Starting a business is an easy task as you will find N number of help from an emerging trucking business, but the real challenge comes while sustaining and keeping it on track of progress! Understanding numbers vital to your business’s growth is critical for newer trucking companies. If ignored, it can shut down your business within the 1st year of establishment.
Before starting a trucking business, the first essential step you must do is to estimate your ALL-IN cost per mile. Knowing this number enables you to calculate your expected profit. Profit is your most important number!
Follow the below steps to determine your cost per mile:
1. Determine how many miles you can drive:
As your profit depends on the total number of miles you drive each month. This includes compensated and not compensated (deadhead miles). Most drivers report driving around 100,000 miles a year.
2. Calculate fixed expenses:
Fixed expenses are those expenses that stay the same every month regardless of how many miles you drive; these include insurance, license plates, IFTA-IRP, and many other permits.
3. Calculate variable expenses:
Variable expenses are the direct costs associated with driving every mile, increasing or decreasing, including fuel price, meals, maintenance, factoring, and broker fees.
Note that fuel expenses and broker charges are the two highest variable costs. Having reasonable control over these can lead to higher profits.
4. Attention to fuel burned out:
Most new trucking rookies think that the lowest pump price is the cheapest way to get fuel, but this is not how it works. Every trucker must pay taxes to every state they drive through, and it’s based on gallons used or miles driven. SAVE YOUR FUEL-DON’T KEEP YOUR MOTOR ON IDLE FOR LONG UNTIL NECESSARY.
5. Work with experienced dispatcher:
At MetroMax Dispatch, we train our dispatcher to leverage the latest technology of load boards and book loads with higher RPM.
6. Have an accounting team:
The only way to successfully run your trucking business is to be supported by an experienced accounting team who can track your expenses and provide you with insights into your income while helping you scale. Our accounting team allows all these operations to handle hassle-free.