What I Wish I Knew Before Starting A Business

When we formed our LLC over 5 yrs ago, there were many things that I wish I would have known, so I thought I would go over my top ones in the hopes of helping others.

This business is expensive. When we started out my brother had been a company driver so there were not as many costs that he would see directly. If he needed a tire, repairs, or anything else, he would get a comdata check and call it a day.

As an owner operator or fleet owner, all of those costs are directly paid by me, or more specifically my LLC. If our trucks break down, we can't just borrow another truck, the revenue stops.

Essentially we are spending money, and losing money with a non functioning truck.

How I would have mitigated this issue. I would have looked to get a larger line of credit, and if you are unsure the difference in those, watch this video here.

With lines of credit you want to look at about 10-15% of your gross revenues. This is only to be used for short term expenses like fuel, wages, insurance bills, things that will be paid off in less than a year.

Having an adequate line of credit helps you not get into a cash crunch when something inevitably breaks.

That leads me into my next tip. Things break. Things break often and at times you really don’t want them to happen. Driving and owning large trucks is not like your everyday driver. Checking your oil in a passenger vehicle almost never has to be done, but in large pieces of equipment, it seems like something is always leaking.

Make sure the drivers that you are hiring are looking for the small things, so that little things don’t turn into major issues. Always have your trucks looked at for warning lights, even if you think it may be nothing. There are multiple systems that talk to the computer brain and even a small issue can cause major problems.

How to mitigate these issues. If you want to know my thoughts on new vs old trucks In short, I would have only bought a new truck, or one with lower miles to begin with.

We did have the extended warranty on the engine, but guess what, never had issues, yep, the engine. Even though we had that warranty, the rest of the truck was showing signs of wear.

Now I am a firm believer of new trucks, even with the emissions issues, I feel like you still make out in the long run. Putting your drivers in a newer truck means you should and I will put that in air quotes, should have less issues. Make sure your drivers take care of the equipment, by taking care of the drivers. That leads me to number three.

Drivers and the cost of hiring people. When we started out we only had one driver who is my brother. Once we started growing and hide our second driver we needed to get workers comp insurance. we also needed to keep employee files, file additional taxes, order several credit cards and all the things that go along with employees.

Before you hire a driver that's a non-family make sure you look at what the workers comp insurance is going to cost you. I know there's different forms out there and other channels that talk about 1099 a driver but the end of the day the IRS is really cracking down on trucking companies that are paying that way.

If you look at the definition listed under the IRS classification. If you control every aspect of your drivers Day meaning where they pick up when they pick up what equipment they'll drive hours that work things like that then they are considered an employee instead of a contractor.

After speaking with many accountants they have told me that the cost that you will incur if the IRS ever all that you and finds out that you're paying as a 1099 contractor and those were actual employees will negate any money that you would have spent our workers comp insurance.

Now that being said workers comp insurance is the number one cost when it comes to employment. Workers comp insurance is going to go off of the gross revenue that is paid to your drivers on an annual basis. When we started out I didn't even think about workers comp insurance because my brother does not need it as he as in owner of the company and a family member. We pay for occupational hazard insurance through the carrier that we're at least two.

And that's going to lead me into the number 2. when we started out we were leased onto a carrier called Super Service that is no longer in business. When working with the recruiter if you will they send me all sorts of emails kind of telling me what the costs are going to be how much money we can make at all of those things.

Being the naive new Fleet under that I was I just took them at face value and didn't look at all the underline cost that we would have. be sure when you were looking at these contracts from carriers that you are asking the questions of what exactly expenses are coming out of your check, and what your net bring home pay is anticipated to be.

There's a lot of companies out there that'll brag that their gross numbers are but I don't really care what the gross is, I want to know what the net into my pocket is going to be because that's what I have to use to pay bills.

I would have done a little more research with the carriers that we were looking to lease onto before I ever applied for my first loan. I would want to verify in writing what all those exact cost are what I'm going to be responsible for and ultimately what my net pay is going to be.

Once you have an information it's a whole lot easier to plan your business plan and about what your estimated revenues going to be so that you know what you can pay your drivers.

And now for the number one thing that I wish I would have known prior to starting a company. in the beginning it is going to suck. I don't know how else I can say it. I don't want to sugarcoat it because I'm not that type of person, I believe in giving you the honest opinions and the experience that I've had.

I'm not going to sit here and say starting trucking companies going to be easy and that you're going to sleep like a baby at night knowing that money is going to roll in. There's going to be hard times, there's going to be sleepless nights, there's going to be fights with your significant other, your brother, your sister, your cousin, whoever you're involved with in the business.

I'm not going to say that it gets a hundred percent better but I can say after a period of time you're going to settle into a more of a routine an understanding the Ebbs and flows of how the business goes.

If you would have told me even last year that fuel prices were going to go from $3 a gallon to almost $7 a gallon and that the cost of Parts materials everything is going to double or even triple I would have said you were crazy, but that's exactly what we're seeing over the past few months.

I don't even know when we're going to see an end in sight. I can say that a lot of the rates have gone up to compensate for some of those fuel costs but there is a lag. so it's going to take you a little more time to recoup some of your initial investment given these higher costs.

With all that being said I don't regret going into this business overall it's giving me a great sense of pride, it gives me good material here to share on YouTube, it also gives me a better understanding of the industry overall.

In my day job I do deal with lots of different trucking companies, owner operators and other business owners, so being able to relate on this level has its added benefit..

That being said if you need any additional help with your business I would like someone to take a look at your business plan, or even give you a second set of eyes on how your business is running reach out to me through email or go to my website.