Profit margin

Yes, you could do it that way. I would caution you not to expect to be profitable from the first month, it takes time to work up to profitability. When setting goals for profit margin be realistic with your budget numbers regarding expenses and conservative with your income projections. Also, remember it is not as much about the miles you get each week but rather the revenue generated by your operation. I have never worried about how many miles I am running, I only care about the weekly/monthly gross revenue and what I can do to control my expenses. This is easy for me since I do not invoice based on dispatched miles but rate a fixed amount per vehicle I transport depending on the geographic area it comes from (zone rate).

As a beginner I would suggest you do as you said for now, as you learn more about running your operation and what works for you, how you can cut expenses, what are your most profitable lanes, etc you will be able to better set goals regarding profit and retained earnings. Lastly, I would only expect to break even during your first year as there are too many variables when you are learning.

 

Here lies the problem with our industry, everybody bids on their cost and then tries to make a profit on that. Try bidding on what it would cost the shipper to do it themselves, then find your margin in there. If your cost were $1.25 per mile, and the next guys is $1.35 per mile but the shipper could not do it themselves for under $1.50 per mile, before putting fuel and a driver in the truck, would you leave the extra coin on the table or floor. Me I am going to pick that coin up and put it in my pocket. Any savings I found along the way would increase my margin, why should I pass that onto the shipper or broker?

If they want to save the extra money, then they should buy their own equipment, get their own drivers, and take the extra risk involved, we all see how that is working for Wal-Mart right now.

 

Is you made $1M, but it cost you $1.25M to make it. You would still be making money, just not for you. Make sure to not make the same mistakes as everybody else, thinking more miles = more money, it does not. More profit = more money to you.