If you’re thinking about starting a trucking company, you must know the operating expenses so you can better manage your business. The expenses that a trucking company could incur are numerous. They may vary depending on your equipment’s specifications, the loads you carry, the runs you select, and even your individual habits.
For instance, on average, fuel costs account for 7% of annual revenue for trucking companies. So, what happens to the other expenses? Read on to find out about the costs that are normally essential for operating a successful business.
As an owner, your truck maintenance payment can be the biggest constant monthly expense. However, there is often not much you can do to minimize your payments when it comes to maintaining your trucks, since this is the most crucial part of your business.
You can also forgo certain maintenance in order to reduce your expenditures, but doing so could be a great mistake. Maintaining your trucks in safe working conditions is mandated by law, and postponing necessary maintenance simply increases the likelihood of a hefty repair cost in the future, or even dangerous accidents on the road.
Instead, plan for these expenses so that you won’t be surprised. Generally speaking, you should anticipate truck maintenance and repairs to account for 10% of your overall costs, with annual tire costs ranging from $1,000 to $4,000.
You can calculate the fuel cost per mile of your trucks by the current fuel price per gallon and by the number of miles you intend to go. Finding your engine’s ‘sweet spot’ will help you save on fuel costs even if you might not be able to do so considerably.
If you’re operating with semi-trucks, for example, think about what would be the best way to reduce fuel costs. There are a few great ways to gain fuel efficiency such as maintenance, minimizing the use of your AC, avoiding idling, etc. In fact, the most fuel efficient semi truck solutions will help you to reduce your expenses dramatically or you can rechannel them to the part of your business that needs them more.
In addition, there are also various products on the market that can help improve the aerodynamics of your trucks and significantly reduce fuel costs. Some aerodynamic solutions include roof farings, side extensions, and wheel covers.
Another important expense to remember is the salary you need to give to your drivers. In the US, a truck driver makes an average yearly salary of $82,446. Since the salary range changes from state to state, you need to do your research about the minimum salary your drivers must be paid and do it accordingly.
Annual Licenses, Permissions, And Paperwork
Don’t forget to include the cost of your yearly licenses and permits. These are regulated by legislation and could differ by state. If you’re interested about the most recent price information, you can contact the appropriate government agency.
Insurance for commercial trucks can be challenging. Spend some time learning about the different coverage options so you can decide what you need. Make sure to do your research on fleet insurance to get the best deal for your company.
You will also need to get health insurance for your employees. While most trucking businesses give health insurance to their employees or contractual drivers, some of them don’t because the coverage is either too expensive or too rigid. If you choose to offer health insurance to your drivers, employee morale will skyrocket and your company will be more attractive to new potential employees.
You should also think about taxes as an expense category. By claiming all of your allowable deductions you can reduce your company taxes, but be careful. Not all expenses are entirely deductible, so you’ll need to be able to substantiate them most of the time. One way to do this is by maintaining your receipts. Make sure you keep thorough records and speak with a tax lawyer or CPA each year.
Transportation Management System (TMS)
The amount of documentation you need to manually fill out is significantly decreased by a transportation management system. You may automate the majority of your processes for a low monthly charge, including single-click invoicing, thorough customer agreements, and International Fuel Tax Agreement (IFTA) reporting. Additionally, you’ll be able to get thorough reports that will aid in your decision-making.
In the grand scheme of things, each and every operational choice that a trucking company makes is a component of its costs. Remember to make the best decisions for your company when it comes to saving money while keeping in mind the safety of your drivers and your vehicles.