Issue link: https://read.dmtmag.com/i/36447
SMART DRIVING MAX KVIDERA Planning Ahead Keeping a budget will help you track costs and save money on the road etting a budget alone won’t make you successful, but it will tell you how your business is perform- ing. A budget will help guide you where you want and need to spend money. If nothing else, a budget might provide some financial discipline. The time to start a budget is now. For an own- er-operator, establishing a budget should pre- cede going into business, advises Barry Sullivan, lead business consultant at financial services firm ATBS. “Oftentimes guys will get into a lease-purchase program or buy a truck and do a budget afterward,” he says, “which is the cart before the horse.” S Sullivan says a budget will demonstrate if a proposed business is likely to succeed. The budget will show whether the income is sufficient to support both the business side and expenses back home. If you’re the sole means of support, setting a budget is criti- cal, he says. AN ALTERNATIVE Fred Lapp, a Sarasota, Fla.-based owner- operator leased to Bennett Motor Express, says he did a conventional budget for years. That experience led him to tracking figures that are meaningful to him. Eric Cook of Peak Trucking Consultants says a budget provides a “roadmap of how their expenses compare to the income they can generate.” He says it should be prepared before you buy a truck to see whether the proposed venture makes financial sense. He recommends researching fuel costs where you’ll be running, potential revenue per mile and what truck payment you can afford. Pat Musgrave, owner of TruckersAccoun- tant.com, says a budget will show where you’re spending your money. “The budget is not there to say you can’t spend it,” he says. “It’s there to say, one, you have the money in case you need it, and, two, it guides you where you should be spending it.” WHAT TO INCLUDE Sullivan says a budget doesn’t have to be complicated. You could set one up on a spreadsheet program on 30 TRUCKERS NEWS AUGUST 2011 He tracks loaded miles, deadhead miles, gross revenue per mile, fuel surcharges and net revenue. He also keeps an eye on his auxiliary power unit fuel consumption and per-diem expenses. This year through early May he reported his gross revenue per mile at $1.91. Add- ing in fuel surcharges and extra revenue pushed his revenue per loaded mile to $2.24. Last year, a down year for Lapp, provided almost $20,000 in net revenue in the first quarter, he says. For the year, monthly he averaged $10,555. This year through mid-May, he cal- culated revenue of more than $65,000. Fred Lapp Lapp, who has paid off his tractor and trailer, advises putting money aside for truck and trailer repairs. He assigns $250 from every load to a repair account. your computer or draw one up with a pencil and legal pad. “People don’t like the word budget,” Sullivan says. “That’s why it’s equally referred to [at ATBS] as a business plan.” In a one-page budget, Sullivan says include fixed costs such as your truck payment and insurance, variable costs such as maintenance and fuel, and your personal expens- es, such as mortgage or rent, credit card debt and child continued on page 33 COURTESY BENNETT MOTOR EXPRESS