Building an Owner-Operator Trucking Business Plan
Your business plan will have
- an executive summary
- a company overview
- a marketing plan
- a set of goals or milestones
- a list of the current staff
- a financial plan.
TruckingOffice can help you as we break down each step of writing your owner-operator trucking business plan for your success.
Financial Reports
There are “numbers” people in the world, and there are people who aren’t. That’s a pretty grand stereotype, but we all know what we are by the time we get our first driver’s license. So when it comes to financial reports, there are some of us who are going to stop right now and run the opposite direction. Others have been wondering when we were going to get to talk about the dollars and sense of the business.
Sense of the Business
We all love the comfort of a safety net under us that’s fully funded. The emergency fund, the savings, the paid off loans – all of those give a sense of security so that if something horrible happens, we’ve got it covered. For small business owners, that sense of security should be called a sense of the business – that things are going well and you can make some reasonably good predictions for the future.
The financial report is the sense of the business in numbers. What have you done in the past can be an indicator of your future, so providing some of those details needs to be included in the business report.
P&L
A Profit and Loss Statement is a traditional business accounting report. It’s often the first thing a loan officer will look for in the stack of forms when you apply for a loan.
According to Investopedia, a P&L is
The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs and expenses incurred during a specified period, usually a fiscal quarter or year. The P&L statement is synonymous with the income statement. These records provide information about a company’s ability or inability to generate profit by increasing revenue, reducing costs or both. Some refer to the P&L statement as a statement of profit and loss, income statement, statement of operations, statement of financial results or income, earnings statement or expense statement.
You can find samples online for examples or PDFs to fill in. TruckingOffice offers a P&L statement in its report feature. If you use accounting software, it’s likely a report you can print.
Sales Projections
Based on past years’ records, you may be able to predict your probable activity in the coming year. Trucking is a very seasonal job for many people; the loads drop in January through March, then start increasing through the summer. The holidays can be very profitable for some truckers. By looking at previous years’ data, you can make some guesses. Along with your goals and milestones planning, you may be able to show growth in your earnings over the coming three years. Keep this part of the business plan as simple as possible. Details in projections aren’t expected or necessary.
Personnel Expenses
What are your business expenses related to you and your employees? Insurance, payroll taxes, and bonuses should be thought about as well as pay for services for your bookkeeper/accountant or another driver. This won’t include temporary workers or contractors such as a tax accountant or mechanic. If you hire a website designer, you won’t keep that person on staff permanently either. Put together a list of employees and the cost of having them on your payroll.
Cash Flow Statement
Don’t confuse the Cash Flow Statement with the P&L Statement: they use the same numbers but show a very different picture of your business.
This is another standard accounting report that shows how money flows through your business. You may show profits on the P&L statement but if an invoice is late, it has an impact on your ability to pay your bills. Some accounting programs can print this statement. It’s not a difficult statement to create for a small business like an owner-operator trucking business. We found an excellent example on Fundera.com of how the cash flow is calculated and how to produce one without investing in expensive software. This may become a report that you consider frequently, as it shows how you know you’re making a profit, but the bank balance doesn’t show it.
Business Balance Sheet
What’s the net worth of your company? The Balance Sheet will show it. This is the highest overview of your company. You will list the company assets (what do you own), the company liabilities (what do you owe), and the owner’s equity stake in the business (how much of the business you own vs. how many investors hold what percentage of the company.) Subtract the company liabilities from the company assets and you have a company balance sheet. Be sure to date this balance sheet, especially if you have loans. Those figures change monthly.
Exit Strategy
What do you want to do with your owner-operator business when you’re ready to retire? Could someone buy your business out? Do you have a child or relative who wants to take over from you? Will cash be involved in that process? If this is the first time you’ve thought about this, you may want to consult with the other stakeholders or owners of your business, or your spouse. What are their expectations about the future of your company?
Getting a Loan? Use of Funds
If you are using this business plan for a loan or financing, then you need to explain what you’re going to use the money for. This isn’t a wish list. Be specific about the use of the money along with estimates of the costs. You don’t need to provide actual contracts unless the financing company or the bank ask for them – to cover an expensive repair or purchase.
Approaching an Investor?
If you’re approaching an investor to buy a percentage of the value of your company, we recommend you watch an episode or three of Shark Tank. Not every investor is Mr. Wonderful, but you need to be prepared to answer some tough, specific questions. This section of the owner-operator trucking business plan will help you prove the value of your company.
The Financial Statements Carry Weight
{That’s a truck joke, right?) The numbers are important to your business plan because what we measure, we can improve. While predictions aren’t to be written in stone, this section weighs heavily in showing your commitment to your business long term. By looking forward with goals and milestones, this section lays out a solid plan for the future of your trucking business.
Ask for help if you need it. You can find financial planners who specialize in helping companies prepare their financial statements. Even if you’re uncomfortable with numbers, find someone you can trust to help you. They’re worth what you’re going to pay them for their services.
Why It Is Important to Have a Business Plan
Even if you’re new to the trucking industry, you’ve already learned that there’s more to it than being a safe driver and delivering goods on time. You have to stay on top of everything from expenses, costs, mileage, invoices, taxes, truck maintenance, and so much more. That’s why it’s best to have a detailed business plan to keep you headed in the right direction.
Not only does a business plan keep your trucking business organized, it will improve your chance of seeing your dream come true. Think of the business plan as a road map for success. Just as you follow directions on a GPS to your next drop, you can follow your business plan to the next step to develop a thriving, profitable operation.
When it comes to running a trucking business, numbers can be your friend or enemy. Math errors can result in fines or penalties that throw your operation off course. But with a solid business plan in conjunction with a reliable trucking software program, you will stay on track. If you’re ready for a TMS package that is right for your operation, give TruckingOffice a try. We’re here to make your job easier and more profitable. See what you think about our TMS by signing up for this free trial today.
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