Chapter

Build your profit plan for the road ahead to ensure you’re meeting financial needs and expectations. 3

CREATING YOUR FINANCIAL MAP BUILD FOR THE FUTURE WITH A STRONG OWNER-OPERATOR

business plan, also be a source of great personal ments are needed to maximize known as a profit satisfaction as well as an im- profits. Even if you already plan, is one of portant contributor to the suc- have started, it is not too late Athe most effective cess of your business. It also to think about planning. business tools you’ll use as an allows you to know when you In its simplest form, the owner-operator. Think of it have reached your break-even business or profit plan should as a road map that allows you point – after which every extra identify your – or to track income and mile driven puts more money gross income – and your ex- over time, with the goal of in your pocket. Experienced penses. All personal household reaching your desired financial owner-operators will tell you expenses should be included. rewards. A business plan helps that working without a plan While your books may re- you make ends meet. It shows is like sitting in the bed of a flect a profitable business you exactly how much money moving pickup truck looking operation, you may fall short is needed for expenses, where backward. You can see where of your personal needs and it will be spent and how much you’ve been – but not where desires if household expenses you can afford to pay yourself. you’re headed. are left out. If you’re serious Your business plan should about your success, sit down show all sources of income and GETTING STARTED with your spouse or business costs while taking into account The best time to begin the partner and identify all of industry averages, personal planning process is before you your personal and business in- expenses and flow. It also start your business. The pro- come and expenses. should provide this complete cess will give you targets, and financial picture in weekly, these can be compared later monthly and annual detail. with your actual financial per- Creating a business plan can formance to see where adjust-

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Profit planning can help you get there. When updating your profit plan, take the time to build balance sheets – both personal and business – to calculate your net worth. The compares your with your liabilities. Creating a balance sheet for a single-truck owner-operator business is fairly simple. Start with what your business owns: Write down how much money is in your business checking and savings accounts, and don’t forget escrows or maintenance reserves your carrier may be deducting from your settlement to fund. Next, determine how much your equipment – truck, trailer, tools, etc. – is worth; use online resources to help determine fair market value. Next are your business liabilities: These are your truck or trailer loans, business credit card balances, outstanding accounts with vendors and repair shops, etc. Subtract your liabilities from your assets, and you have the net worth of the business. If the number is positive, it becomes an on your personal balance sheet. If it’s negative, it’s a liability. Do the same for your personal balance sheet. The difference between your assets and liabilities is your net worth. Continually increasing personal net worth should be one of your long-term goals. Don’t be discouraged if you have negative net worth. Many people avoid this process because they don’t want to see the results, but don’t fall into that trap. Setting goals and improving your financial situation is much easier once you know your net worth. This is the starting point for any good long- term financial plan. Make sure you update your balance sheet continuously – at least twice per year – to ensure you are meeting your financial goals.

taxes and lean times. Under this plan, the owner-operator runs 132,600 loaded miles, earning $54,203 on $172,965 in revenue. If you lack past data for developing your plan, be con- servative in estimating your BE REALISTIC ceipts as possible. Accumulate income, and overestimate your As you work through this pro- three to four months of ex- expected expenses so you don’t cess, gather as many of your penses to reflect your spending have a flawed plan. If there is collected invoices or settle- habits properly. Don’t forget to money left, place it into savings ment statements, bills and re- for savings, estimated for unexpected emergencies.

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