If you have been following this series, part three got you thinking about how to build a business description out of what you say about your business in casual conversation. We are now ready to put your words into formal business planning language.
In this Business Planning for Successful Expediters series, we have suggested a business plan outline suitable for a one-truck, owner-operator expediter or expediting team (part five). As the series progresses, we are discussing the outline item by item. Next up is Business Description.
Ask an expediter to describe his or her business, and you will likely hear something like, “I’m a truck driver.” “I haul expedited freight.” or “I pull a trailer for (carrier name).” Some will evade the question with statements like, “Just taking it one day at a time” or “I was born with nothing and still have all of it left.” While such statements work in casual conversation, your banker and others on your business team expect a more professional business description.
In part three, we said your business description tells the key people in your business life what you want them to know. It also tells them what they need to know to best help you succeed. We also said that describing your business in writing forces you to think things through that you otherwise may not. It gives you better information which you then use to accurately understand and improve your business circumstances.
If you have been following this series, part three got you thinking about how to build a business description out of what you say about your business in casual conversation. We are now ready to put your words into formal business planning language.
A formal business description includes information about your business name, form (proprietorship, partnership, corporation), owners, type, location, and history. It also includes your mission statement, describes your current situation, and states your goals. That sounds like a lot to put in writing, and it is. We will take each item in turn, starting with your business name.
You need a business name for one very simple reason. Some of the people and companies you deal with expect you to have one and will ask you what it is. A good business name will be easy to pronounce, easy to spell, and will help people know what you do. Examples are B A Expediting Services and Jones Expedited Freight Transport.
Keep it professional and avoid names that strangers will not readily understand. If you have to explain your business name to a stranger after saying it, another name would probably be better. Examples of those are B A Enterprises and The Jones Company. A stranger hearing those names for the first time would have no idea what you do.
If you have a sense of humor, leave it out of your business name. You may take great pride in how you and your co-driver often drive overnight to get your shipper’s freight there on time. A business name like Midnight Riders or In The Dark Transport might be cool or cute, but it would hurt you more than help. You don’t want people laughing at your business name. You want people to take your business as seriously as you do.
A one-truck owner-operator is closely linked to his or her business. For that reason, using your own name as your business name works; such as John Doe Expediting, Jane Doe Direct Freight Transport. If your business is incorporated, consider a name like John and Jane Doe Trucking Inc. with a business slogan like “ Specializing In Expedited Freight Transport”
Naming your business can be as difficult as naming your baby but it does not have to be. For ideas, just look around and see what other people do. If you are already in the business, every truck you see on the road has a name on it. If you are not in the business, open the yellow pages to the trucking and freight sections to get ideas there.
Your business form is part of your business description. This is a complex topic that we will begin discussing here and continue in later parts.
When a business professional asks, “What is your business form?” he or she wants to know if you are running your business as a sole proprietorship, partnership, corporation or limited liability company (LLC). The professional is asking what form of business ownership or business structure you have. If you tell the professional you have partnership or corporation, the next thing he or she will ask is, “What kind?”
The business form you choose determines what kind of income tax returns you must file. Some business forms make businesses easier to pass on to your kids than others. If you are involved in a serious accident or if someone gets hurt when working around your truck, liability issues immediately rise. Your business form may make a difference in how things turn out when lawyers start talking about who is responsible and who pays.
A common question among owner-operators is, “Should I incorporate?” For fun, and as an experiment, sit down at a couple of truck stop lunch counters and ask the drivers there if you should run your business in your own name or form a corporation. Or go on an internet forum where truck topics are discussed and ask the question there.
You will likely receive a variety of answers that will confuse the issue more than clarify it. Some drivers will say they are incorporated, that you should be too, and they will tell you why. Others will say they are not incorporated, that you should not be either, and they too will tell you why. Others will speak that probably should not, but that has never stopped them before. They have no idea what they are talking about but will ramble on just the same saying to you things they have heard in radio ads in the middle of the night.
While it is a very good idea to ask the question and listen to all answers, it is not a good idea to make a quick decision. Each business form comes with its own set of costs, benefits, government regulations and compliance requirements. While a radio ad may make incorporating your business sound like the right thing to do, such ads do not tell the full story. If you fill out the forms, send in your check and incorporate without knowing the full story, you may later find yourself tangled up in a mess that is hard to escape.
If you walk into an insurance agent’s office and say, “I have heard that a one-truck owner-operator does not need to incorporate because liability can be managed just as well with good insurance.” the agent will probably agree and tell you how smart you are. It is not likely that the agent will send you away to talk to a lawyer first. If you go to a lawyer that specializes in forming corporations, he or she is not likely to send you to an insurance agent before taking your money and setting up your corporation.
There are a number of different business forms and conflicting advice as to which one is right because people and businesses have different needs. Some are concerned with passing their business on to their kids (business succession). Others worry about who has the power to make the decisions in a business. Still others focus on reducing tax and legal liability.
Notice that each of these issues is not a business form issue but an issue all by itself. Business decision making power is a business management issue. Reducing legal liability is a risk management (insurance) issue. While thinking through these things all at once can make your head spin and motivate you to turn on the TV instead, this is where the power of writing a formal business plan can be yours to have.
Our outline presents the topics your completed business plan will address. The good news is, you do not have to think about them all at once. You can take them a piece at a time, and even a piece of a piece at a time, at the pace that works for you.
The first step in choosing your business form is to learn what the options are. Then consider the pros and cons of each. Considering those will quickly take you into other complex topics that may discourage you from writing a business plan at all.
Do not quit. Do not give up. It is OK to be confused. There really is a lot to think about and much of it will be new to you. Just be patient, take it a step at a time, keep leaning into it, and it will come together.
Say you are reading about business incorporation and you come across the term “key man insurance.” It may be a term you have never heard before. One minute you were thinking about incorporating your business. Now you have to figure out what the heck key man insurance is. Such events are common in business planning.
The U.S. Army is one of the best training organizations in the world. Millions of times, they have taken young men and women off the street that had absolutely no experience in performing military tasks and turned them into soldiers.
One military task is land navigation. Soldiers must know how to use a map and compass to move through unfamiliar areas. When learning those skills, trainees frequently get lost. Knowing what to do when you are lost is at least as important as knowing what to do when you are on track.
When lost, soldiers are trained to return to a known point. Return to a known point. Those are very powerful words that work in a variety of situations. In this business planning process, the known point is the outline.
Very much like a city map, the outline presents the big picture or bird’s eye view. While you might be having trouble finding an address in a particular neighborhood, the bird’s eye view helps you know what city you are in and what major intersections are close. The map gets you into the neighborhood. Once there, you explore, ask for directions or otherwise find your way around until you get where you want to be.
The good news about business planning is there is no delivery deadline or rush hour to beat. When two or three complex topics rise at once and you begin to feel lost, return to a known point. Do not try to think through two or more complex topics all at once, return to the outline instead.
Focus on the topic you want to think about at the moment. As other topics rise, figure out only where they fit in the outline and “deposit” them there for later consideration. In your business planning outline and notes, you may want to create a dumping ground for concepts you do not now understand but will take up later. Having returned to the known point and dumped confusing concepts there, you can refocus on the topic at hand.
Right now, the topic is Business Form. We will continue the discussion in part nine.
Phil Madsen is the senior field editor with ExpeditersOnline and Expedite NOW. He and his wife Diane are a straight-truck expediting team. In 2003 they left their white collar careers and became expediters to increase their income, simplify their lives, spend more time together, share a business project, and see the country. Phil can be reached at [email protected].
