Well what is profit? I never could nail this down as different people have different meaning for it. Is it the money left over after the break even point? Or money left over after accounting for all present and potential future business expenses?
How much money do you make? How green is your grass?
Discussion in 'Ask An Owner Operator' started by Renegade92, Jun 8, 2020.
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The one thing that’s constantly overlooked, when talking about revenue, is all the different factors involved. Mainly Equipment cost, and fluctuations in rates and fuel costs. Add unexpected repairs. Typically I’ll see Guys make a killing, right off the bat. They couldn’t be happier. Each year their enthusiasm drops. Eventually their disappointed. Usually it’s because, “ Things aren’t like they used to be”. Truth is things never were that great, and the Law of averages caught up with them.
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Sometimes it may go days or years on end but finally something clicks... be it a bribe or nepotism with a little bit of luck and you have your good run too. Better to be able to run 1.5 per mile in a few years stretch. If they run for 3, sure you will too. Yet if they cannot handle 1.5 per mile and you can, you are so much better than them. They will say that you will sink but you will not sink before them, and that's what gives you more power.Renegade92 and Rideandrepair Thank this. -
You are far better off setting up your business like it’s a full blown trucking company that hires drivers, has staff, runs multiple trucks, etc. One that you as the owner are not a driver.
You then, decide to HIRE yourself as a driver of the truck that your company owns. You pay yourself as the employee of the company. Think of your company as it’s own being or entity that has nothing to do with you. It’s own bank account, it’s own taxes, it owns the equipment, everything is it’s own deal. So, the money leftover in the company technically is what your actual profit is for the business. However, it’s trickier yet. The 2nd area you can get in trouble is not accounting for your equipment wearing out. So, your bank account goes up but .30 per mile needs to be kept back for repairs and/or truck replacement. It’s only after accounting for things like that do you figure up what’s left over and that’s your real profit that is in the business for growth or whatever you deem it to be as steward of the company. Many take that money out and spend it on toys which is your own prerogative but I recommend letting it build up and being financially sound to where you have maximum options with the business.
Hope this helps.Last edited: Jun 9, 2020
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Like I said, I’d go with 30 cents per mile. Create a whole separate account if you need to in order to keep it straight. Or, at the very least separate it in quick books. I pay 149,000 for new trucks and run them 500,000 miles. That’s 30 cents per mile. Now, you should be able to get around 65 to 70,000 for it when your ready to sell. So, there is no reason whatsoever you shouldn’t be able to pay cash for the next one. If you remain a 1 truck operator then the first truck loan you get should be the last one IMO. With the 30 cents you can put tires on it, shocks, alignments, services, and any other costs that creep up towards the later years of the life cycle you have it on. You will actually have money left over after paying cash for your next one but that’s a good thing and how a snowball starts over time completely separate even to the profit of the company.
BTW.. you can also use 30k per year depreciation as needed to lower your companies tax burden on the profits you do make. Some years you may use more then others depending on how good of a year it was.chrisdab, dwells40, Renegade92 and 2 others Thank this.
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