Know That What You Know is True
So, when is a good time to get into the independent operator business? With fuel prices still high and freight rates not what they used to be; many are asking: should I become an operator now? The short answer is probably no, but the full answer may be “now is the perfect time”. In making a good choice we must accept that there are many circumstances that determine both success and failure. If nine out of ten show a good opportunity but the one problem area makes the whole opportunity vulnerable… we probably chose based on the one negative variable, not the nine. However, sometimes there are five negative things and five positive things and it’s well worth the investment. Each circumstance weighs differently, sometimes in combination with other circumstances. For instance, if you get
7.5 MPG and the formula for fuel subsidy at the carrier you are with is calculated at 6.5 MPG, the higher the market fuel cost goes… the MORE margin and money you make (a perfect opportunity). But if your truck only gets 5.75 MPG, the circumstances say NO-NO-NO.
However, there are a few circumstances that are universally good no matter what the external circumstances. I know one guy who stumbled across an awesome 7 MPG truck for $5,000 (plus $6K to safety) making it a smoking hot deal. Another obvious example is non-taxable benefits. Every long-distance operator has the opportunity to save $12,000 per year in taxes no matter what the other circumstances are: truck cost/value, freight rates, fuel economy of the truck, market fuel costs etc. It’s the one constant the industry can provide and yet far too few operators use it or even know about it. It is what I wrote about in my first book in 2007, over 15 years ago.
Mark Twain once stated, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so”. This quote is only half ‘perfect’ (if there is such a thing). Most operators and those who prepare taxes don’t know about NTB (Non-Taxable Benefits), but they ‘know for sure’ that how they are preparing taxes is the best method… and yet it “…just ain’t so”. It’s what they ‘don’t know’ (NTB) that gets them in trouble… if you define trouble as paying too much in taxes.
I had an interesting conversation with an operator the other week. He stated, “all contracts from carriers end up being the same anyway”. Again… it “just ain’t so”. Just as my second book showed in its research that the difference between the best and worst carrier in 1996 is $1,800 per month cash flow and in the research in 2012, the number was over $3,000, so we need to realize facts don’t lie but guesses usually mislead. Remember, not all carriers pay the same for different reasons and often because the responsibilities can vary dramatically. The operator responsibilities between dry van, livestock and dangerous good tankers are obvious and dramatic. Thinking they will be paid the same is very naive.
It is for this reason that learning your industry is critical to running a successful business. It is far too expensive to learn things by ‘trial and error’ or ‘on your own’. You must be able to search out and gain insight so you can avoid costly ‘tuition to the school of hard knocks’. Thomas Sowell had a great saying (paraphrased), “If you only learn by experience, then, by the time you’re 50, you should know all you need to know when you were 25”. We MUST learn from other people’s mistakes or from honest factual calculations. In business, there are very few situations where we
can ‘figure it out later, after the fact’ and still survive.
If you really want to learn and understand… READ. If you don’t have time to read… listen to wise PODCASTS. If you don’t want to apply yourself… you should stay as a company driver. Being in business requires continual learning and adapting.
Look into the Making Your Miles Count Podcasts on our website… the leading industry site for becoming successful in this business.
About the Author:
Robert D. Scheper is a leading Accountant and Consultant exclusively serving the Lease/Owner operator industry in Canada. His first book in the Making Your Miles Count series “taxes, taxes, taxes” was released in 2007. His second book “Choosing a Trucking company” is the most in-depth analysis of the independent operator industry today. He has a Master’s degree (MBA) in financial management and has been serving the industry since he and his wife came off the road in 1993. His dedication, commitment and strong opinions can be read and heard in many articles and seminars.
You can find him at www.makingyourmilescount.com or 1-877-987-9787.
Robert D Scheper operates an accounting and consulting firm in Steinbach, Manitoba. He has a Masters Degree in Business Administration and is the author of the Book “Making Your Miles Count: taxes, taxes, taxes” (now available on CD). You can find him at www.thrconsulting.ca and thrconsulting.blogspot.com or at 1-877-987-9787. You can e-mail him at: firstname.lastname@example.org.