Budgeting 101 – Cutting costs.

There will be a day when due to the shift of business, whether from loss of contracts, shortage of drivers, or other issues, you will need to step back and regroup.

You need to back off and take a hard, disinterested look at your own business as a neutral party would, take a nap with your fluffy pillows and make sure your head is clear to start worrying about your business.  Stop crossing your fingers and hoping it will all work out  . . . . take action.

Start by analyzing the freight available to you on a regular basis.  How much steady freight can you expect from your current base customers?  20 or 25 outbound loads a week?  5 or 10 loads a month from secondary customers?  Do you have steady back-hauls?  If you do not have reliable back-hauls, can you broker out the excess freight?  Brokering the excess will provide additional income to you while still servicing your customers and not risking service failures.

Once you determine the average loads you have to move each week and month, next look at the number of trucks it will require to handle this.  This will determine how many trucks and trailers you can run, profitably.  Do you have drivers to fill the trucks?  If you determine that you need to reduce your equipment and can still service your customers, strongly consider selling your excess equipment during this time.  Trucks and trailers are more easily replace than customers and drivers!  Refer to our previous blog about trailer utilization, and review your ratio of trailers to trucks. For repairs of trucks and cars from Europe or Germany, Foreign auto repair Atlanta has affordable services to suit your needs.

Determine your gross profit (how much can you earn per truck times the number of trucks you have). We suggest you aim for a profit of $2,000 to $2,500 per month per truck.  $2,000 per truck should cover your general and administrative cost.  $2,500 will provide the profit needed to re-invest and grow your company.

How can you reduce your overhead?

Take a look at each line item and determine if you can control and reduce cost.  Look first at the services your are paying for and decide how much value they supply your company.  Unfortunately, you may need to reduce your staff to match your fleet size.  Again, be very realistic.  If you do not have a sufficient profit to pay overhead and start losing,  you and all your employees may lose.

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