Overdrive Magazine

September 2020

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20 | Overdrive | September 2020 Former Landstar-leased owner- operator Gary Buchs recalled making a final delivery to a long-time customer and telling his contact that he was retiring. After offering congratulations, the contact retrieved a business card Buchs had left when he made his first delivery, noting that Buchs had been called for deliveries three or four times simply because he had made a good impression. "That's how you compete with cheap carriers — get as close to the final customer as possible," Buchs said during an Overdrive's Partners in Business webinar. "You don't drive miles. You haul value for profit." Building relationships to stand apart from cut-rate competitors was one of the topics covered by Buchs and trucking radio personality Kevin Rutherford during Overdrive's GATS Week, a series of online presentations held in place of the Great American Trucking Show after it was canceled. The two owner-operator coaches also fielded questions about cost-cutting, knowing your key operational numbers, buying new versus used and avoiding irrational decision-making. "I consider new trucks risky — really risky," said Rutherford, a former small-fleet owner. "It's surprising to me how many people believe the opposite." Some defend buying new by pointing to the warranty, but even with a warranty, a repair could mean a week or more of downtime with no revenue, he said. Truck selection is one of many decisions best evaluated when the operator knows his business numbers, such as cost per mile, gross revenue and net income. Such data can be found on a profit and loss statement, Rutherford said. With that information, Buchs said, an operator can do midrange planning that will guide many decisions. For example, out of the days remaining in the year, how many do you plan to work? To get the net income you need, based on your fixed costs and variable costs such as fuel, how much revenue will you need to average per day? "That can keep you from running loads that are a break-even or a loss," he said. Familiarity with your data is critical in volatile times such as 2020. Rutherford advised not looking to new ventures for now. "You've got to protect that downside," he said. Examine your profit and loss statement, and "start cutting everything that isn't necessary to run the business right now." Both speakers encouraged simplicity in all aspects of record- keeping, because it's human nature to avoid any system that's too detailed or too complex to operate. For maintenance tracking, Buchs recommended keeping repairs separate from routine variable costs such as oil changes and tires. Rutherford noted that if you find yourself tediously tracking specific expenditures, ask yourself if you would ever use the information to make a decision. If not, don't bother. Rutherford said his ProfitGauges accounting product is simple but effective, giving the user a better understanding of fixed and variable costs. For an operator with high fixed costs, "You better get your ass out there and work," he said. "You have a big nut to crack just to break even. If you have low fixed costs, you can stay home more often." Buchs also stressed "behavioral" factors that can mislead owner- operators who often focus on the wrong thing, such as gross revenue, which "doesn't mean anything," instead of net income. Some operators defend their financial decisions, such as discretionary purchases, as helping to defray taxes, and they even chide other operators who end up with a tax bill, telling them they need a new accountant. Yet it's irrational to make tax avoidance a primary goal for an independent contractor, because a high tax bill generally reflects strong net income, both speakers said. As Rutherford noted, if you're consistently paying no taxes, it means either you're cheating or you earned no income. Owner-operator coaches Kevin Rutherford, left, and Gary Buchs answered questions about best practices during Overdrive's Partners in Business webinar. They encouraged rational decision-making informed by a close knowledge of your business metrics. Partners in Business is sponsored by TBS Factoring Service. KNOW YOUR NUMBERS, MAKE GOOD DECISIONS BY MAX HEINE Owner-operator coaches Kevin Rutherford, left, and Gary Buchs answered questions about best practices

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