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“Hey everyone, we’re here today to walk you through Part Two of the basics of creating a business plan for your trucking company. We’ll be covering your trucking company’s expenses and revenue, and we’ll walk through what going to take to make a profit. The information comes from a variety of sources, so for the purposes of this video, we will give rough monthly estimates of common expenses for a one-truck company.
First, let’s talk about expenses. Expenses are all the costs of running your business. What are some of the most common costs you’ll have running a trucking company?
The expenses may include monthly insurance payments, which vary greatly from as low as $1,000 to as high as $3,000 depending on a variety of factors related to your operations. Equipment could be around $3,500. Fuel will be roughly $4,000. Repairs and maintenance may be about $2,000. You will also need to pay quarterly IFTA taxes, which depends on your mileage and gallons purchased in each state. Check out our video on IFTA taxes for more information.
Second, you’re going to need to think about your revenue. Revenue is your business’s income or the money you’ll receive from your customers. You’ll use this number along with your expense total to determine your company’s profit, also called net income. Just subtract your expenses from your revenue.
So, what does it take to ensure your trucking company makes a profit? We tell our clients that go through the Apex Startup Program that they should to know their break-even point and target rate-per-mile. This helps to identify where you’ll start making money. What are your trucking company’s breakeven point and target rate per-mile? We’ll tell you.
Your breakeven point occurs when your company generates enough revenue to cover all of its expenses. Simply put, if your company brings in just enough revenue to cover its expenses each month, you wouldn’t be making a profit, but you wouldn’t be losing money either. You’ll simply be “breaking even.” As long as your total revenue is greater than your total expenses, your company will be making a profit.
Now that you understand the breakeven point, you can determine what you will need to make a profit. This is where knowing your target rate-per-mile comes in.
Your target rate-per-mile is an estimate of how much revenue you want to earn per-mile. Knowing this target helps you identify the loads with rates which bring a profit to your company.
Target Rate-Per-Mile: To find your target rate-per-mile, you’ll estimate your desired monthly profits and divide that by the number of miles you’ll drive in a month.
That’s a wrap guys, now that you’re ready to create your business plan, you can download our free whitepaper, How to Write a Business Plan for free!”
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