or decreases. It’s the point where losing money stops and profit begins.
- Be sure you’ve included in your break-even costs a salary for yourself, and anyone else working for your company. Any company owner waiting for profits to pay his salary is doomed to working for someone else. Your profits are where your funds for growth will accumulate and where performance bonuses come from; it’s not your salary.
- Determine a profit margin, which will retain your competitive position while growing your capitalization fund.
A trucking company owner who thinks he’s going to strike it rich in the first five years had better think twice. That’s not to say this isn’t possible, but you have a better chance of selecting next week’s winning lottery numbers. If you want to grow your company, reinvest your profits back into your trucking company.
In the next blog article, I’ll provide an example with numbers on how to establish the needed funds to sustain and grow your trucking company.
Drive long and prosper, and remember: Sustainability is the first step towards growth.
Timothy Brady ©2013
To contact Brady go to www.timothybrady.com