Most bankers don't have a clue about what it is like to drive a truck and work and live on the road. Some of them would be scared half to death if they found themselves sitting among truckers in the TV lounge of a truck stop.
In part 13 of this Business Planning for Successful Expediters series, we talked about you as the manager of your business and asked the question, “How good are you, really?” It is not a question the people who read your business plan are likely to directly ask, but they will wonder, so it is a good idea to answer it in the written plan you share with them.
Our suggested business plan outline includes a section entitled Business Owners and Managers. This is where you talk about the skills and work ethic you bring to the business. It is where you give your business plan readers good reason to believe in you.
Vince and Cheryl Piazza recently became owner-operators of an expediter straight truck. Both had several years of over-the-road experience as company drivers hauling reefer freight in big trucks.
Before he became a big-rig driver, Vince worked for several years as a tow truck operator. Before they met, got married and drove a truck together, Cheryl had several jobs including waitress, bartender, landscaper, factory laborer and nursing home worker.
Like many owner-operators, the Piazzas do not have a written business plan. The owner-operator opportunity came to them as much as they came to it. They started their expediting career like many do, as drivers for a fleet owner. After a short stay with one carrier and leaving it because the loads were too few, they changed fleet owners and began with another carrier.
Things went OK for a while. Then the fleet owner stopped paying the Piazzas and got into trouble such that the truck the Piazzas were driving was repossessed. While frustrated because they had not been paid, they were surprised to be approached by the leasing company and told they could own the truck if they took over the payments.
So, just like that, the Piazzas became owner-operators and they did not need a business plan to do it. While it certainly did not look like it then, they happened to be in the right place at the right time. It helped that the Piazza’s credit score and work history made the leasing company’s grade. It did not hurt that the leasing company did not want to take a loss on the truck and would not have to if the Piazzas could keep up the payments. It helped that the truck was a repo and the Piazzas did not need to make a down payment.
With a six-year lease, the truck will age as the Piazzas run it. Their lease terms allow it and the chances are good that they will want to get out of this truck and into their next before the lease agreement concludes. A number of paths can lead them to their next truck. Which path is the best? To answer that question, the Piazzas will need to explore their options, including loans other lenders may offer.
How do you get multiple options presented to you and favorable terms from lenders? You guessed it. You approach your prospective lenders with a good business plan in hand.
Let’s say the Piazzas have been following this series and have completed all the steps so far. Their next step is to write their business plan’s owners and managers section.
Pretend for a moment that you are a banker. It is Monday morning. You drive from your house in the suburbs to work as you have done hundreds of times before. You get your coffee, greet your co-workers and sit through yet another morning meeting. You move next to your desk, and start in on the mail, memos, e-mail and voice messages that built up since you left work on Friday.
A box pops up on your computer screen reminding you of your 10:00 a.m. appointment. You go to the rest room, get another cup of coffee and return to your desk to meet a couple of truck drivers that want you to put them in a new truck.
As you wait for them to arrive, your mind races ahead to your 11:00 meeting and the errand you must do on your way home. If you can get out of the office early today, you might be able to complete the errand and beat the rush hour home. The receptionist calls and says your 10:00 people are here. You go to the lobby, judge them on sight, greet them and walk them back to your desk.
Now put yourself in the truckers’ place. The banker seats you in front of his or her desk. Expecting you to ask for a truck loan, the banker begins the meeting by saying, “How can I help you?” If you say, “You can help us by giving us a loan that will put us in a new truck.” and if you can complete a loan application that satisfies the lender, you may get your truck loan. But at what terms will the loan be offered, and how do you know you got a good deal?
Let’s try this again, only this time with you having sent your business plan to the banker before the meeting. You have also called ahead to verify that the banker had the opportunity to read your plan and ask if he or she had any questions that you could answer ahead of the meeting. You now know that the banker has read your plan, has no questions to ask before the meeting and still wishes to meet.
Do you see the difference? Do you see how the power shifts? If the banker wants to meet with you after reading your business plan, you know he or she is already half-sold on giving you the loan. Being human beings, you and your prospective lender will naturally size each other up when meeting for the first time. But this will not be the banker’s first impression of you. Your best self will already be in your banker’s mind because he or she read what you wrote in your business plan’s owner and managers section.
Let’s take another look at Vince and Cheryl Piazza. We know very little about them from the information above. Having interviewed them for this piece, this writer knows a bit more. They don’t have college degrees like many bankers have. They have never before owned and operated a business. Their employment history includes an above-average number of employers.
That’s OK. When they move on to their next truck, the Piazzas are not doing it to become bankers. They are doing it to be successful expediters. Most bankers don’t have a clue about what it is like to drive a truck and work and live on the road. Some of them would be scared half to death if they found themselves sitting among truckers in the TV lounge of a truck stop. That’s OK too. Bankers and truckers don’t have to be like each other to work together. They need to believe in each other and be good at what each of them does.
Like every other trucker out there, the Piazzas have people they believe in and people they avoid. Bankers make money by lending money. Just as truck drivers present themselves as prospective borrowers, bankers present themselves to prospective borrowers. As you meet them, you will come to favor some bankers over others. The next step is to get your favored bankers to also favor you.
The owners and managers section of your business plan helps make that happen. Given what we know about the Piazzas, we might write something like this:
Vince and Cheryl Piazza are a Husband/wife truck driving team. They bring several years of over-the-road truck driving experience to their one-truck owner-operator business. Their exemplary driving and customer service records include no accidents, freight damage claims or tickets. While their employment history is varied, their work ethic is demonstrated by their quickly finding new work when previous jobs ended (often due to circumstances beyond their control).
Before they married, Vince and Cheryl worked as solo truck drivers. After meeting on the road, courting for a time and getting married, they found their way into expediting and a custom-built truck of their own. They love each other, their work and their life together on the road.
Having no formal training in business management and accounting, the Piazza’s business skills are self-taught. Their accountant assists them with tax return preparation and business analysis. Their daily, weekly and monthly bookkeeping practices enable them to maintain an accurate balance sheet and income statement, examples of which are included in this business plan.
Since getting married and hitting their stride as expediters, the Piazza’s financial circumstances have included short-term declines followed by longer-term gains. In today’s challenging economic conditions, the Piazza’s proven work ethic, ability to recover from setbacks and money management skills will serve their business well. They have a proven record of serving customers well, maintaining their truck and fulfilling all of their obligations to their vendors.
If a banker read this about the Piazzas before meeting them in the lobby, he or she would be more likely to envy them than judge them. They are free to roam the country and take Monday off if they wish. They are making money and gaining skills. Most importantly, the Piazzas are happy in their life and work. What banker would not want to have a customer like that? Having made that judgment before even meeting them, a banker is more likely to offer favorable terms, especially when it is made known that the Piazzas are talking to other bankers too.
We are out of space now. In part 15, we will provide sample owners and managers text for people entering the expediting business with little or no experience as truck drivers or owner-operators.
