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GROWTH DOES NOT FOLLOW SIMPLE ARITHMETIC.
Why? For starters, new equipment is an expense that will almost certainly be taken into consideration. There will also be a need for more drivers, which entails both labor costs and recruiting effort. Managing the larger fleet may take more staff. A big enough jump in workload could warrant an investment in technology that will pay off in the long run, but take a significant initial investment.
An owner in fleet-building mode may want to grab every new opportunity and figure out how to handle it as needed. Running hard and fast feels exciting, while controlled growth requires patience. Ultimately, that patience pays off because the company is
less likely to get unexpectedly thrown off course. Knowing all the numbers coming in and going out allows for better planning, more effective streamlining and an increased ability to absorb small upsets.
Owners with growth in mind need to know the capital required per truck, per lane or per driver on any new route, so that they can calculate their true profit margin. In this expansion space, the company will also need to assess its cash flow cycle, and whether it will require a new source of capital to see the business through as it changes form.
That’s valuable information for getting on the right path to increase profit margins. Getting a clear picture of the profits and costs of similar-sized trucking companies can help with driver recruitment and retention, equipment decisions, technology investments, staffing structure and more.
Somewhere between those humble beginnings and enormous success lies a business plan that includes long-term goals broken down into short-term actions. That plan must include a realistic assessment of what expansion means to the bottom line.
EVERY FLEET IS UNIQUE SO IT’S IMPORTANT TO LOOK FOR THE STORY BEHIND THE NUMBERS.
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