Interesting, that 30% of an expediting carrier's drivers produce 70% the companies revenue. Another interesting number; 50% of expediting drivers can't answer this most basic business question.
From past business experiences, I am making a SWAG (scientific wild ass guess) that thirty percent of a carrier’s drivers produce seventy percent of their hauling revenue. I would love it if someone will challenge this number. I am also making a SWAG that fifty percent of hotshot drivers can’t answer this most basic of questions regarding their business: What is your truck’s operating cost per mile.?
In a previous blog, I shared our earnings for 2012, but with the caveat that my business expenses where about sixty percent of my gross earnings. I also made the point that rather than flipping carriers for a nickle/mile perhaps owner/operators and drivers consider how to become top producers in the carrier they are now working for. My critics have stated that I’m not qualified to give expert advice on this industry because I’ve not worked for at least three carriers, And, they are right. I claim no expertise on any topic except how we run our business, and I certainly lack the experience driving for multiple carriers. Bu t, I am gaining experience in the benefits of longevity with a single carrier.
First lets look at the most significant business error half of us make; as business owners and entrepreneurs, not knowing our operating cost per mile. If you received a 1099 from your carrier or owner/operator last month rather than a W-9, you are a person in charge of a trucking business whether you like it or not. Every successful business person knows what their operating costs are off the top their head. You need to know this number because as a business owner you are making decisions 24/7 that effect your business and your life, and knowledge of your operating costs are fundamental to that decision making process. I appreciate the fact that if you are reading this blog on expeditenow.com you already consider yourself a successfull business person and I’m preaching to the choir, but there are newbies, carrier employees, and researchers out there looking at this material who are seeking insight and answers about this industry..
There are multiple ways to compute your cost per mile, but I’ll share my KISS approach. From my records for my trailing twelve months of business expenses, I’ll divide that number by the total of loaded miles driven during the same time period. My expenses for 2012 were $123,000. This number included: fuel $60,000, truck payments $25,000, and truck maintenance (aging Freightliner M2106) $20,000. We drove 119,000 loaded miles during the same period. So, simply stated, my gross operating costs per loaded mile are $1.03. There are multiple approaches to this computation and its applications, and other bloggers and authors on this site have provided their well thought out formulations.
We’ll expand on the use of this concept in future blogs and share more about that thirty percent issue. In the mean time.
Check your mirrors and keep’r between the lines
gary and barb
