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5 Ways to Manage an Over-the-Road Trucking Company

When you manage your own trucking company, you’re expected to handle all hauls with complete efficiency; and that’s on top of taking care of a long list of other crucial responsibilities necessary for your company’s survival. Throughout the COVID-19 pandemic, owners/operators have had their hands full as many companies rely on them to fulfill orders and accomplish essential hauls. But even as the workload increases, everything must continue to run smoothly. Experienced truckers know that requires superior management skills.

In this article, we’ll go over the top five responsibilities an owner/operator must handle on a day-to-day basis and how to manage them properly.

1. Clients

A recent survey found 78% of clients have canceled business transactions due to poor customer service quality; no clients equals no revenue. When managing your own trucking company, it’s essential to prioritize your clients in order to develop and maintain consistent, positive relationships. Once you arrange and schedule your hauls, you should communicate the details with clients and keep them in the know in the event of any changes. This demonstrates excellent communication skills and work ethic—two things absolutely necessary in order to create a steady workflow and a stable, profitable company.

2. Health

Nearly 1 in 15 people work in what is considered one of the nation’s unhealthiest industries: the trucking industry. In 2019, a study from Business Insider found 7 out of 10 truck drivers were categorized as obese and about 17% were considered morbidly obese. When you’re sick and not on the road, your company loses revenue and crucial business opportunities. Try incorporating these lifestyle changes to combat any health problems and keep on trucking:

  • When you’re done for the day, take some time to exercise.
  • Develop and maintain a healthy sleep schedule.
  • Cook our pickup healthy meals for yourself; skip the drive-thru.
  • Drink plenty of water.
  • Give up smoking for good.

3. Expenses

On average, the trucking industry rakes in $255.5 billion in revenue each year—but everything comes at a cost, and running your carrier authority is no exception. As a manager, it’s your job to track and manage your company’s expenses using organized and detailed records. In doing so, your company will have a greater chance of surviving, as you’ll be able to track whether your company is gaining or losing money. If you find you’re entering a potential deficit, you need to readjust how you operate and fund the major expenses (e.g. fuel, food/drink, insurance, and rigs) by developing a budget. Of course, there will be unforeseen expenses, so plan ahead by creating an emergency fund. Over time, you’ll learn how much you spend per month and how to lower costs and operate more efficiently.

4. Fuel

It’s crucial to properly manage fuel usage and its expense. On average, truck drivers will log between 2,000 and 3,000 miles per week and more than 100,000 miles per year; this translates to around 53.9 billion gallons of fuel annually. Pair those numbers with the fluctuating diesel prices, and you’ve got a serious expense on your hands. However, there are ways to manage your fuel usage and minimize the cost, such as monitoring your rig’s tire pressure, minimizing idling, moderating your braking, and managing cruise RPM. Not sure if these things are helping you reduce fuel consumption? Try tracking your fleet’s fuel expenses before and after applying these changes, and see how much you save.

5. Taxes

When you own and manage a trucking company, you are responsible for calculating and paying your taxes correctly each quarter, plus filing several tax forms and schedules, such as W-9, 11099-NEC, and Form 1040. If your taxes are not tracked or paid correctly, your business could be in jeopardy. To avoid any missteps, keep a profit and loss statement each quarter, set aside 25 to 30% of your weekly net income, and pay your quarterly taxes on time to avoid penalty charges.

Ready to start your career as an American truck driver? Want to learn more about what it takes to succeed as an owner/operator? Check out our latest post, 5 Things Owner/Operators Should Do to Achieve Success.

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5 Things Owner/Operators Should Do to Achieve Success

Trucking is an expansive and flourishing occupation—and it’s one of the industries that hasn’t slowed down during the current COVID-19 crisis. Companies and essential businesses turned to trucking, heavily relying on owners/operators to deliver their much-needed products across the nation. With this level of productivity and increased activity comes the question of success. What is now deemed “successful” in the trucking industry?

For some people, success is defined by what they have. For truck drivers, success is determined by their quality of work and the professional milestones they meet. But if you’re new to owning and operating your own business, figuring out how to measure success outside of just numbers can seem overwhelming. There’s so much more to success than sheer quantity or numerical values. In this article, we’ll break down the top five things you should do if you’re aiming for success in the trucking industry.

1. Be Positive

Trucking can be a strenuous job, but if you approach your career with set goals and a positive attitude, you’re more likely to beat out the competition and thrive as a business owner. It’s essential to consider your needs and desires to establish your short-term and long-term goals. Write out your goals and treat them as stepping stones to your future. Another tip for success: Try starting your day with “I get to” instead of “I have to.” When you work as an optimist, you can be 20 to 40% more successful than pessimists.

2. Health Matters

Successful business owners know a healthy body leads to a healthy mind, which leads to a healthy business. Researchers at the University of Georgia asked a group of people who make upward of $100,000 per year what helps them find success in their work. At least 75% credited their focus and drive to physical fitness. If your health is compromised by an unhealthy diet or lack of exercise, you’re almost guaranteed to spend more time in a doctor’s office and less time running and growing your business. An unhealthy lifestyle also leads to poor leadership skills and personal qualities, like tiredness and irritability. By staying on top of your health, you’ll be more energized, focused, and capable of taking your trucking business to the next level.

3. Focus Is Key

Business owners become successful by staying focused, committed, and driven. It’s easy to lose focus in the hustle of day-to-day operations; to grow your business, however, try incorporating healthy and productive habits. Each morning, write out your goals for the day then focus on them one at a time. When you focus on too many things at once, you lose up to 40% of your productivity. Working one goal at a time will help you hone in on the day ahead. While on the clock, eliminate distractions and stay committed to your goals. Combine your focus and commitment, and those around you will see you as a driven leader and someone they want to work with.

4. Work Harder and Smarter

Having a business means setting goals, achieving them, then working hard to outdo yourself on your next set of plans. A study from Harvard showed 3% of graduate students had written goals and plans. Ten years later, the 3% were making 10 times more than the 97% who didn’t have written goals. Make your goals achievable, then strive to achieve them. To work smarter, try placing your simple tasks and goals at the start of your day. It’ll give you a sense of accomplishment and help you conquer the more challenging tasks later.

5. Don’t Be Afraid to Fail

Finally, don’t be afraid to fail. It works exactly how it sounds. Things don’t always go according to plan. Some things are past our control, and that’s OK. Successful owners aren’t afraid to leap, even in the face of potential failure. It’s important to lose any fear of judgment and view your losses as learning opportunities. To get to your future, weigh the pros and cons of new options, accept any outcome, then strive for the next best thing.

Now that you have the tools for success, it’s time to get to work.

Interested in learning what it takes to become a successful owner/operator? Check out our post, How to Succeed as an Owner/Operator. For more industry news and content, stay up to date with our blog. Ready to begin your career as a trucker, but need some financial guidance? Visit our website to view our list of services, and contact us with any questions.

Tax Update for Owner Operators and Fleet Owners

IRS Brings Back Form 1099-NEC

The IRS form known as 1099-NEC is returning for the 2020 tax year. The 1099 form has been in use for a long time—it’s the tax form used for independent contractors to report their taxable income. The NEC variant hasn’t always been in use, however, as it was replaced in the early 1980s by an updated, more robust version of 1099 MISC. This year, the form you’ll use to report information about your income as an independent contractor has changed. In this article we’ll describe why that is and what you need to know to be prepared. Filing taxes correctly can save you a lot of time, money, and headache—so make sure to do your due diligence and brush up on what’s new for 2020, and read our other tips for trucking success once you’ve made a plan for this tax season.

Supposedly, the revival of this tax form is in response to the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which now requires businesses to file new information returns that are specific to their 1099 (aka non-employee) workers by January 31 of each year. The PATH Act created new problems with the IRS and its ability to process data, because the due date for 1099-MISC forms those same workers would have to file wouldn’t be due until March 31. In order to skirt this issue, the new version of 1099-NEC, available on the IRS website, contains a new box for indicating non-employee compensation (NEC). Note, the 1099-NEC form isn’t replacing 1099-MISC. Rather, it’s a supplemental form that deals with NEC. As we’ll explain later, 1099-MISC is used to report many different types of miscellaneous income, and for that reason, it still remains in use for employers, businesses, and non-employed contractors alike.

How This Affects Fleet Owners and Drivers

If you work for a fleet or are a fleet owner yourself, it’s important to acknowledge this change. If you’re an operator, this will be the form you’ll have to fill out and supply to both the government and your contract supplier, which is slightly different from the 1099-MISC you’ve likely filled out in previous years and will have to fill out again this year. If you’re a fleet owner, this will be the form you’ll have to issue to your independent contractors in 2020.

Form 1099-MISC, which most seasoned owner/operators should be familiar with, is what’s called an information return businesses of all kinds use to report payments to outside independent contractors. This form is also used for other types of income payments like royalties and rent payments, which only applies to certain types of businesses. Any contractor who makes more than $600 from one particular source will receive a 1099-MISC from that source. For the most part, the 1099-MISC is filled out a lot like form W-2, except it has extra boxes for giving information about non-employed contractors.

The 1099-MISC form is an information return used to report types of payments made to independent contractors. Payments included can come in the form of royalties and rents as well, but for most O/Os, this form will be used to assess what you owe based on what outside businesses paid you during the last fiscal year.

Here’s a full list of income types that can be reported on a 1099-MISC:

  • Royalties
  • Rent
  • Fishing boat proceeds
  • Medical and health care payments
  • Substitute payments in lieu of dividends or interest
  • Crop insurance proceeds
  • Excess golden parachute payments
  • Gross proceeds paid to an attorney

So, What Do You Report on 1099-NEC?

1099-NEC is for reporting non-employee compensation. These include the following taxable payment types to independent contractors: fees, commissions, prizes, awards, and other forms of potentially non-monetary forms of compensation for services rendered. For every 1099-NEC, there are multiple copies that need to be sent to the proper parties.

Use this checklist to make sure your 1099-NEC copies get sent to the proper places:

  • Copy A: Send this copy to the IRS
  • Copy 1: Send to your state tax department, if your state collects income tax
  • Copy B: Send to your independent contractor
  • Copy 2: Send this copy of the state return to your Independent contractor
  • Copy C: To be kept for your business records

Have More Questions about Taxes?

Taxes can be difficult to manage, which is why we make a point to keep our readers updated on the latest changes to tax code and different financial strategies for owner/operators. If you’re interested in what truckers have been doing to find enough capital to stay afloat during the coronavirus pandemic, read our blog on short-term financing. Keep up to date on the state of trucking in America by reading our posts on supply chain and employment topics, which you can find here. If you’re new to trucking, and want to get started with your own fleet or your own rig, contact us with any questions you might have and we can help you get started in a brand new career.

Why Walmart is Hiring a Surge of New Drivers

According to a press release by shopping giant Walmart, the company is expanding their truck driver positions by 500 this year, mainly on the West and East Coast. This is great news for truck drivers in general, but it’s still unclear as to whether increased hiring is a trend we’ll see across the country. The presence of the Coronavirus in the United States has caused a great deal of turbulence in the freight industry over the course of last month, resulting in an increased demand for drivers in some areas, alongside increased complications for the drivers that are managing to stay on the road.

A Surge in Online Shopping

As some economists have predicted, the government instruction for American citizens to stay home whenever possible, and with many states calling for the shutdown of non-essential businesses, Americans have been turning to the internet for their shopping needs. Walmart’s decision to hire more drivers is a direct result of an increase in online orders, according to the retailer, a trend that’s grown persistently in recent years.

The company began dialing up their driver program last year, hiring 1,400 drivers to meet a 3% increase in same-store sales. All of this is good news for truckers, especially because Walmart has taken steps to ensure that their jobs are competitive with other trucking jobs on the market. According to Walmart, their average driver salary is all the way up to $87,500 per year, a result of their all-in rate per mile being close to $0.89. This is a far-and-away a much better deal than the national average salary for truck drivers, which is $43,680 per year. Only 10% of truck drivers earn more than $64,000 per year, making Walmart’s reported salary a bold play for attracting truck drivers. This will surely result in Walmart’s new positions being filled, but it’s difficult to predict whether it will ever make a dent in the national driver shortage America has been facing.

What It’s Like to Drive for Walmart

You can read testimonials from Walmart drivers on their website. One of which describes Robert Sullivan, who’s been driving a truck for twenty years, and working for Walmart for the last two. He describes a breadth of small perks that, for him, really add to his enjoyment of driving for the company. Predictable home time and no-touch freight are some of the best perks of the position, alongside small bonuses like company-paid dry-cleaning services and paid rest breaks, which can make a big difference when it comes to enjoyment on the job. Walmart has recently revamped their onboarding process, making it even more efficient for new drivers to join their fleet.

America Needs More Drivers

There have been reports of large employee demographics being at risk of infection for Coronavirus, which has had a large impact on America’s economic structure. The unemployment rate in America is at a record-breaking 6.5 million at its most recent estimate— nearly double what it was only 25 days ago. There are reports that nearly 2,000 USPS workers have been quarantined over Coronavirus concerns, and it’s impossible to fully understand the scope of the effects Coronavirus has had on any industry.

The world has recognized the importance of truck drivers in keeping local businesses supplied throughout this difficult time, and there has been a lot of good news regarding the country’s efforts to keep more truck drivers on the road. President Trump has relaxed trucking regulations in response to this need, rolling back a law that’s been in place since 1938, which disallows truck drivers for working more than 11 hours per any 14-hour work period. Businesses have been offering free parking and free meals to truckers along the I-80 corridor, and there are reports of truck drivers being cheered upon arriving with their cargo. Before March, the American Trucking Association had issued multiple statements about the incredibly high demand for truck drivers in America, some claiming that there are 48,000 vacant truck driver positions in the country. It’s possible that Walmart’s publicized wage increases may be an indirect result of their inability to staff their trucks by more conventional means.

How You Can Get Started as a Truck Driver

If you’re considering becoming an owner/operator of a semi-truck, now is a great time to do your part and help supply a vital service for the American people. Truck drivers require a Commercial Driver’s License, which is attainable through your local DMV. Check your local Office of Motor Vehicles for their program details. Truck driving becomes increasingly lucrative every single year, but it often takes a significant amount of initial investment to get started. If you need semi-truck financing, contact us, and we’ll help you out, even if you’ve got bad credit or limited driving experience.

How to Succeed as an Owner-Operator

5 Tips for New Semi-Truck Drivers

While being the owner-operator for a semi-truck can be hard work, it can be equally as fulfilling. If you’re new to the industry, you may be asking yourself a lot of questions about what success looks like as an owner-operator. First thing’s first, now is an amazing time to be getting into the booming transportation industry. New retail surges and the growth of online commerce has led to a higher demand than ever, resulting in a national driver shortage. This demand creates better opportunities for drivers, so you’ve made a smart decision by joining now.

Once you get into the business, there are many things that you can be doing to ensure that you flourish in this new role. Here are our best tips to help you achieve the most out of being an owner-operator.

#1: Choose the Right Truck 

When it comes to purchasing your first semi-truck, the wide variety of options can definitely be overwhelming. You can go with a new or used semi, and both have their advantages and disadvantages. While a used truck may appear appealing originally due to its comparatively lower price, older trucks are also a liability for repairs. They have older parts and more miles on the engine, so you might spend more on maintenance than a newer truck. Additionally, with the newly enforced ELD Mandate, you may have to do some work to get the logging device that’s installed in the truck up to par.

While newer trucks have a slightly lower liability associated with them, it is easier said than done when it comes to purchasing. You will have to invest more money upfront due to the overall higher cost. If you don’t have a sizeable amount saved up in the bank, a new truck might not be as realistic of an option for you.

#2: Plan for Repairs 

Planning for repairs is crucial, and it is a big part of every trucker’s life. If you own your truck, you are often responsible for these costs, so it is important to put money aside consistently to manage these costs effectively. Do thorough research and try to best determine your annual maintenance cost, and then put additional funds aside in case of a breakdown or other unexpected damage.

While each semi-truck is unique in terms of exactly how much care it’ll need, consider the mileage, age, collision and damage history of yours to formulate your savings. Additionally, if you sprung for a new truck that came with a warranty, don’t expect that it won’t necessarily need repairs. Even the newest trucks can have issues that won’t be covered by a warranty. Be sure to take good care of your truck; it’s a major money-making tool. Good care can minimize the overall money that you’d dump into repairs that were warranted by poor maintenance.

#3: Put in the Effort

We all want to have a profitable career. The average successful owner-operator makes anywhere from $1.00-$3.00 per mile, but what exactly does it take to make money as an owner-operator? Well, it mostly just takes pure effort. You have to put in the work to reap the benefits, as most carriers or clients won’t offer a salary payment system. Most drivers are paid by the mile or sometimes by the hour. This makes it so that your pay directly correlates to the type of work that you put in. Don’t expect a big salary in this position if you’re not willing to take on ambitious hauls. If you’re looking to make the big bucks, open yourself up to longer and bigger hauls.

Additionally, taking fewer days off in between hauls will not only boost your profits, but it can make you a more attractive option to potential carriers who are trying to get their cargo moved as quickly as possible.

#4: Seek out Successful Carriers

If you’re in this for the long haul, pun intended, job security is key. Look for an employer that is doing well themselves, as that gives more potential to your future with them. With the national driver shortage, many carriers are struggling, but as a driver, finding ones that still manage to be profitable will open up many more possibilities. Finding employment with a booming carrier translates into more hours and increased job security. Massive corporations such as Amazon, Walmart, and Uber have all been flourishing in this new modern age of trucking and have continuously been hiring while the driver pool of others has been dwindling.

#5: Define Your Goals and Habits

This is a big one. Before you get lost in this complex industry, it is important to figure out which route you’d like to pursue. Decide if you’d like to be signed onto a carrier, or possibly drive independently for a company such as Uber Freight. While there are pros and cons to each, the best choice will depend on what lifestyle you crave. While working independently provides freedom and flexibility, it’s not as consistent or dependable. Consider your unique needs and adjust accordingly.

Getting involved in the trucking industry can be confusing and complicated, but luckily, Mission Financial is always here to help you out. Check out our comprehensive blog for industry news and more tips like these!

 

Keeping Semi-Truck Operating Costs Low

Trucking can be an expensive ordeal. This is especially true when you own or lease your own semi instead of driving a company-owned truck. Not only is the upfront cost expensive (hovering around $150,000), but the maintenance and annual expenses also pile up, usually costing around $180,000 to keep a commercial truck in a fleet every year. While many of these costs are unavoidable, there are several things you can be doing to minimize your operating costs to be as low as possible. Here are a few of our suggestions.

Slashing Fuel Costs

Fuel is one of the most expensive parts of semi-truck ownership, making up to 39% of operating costs. Depending on the area of operation, diesel can easily add up to over $70,000 a year alone. If you’re new to the industry, you might be unaware of the extent of this usage. To put it in perspective, the average car uses 500 gallons of fuel per year. In contrast, the average semi-truck uses 20,500 gallons annually, a staggering difference.

To help keep this lofty cost to a minimum, one thing you can do is to maximize your fuel efficiency. Every truck has a “sweet spot” where you’re going fast enough to make all of your appointments on time, but slow enough that you’re not burning unnecessary, excess fuel. To find your sweet spot, try monitoring your current fuel efficiency, and adjust your average speed accordingly.

Another way to cut down on fuel costs is to shop smarter when filling up the tank. As it does with normal automobile gas, diesel prices fluctuate drastically depending on the area. The U.S. national average cost per gallon of diesel hovers around $3.17. This changes by a few cents depending on the exact station and area, but there are a few ways to avoid overpaying. In general, diesel is more expensive on the West Coast. This is mostly due to the famously overpriced California. If you can, try to plan out your route so that you can avoid filling up in this expensive area. Additionally, if you have the resources to do so, alternatives to diesel fuel could potentially help you save on this massive expense.

Getting Affordable Insurance

Insurance is another sizable cost of operating a semi-truck, as there are over 9 different policies to buy and consider. The costs of these policies are usually around 4% of overall operating expenses, which may seem like a small fraction but is really thousands of dollars. While you don’t have a choice in whether or not you purchase these insurance policies, there are a few things that you can do to lower your rates and get the cheapest possible insurance deals.

One of the most important things you can do to lower your insurance rates is to keep your driving record as clean as possible. Drivers without any major infractions are considered less of a financial liability for insurance providers, and this trust translates into lower rates. While adhering to safe and orderly driving practices is important for the wellbeing of the public, it’s also essential for the wellbeing of your pockets.

Avoiding Unnecessary Repairs

Truck repairs can really add up, adding thousands to your annual bill. While it may sound counterintuitive, one of the best things you can do to minimize these costs is to pay more upfront. Being diligent about regular maintenance can actually lower your overall costs by preventing emergency repairs or paying for an accident resulting from faulty equipment. Waiting until equipment malfunctions or breaks down results in having to replace it all together rather than just taking proper care of it to preserve it.

Breakdowns due to poor maintenance can also lead to bigger issues affecting other tuck parts, or they can even leave you vulnerable to accidents that endanger you, the public, and your entire rig. Schedule regular maintenance to keep your semi in pristine working condition.

Schedule Your Routes Carefully

Since most truck drivers are paid by the mile, one of the best ways to optimize your pay per hour is to reduce idling time or time spent sitting in traffic. Any time where the truck isn’t moving is money right out of your pocket. While the conditions might not always be in your control, you can always make your best effort to avoid it.

Try to plan out your routes to avoid heavily congested areas during busy times such as the morning or evening rush. If you have the freedom to do so, take less popular roads during these times to try to skirt around traffic jams. While you might take a slightly longer route mile-wise, it will improve efficiency by allowing you to complete routes faster. Additionally, this can result in safer traveling due to clearer conditions, as traffic jams are often risky in terms of fender benders.

Maximizing Profit

When it comes down to it, driving a semi-truck is your career, and we all want to make a living wage. Keeping operating costs low is the best way to squeeze the most out of your salary. There are several invisible strains on your operation that you might not even realize. For example, truck stops sell more coffee than convenience stores, and the majority of these sales are to big rig drivers. Something as simple as streamlining daily purchases can make a difference in your daily profit margin. While you won’t necessarily be saving thousands by skipping that second cup of joe, making small changes can add up into healthy financial habits that save you big money later on.

For more information about how to get the most out of the trucking industry, check out Mission Financial!

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