the one third theory

i was recently having a discussion with someone and thought it might make a interesting topic for discussion here

basically he felt that everything should be divided into thirds basically broke down like this.

1/3 fuel
1/3 the truck
1/3 profit

basically that at a min. fuel should count for 1/3rd of the gross the next 3rd stays in your company checking and covers maintenance insurance plates and other costs
leaving the remaining 3rd for the owner op.

now i agree with this theory and think its a good baseline obviously the numbers arn't going to match exactly but may be reference point to try to shoot for and actually falls fairly close in what i have previously calculated.

so if you need a quick crude baseline of what you need to cover expenses and have a healthy profit margin say the area i run average fuel prices are right around $4 per gallon (higher than the national average i know) i average 6.2mpg or .64 per mile using the 1/3rd theory i should shoot for a min of $1.92 for all miles to be successful. now this number actually comes out very close to what i have determined using many more numbers to calculate. witch i thought to be quite interesting.

now say you exceed your baseline, the first 2/3rds should still stay with the truck. future improvements expansion but held onto and invested back in.

if your below your baseline, things are out of balance and what you should be paying yourself is going to cover expenses, you should look at what you need to do to get to your baseline.

obviously there is alot more to take into consideration but i thought this theory to be interesting and a interesting topic

 

in my case the truck has been taking more than its 3rd trying to get everything up to snuff on this old million mile truck but revenue has been good been averaging well over 2.00 a mile witch is above my 1.92 baseline. fuel has been less than 1/3rd the theory still apply however. my actual operating expense has been running less than 66% except for maybe last month where i had a clutch go out. (i haven't gotten the final numbers plugged in yet.)

i plan to use this to figure on what to pay myself. for the most part i have only been paying myself enough to pay the house hold bills/food ect and working on building my operating fund up. i am happy with where my operating fund is right now. i think im going to start paying myself a straight 1/3 of the gross and see how it works out

if your fuel cost is 40% do you have any room to negotiate a higher rate.

if fuel is 40% truck is still at 33% only leaves 27% left over aether

fuel cost needs to come down or the rate needs to go up to balance. although both of witch could be a lot easier said than done.