
The party is over. All the paper and confetti have been cleaned up, so now what? The end of the year holiday season is such a positive time, but after New Year’s Day and before Easter is a long span. What’s going to fill that time – good intentions or you just going through the motions until something else comes along? Will you even recognize that “something” when it happens? Then, when that “something” happens, did it happen to you or for you?
Last month I mentioned how with the potential of an expanding economy each of us need to be making an effort to search out new possibilities for our business and to start making plans for the potential to move or maybe expand in a different direction. Note to self: use caution. Don’t jump ship unless you are certain what waters you are jumping into. This is good advice no matter what the nature of your business. I’m always wary of salespersons (recruiters, carrier representatives, or any other third party presentations) who are offering me that “deal” of a lifetime. If it’s such a good deal, why are they offering it to me and not taking it for themselves? Could it be the only profit is in the sale, not in the ownership or operations?
If you need a real life example, the Navy posts sharpshooters on the deck of their ships in a position of accessibility and at the ready whenever they have any swimmers in waters known to have sharks or other predatory dangers lurking. Having been one of those swimmers, I can attest to the relief knowing that someone had by back. Today, I don’t think it’s necessary to hire sharpshooters, but it’s always a good idea to have a qualified financial, legal, and accounting person on your team, if for no other reason than to use as a sounding board to bounce potential ideas off and get their feedback before you jump.
I have written before about the necessity of having qualified members on your team. Even if you don’t employ them on your payroll, it’s good to have access to their knowledge and expertise. No person is an island onto themselves. Each of us may have a specialty, but none of us are so special that we don’t need help or assistance from others. I have known many successful people in my life, but to a person when asked how they became successful, they all gave credit to others, often outlining tech manuals and procedures or guidelines set forth by people more successful than them.
I once asked Don Schneider (owner of SNI, Schneider National Inc.) how he knew so much about running a trucking company. His response kind of shocked me at the time. However, years later, I understood what he was referring to. His response was simply, “I don’t need to know anything about trucking except how to hire the first person. That person will in turn hire additional people who will each bring a new and different perspective to the company. Over the course of time the direction and scope of our team will ultimately be managed by me (himself), but I can only reduce or refine the assets I have available.”
That short but very memorable conversation has served me well over the years. Even though Mr Schneider is now passed on from this life, his legacy still lives as a testament to his leadership. Like so many others, I moved on from his organization, but not before I followed more of his advice. “Make sure your Plan B is just as sound as the Plan A.” Learn to take advantage of all the opportunities offered you in the company or organization you currently work with. Far too often we only measure success in terms of dollars on the settlement check. If we are not generating enough of them, it’s considered to be a failure. In reality, failure may not be the fault of your carrier. Trust me, they are just as interested in your success as you are. How you react or respond to their interest is also, in their eyes, a measure of your potential.
Before you jump to conclusions or run off the handle blaming someone else, first look around and assess what services are available to you through your current carrier or lease agreement. Remember what I said about Mr. Schneider – the more people he added to his organization the more potential they had as a group. As an owner operator I was, at the time, a one man band without any instruments or sheet music. But I did have the ability to recognize opportunities greater than myself. There are several third party organizations that offer management tips or industry training opportunities, most of which are offered at an additional expense to your already strained financial situation. However, is it really necessary to heap more wet rags on an already slow burning fire?
I’m not a big fan of those weekend short courses that promise to turn around failing companies. Case in point: if they were that smart, why don’t they obtain the said company at a fire sale price and turn it around for themselves! Trust me, if there was that much profit in it, they wouldn’t pass up a sure fire thing. The reality is that they are often offering you the same information that’s already available to you at the home office of your carrier – and usually at no additional cost to you other than your time. Take control of your resources, turn the tables on expensive mistakes, and redirect your energy by becoming an active member of the corporate mentality.
Here’s a good rule of thumb: if you are an owner operator, you should be thinking like a company. If you are a company, you should be thinking in terms of a corporation. If you are already a corporation, you should have people thinking for you now. Traditionally, January and February are slower freight months due to end of year purchases and inventory consumption. With that being said, you may have some extra time on your hands. This is the time to ask yourself, “How can we increase revenue when we don’t control the rates?”
This article started out to be about maintenance, referring to fixing your equipment for long term usage, but once again I somehow got off track. Imagine that! The average owner operator only considers his/her physical equipment (trucks, trailers, tires, brakes, etc.) to be the assets that need to be serviced. In truth, your management plans are also assets that need to be restructured as opportunities offer change. Last month I made a statement that cash on hand was the cheapest money you can spend. This month I would like to add, “The easiest road to cash solvency is through reduced spending.” Too bad our government agencies don’t read 10-4 Magazine for the good advice we offer!
Let me follow that last statement with the fact that most carriers are in the business of providing you – their leased operators and associated contractors – with management experience and operating control. Never forget that control has an associated expense. Who do you think is paying the wages for the extra people and all that office space? How and where do I as the leased operator learn to take back some control? Notice I said “some” control, not total control. If you were to take total control, they would have no need for your services because they couldn’t make any money off your labor or movements.
For the company drivers and future equipment owners who do not have a full understanding of how this system works I will break it down to the simplest form. A carrier has two customers. First is the organization that tenders freight for revenue, and the second is anyone who is involved in the movement of that freight. As the equipment operator, your customer is the carrier, because they are responsible for offering opportunities and providing guidelines of transportation. In the end, they will be the ones who pay you for your service. The carrier’s first responsibility is to the organization that tendered them the freight, because without them, no one gets paid. Customer number two is also important because of their revenue owed to the carrier. What do I mean when I say, “revenue owed to the carrier” – why would I owe them anything? Regardless of the relationship, your carrier is charging you for any and all services performed on your behalf. That can include insurance, fuel, road taxes, and permits or incidental expenses associated with a move.
Those contracts that are percentage based (maybe 65/35) are for the purpose of covering those expenses. If you’re on a mileage based package, it’s for the same reason, it is just charged differently. Depending on how complete your truck operation is will determine the amount or percentage taken from your account. No one gives you free base plates or cargo insurance, or fuel discounts or anything else. The actual cost is contained in the contract based on what the contract calls for. Take the time to get it (your lease agreement) out and READ IT. If there are things in there you don’t understand, ask for help explaining it. Now, as an informed operator, you can affect and even control some of these costs.
Let’s start with something as basic as fuel tax owed. How, when, and where you purchase fuel will be credited to your account. Case in point: when I was leased to SNI, I didn’t think anything about the charge for unpaid fuel tax on my settlement statement. Every month it was there until I started asking questions as to why I still owed after all my fuel purchases. They invited me to stop by the home office and they would go over it with me. It turns out they calculated the amount based on fuel purchased each month, not on a 90-day cycle. I was purchasing fuel per quarter and getting over charged for lack of purchases in the month I used it. Understanding all the company’s policies and how (and why) they do what they do is a great place to start. Most carriers will work with you to help understand all this. Typically, all you need to do is ask.
Many of these carriers/companies have in-house purchase programs, as well, that can include the everyday items we all use like tires, tune-ups, and other operational expenses. As a sole owner
operator, the cost of maintenance can be a huge outlay of cash or an additional charge when using credit. However, if you’re able to take advantage of some corporate pricing, those expenses may be far less. Once again, the dollars you don’t spend are going to come home to your bank account as income.
These may all be numbers on a spreadsheet, but they are in fact revenue. It’s hard to associate the money saved with revenue earned per mile. When calculating total earnings, you must look for every savings available. You may be passing up huge possible savings just because you’re not working all the angles. Don’t be afraid to ask questions or take notes. These office personnel are there to help not only the parent company but you, as well, so include them in your circle of associates.
In today’s world the trend is to be your own boss – to sail your own ship on that ongoing sea of concrete, somewhere between the lines. To control your own destiny, so to speak. I can say with great satisfaction the day I put my name (D.D. Mitchell Ent. Ltd.) on the doors, I felt a sense of pride and accomplishment, but I was also scared senseless. In that bag of mixed emotions, I realized I was vulnerable, opening myself up to some implications I didn’t yet understand. But from that day to this one, I never stopped collecting people in my circle. Many of them still work for and are employed by major transportation and/or storage corporations. There’s nothing that says I can’t take advantage of someone else’s experience and success.
To this day I continue to define and refine my road to success. Just for the record, I didn’t think there would be so many potholes or speed bumps along the way, but it’s been said, “To gain respect one must first take responsibility.” To be a responsible business it is essential you know as much as you possibly can in every aspect of its operations. This is a time when it’s great to know someone who knows something about a specialty and can provide you with the expertise to step ahead of the competition and make the right choices in times of opportunity. It’s not enough to know how to drive a truck or strap the load, and just owning equipment won’t guarantee a desirable outcome. You must also be able to drive your people and, therefore, your company’s success, 10-4!