The Importance of a Trucking Business Plan
Every successful business starts with an idea. But to take that idea and turn it into a thriving business, that idea needs to be put into the form of a well written and well-documented business plan.
A proper trucking business plan is a detailed description of the business to be undertaken. It is a dynamic project focused on establishing the myriad of details that are essential to how the business will operate and develop during a given period. It is a roadmap for the entrepreneur to follow, and a valuable source of information for potential investors to make decisions.
And finally, it’s a way to keep your business goals in sight, while still remaining flexible and able to adapt to ever changing trucking trends and the highly competitive trucking industry.
The importance of a business plan for a trucking company cannot be understated. To put this into a historical perspective, consider for a moment the words of the ancient Chinese general, Sun Tzu, who said, “Plan for what is difficult when it is easy.” The period before you launch your trucking company is the easiest step on the journey to a full operational business. The trucking industry is dynamic, fast-paced, and the unexpected can crop up at every turn.
The more time you spend planning before the launch of your company, the better positioned you will be to succeed.
Business plans are vital for a number of reasons:
- Serves as a guide to managing the entire company strategy
- Helps to establish the feasibility of the company/business venture and if the project is ready to implement, or if it still needs more work\Allows you to demonstrate to lenders and investors your ability to meet your obligations, as an entrepreneur and businessman
- Allows you to demonstrate to lenders and investors your ability to meet your obligations, as an entrepreneur and businessman
- Provides the tools to prevent future inconveniences or have strategies prepared to face those that are unavoidable
- Serves to measure the results achieved and make comparison with the anticipated results
- Allows you to actively work towards making your trucking business more profitable
What to Include
Here are the basic nuts and bolts of a business plan for a trucking company. When considering how to build a trucking business plan, keep in mind that the business end of things is complex. As you begin the work of shaping your business plan into a live document, keep reviewing the plan, and make revisions and amendments to the plan to account for any areas that may have been overlooked. A template for your business plan may look something like this:
1) Executive Summary
An executive summary is an overview of the document. The length and scope of your executive summary will vary depending on the type of trucking related business you’re seeking to start. The executive summary is a key part of your documented business plan. It helps to think of the executive summary this way: if key stakeholders read your executive summary, without any additional information provided to them, would they have all the information they need to develop an interest in your plan and make a decision to provide support for the proposed business? If so, your summary served its purpose
2) Business Goals
The best way to set goals is using the SMART methodology
S - Specific
Your goals should be as specific and detailed as possible. There must be no ambiguity in what you are seeking to achieve. Above all, avoid non-specific goals that are unclear and function as the sort of red flags investors and lenders look for when making their decisions.
M - Measurable
Establish metrics to use for determining if your goal has been met. Establishing a methodology for tracking your progress makes the entire venture, from planning to wheels on the road more tangible.
A - Achievable
Change is a natural part of business. So are limitations. When setting your goal(s), make sure they are achievable. If they aren’t, make adjustments to your plan and goals to shift an idea from an unachievable dilemma to the achievable goal.
R – Relevant
The goal must be relevant to your trucking company’s desired program or project and within the limits of any resources you are devoting to the business. Well-defined goals will be relevant, not only emotionally, but also because they bring you closer to your final goal.
T - Time-limited
The goal must have time limits. Understanding what is and what isn’t possible within a defined amount of time is crucial to your success. Setting your goals a time limit will help you to remain focused, stay the course, and succeed.
3) Competitive Analysis
Trucking is a hyper-competitive industry. Fortunately, trucking is also divided into multiple niches such as refrigerated produce, dry loads, and bulk tankers, to name a few of the many sectors within the industry. If you know the type of freight you intend to transport, you will find it easier to identify competitors and potential competitors.
Research your competitors. Once you know who you’re up against, it’s time to dig into their business and find out everything you can about them. What are they doing? What’s working for them? Are they offering any services that could be a threat to your business?
Seek out competitive advantages that make you stand out from the crowded competitive environment of the trucking industry.
4) Cost and Expense
Cost and Expense are two concepts that are often treated as synonyms, but in accounting, they differ substantially.
Cost is defined as the investments necessary for your trucking business to run, such as labor, fuel, software, etc. Costs are treated as investments since they are expected to produce a return in the form of profit for the company.
Expenses are all the payments the company must make for aspects of the business that do not directly impact core production operations, such as the payment of administrative staff salaries (accountants, legal expenses, insurance, etc.). These expenses exist to grease the wheels of a properly functioning trucking business but are not directly related to profits.
Profitability is understood as the degree of profit generated by an investment. It’s the lifeblood of every business. It is a key metric for determining how much has been invested and the amounts returned on that investment.
The most basic and simple way to calculate the profitability of the investment in a trucking business is done by taking the profit and dividing it by the investment, finally the result is multiplied by 100 to know the percentage.
A well-developed business plan for your trucking company will ensure your strategic goals are realized. The more you plan ahead, the more successful your trucking business will become. The trucking industry is the prime example of business competition in its purest form. Look for ways to improve your competitive edge and gain an advantage over your competitors. Then, work that edge into your plan. Once you’ve established a solid business plan for a trucking company, revisit it often. Look at the plan from different angles, examining it for weaknesses to shore up, strengths to exploit, and anything you may have missed in earlier revisions of the plan.