Succeeding During Challenging Times
It’s no secret that owner operators and small fleets are being squeezed by the negative effects of two national trends—surging diesel prices and a softening spot market for freight. There’s no relief in sight. Some industry experts say that only a recession will reverse the rise in the cost of diesel, and of course, an economic downturn would likely crater the spot market.
How can you as a new owner operator (or a driver thinking about buying a truck and starting out on your own) succeed in such a challenging environment?
“It has to start with the basic blocking and tackling of trucking,” says Relay Executive Vice President Meghann Erhart. “Understand your market. Run as efficiently as possible. Minimize your empty miles. And pay strict attention to your cash-flow.”
Cash flow management—understanding and staying on top of the in-flow of revenue received and the out-flow of expenses needing to be paid—is essential to the success of any trucking business, Meghann says.
“Being aware of the ins and outs of your cash flow includes paying attention to the payment terms of each load—knowing when you are going to get your money,” she says. “And it’s about knowing your expenses. Being aware of when your insurance payment is due; when your taxes are due. Knowing and planning for these big upcoming bills. You budget for those known expenses, and include some reserve for unplanned expenses, like a repair to get your truck back running. Not every dollar that comes in can be spent without setting aside what you’re going to need to keep the business going.”
Meghann recommends making a daily routine of assessing the performance of your business. “Knowing your numbers is as important to the owner operator as it is to a 25-truck fleet or a 500-truck fleet. Ask yourself: How did my truck do yesterday? Was I loaded? Did I get paid? How many miles did I run? Did I have any maintenance expenses? Did I buy fuel at the cheapest place I could—and did that mean running a significant distance out of route? Did I get the deposit I expected? Did my interest payment turn out to be what I expected? Pay attention to the numbers so that you know your cash flow on a daily basis. And look for savings you can find throughout the business.”
Relay can help owner operators manage their cash flow and reduce expenses, with solutions to:
- Budget for and keep track of expenses
- Reduce idle time with fast transactions at the shipping dock
- Use a wrapped receipt for a zero-cost lumper payment
- Get a rebate on fuel to avoid going out of route in search of a particular brand
- Get reimbursed for lumper expenses with real-time receipts
- Send invoices out quickly and accurately
“We know the cost of doing business is increasing,” Meghann says. “In addition to providing solutions to save our customers money, Relay is holding our prices stable to support the industry through a difficult time.”
Rising costs are particularly hard on owner operators. Half of single-truck and small fleet owners are considering job changes in the next six-to-twelve months, according to a new survey by Truckstop.com. Some of those considering a change will close their business and go to work driving for a larger fleet. But many of those who choose to stick it out will succeed through hard work, determination and a strict adherence to good business practices, Meghann says.
“Some very large fleets started out as an owner with one truck,” she says. “And just about every one of them has had to overcome some degree of adversity to succeed. This is an industry full of very determined individuals.”
Let's talk - learn how Relay can help you manage your cash flow and reduce expenses by clicking here.