Whether you’re an owner-operator or fleet owner, you must control the costs of your operation if you intend to make money. Of course, your biggest expense is the vehicle itself, but what about all those other daily costs that chip away at your profit? Can you lower them if you have a grasp of the big picture? Absolutely. So, let’s take a look at the top 10 expenses truckers should track on their trucking industry reports if they want to succeed in the business.
Difference Between Fixed and Variable Costs
Before completing any reports, you need to be sure you’ve included everything. First, you should classify your expenses into two main categories:
- Fixed costs: Fixed costs are the expenses you’ll have whether or not your truck ever leaves the parking lot. These costs usually stay the same but may change a little from time to time.
- Variable costs: Variable costs are the expenses you incur while driving your truck. This amount varies with the number of miles driven.
Why is this information important? Because tracking fixed costs helps you see the daily expense of running your operation. Equally important, tracking the variable costs let’s you know how much you spend on the road and where you can cut back.
Furthermore, when you compare fixed and variable costs, you can better understand what areas you need to focus on. The information will help you make informed decisions rather than just driving by the seat of your pants.
Top 10 Expenses You Should be Tracking
You became a professional motor carrier for two main reasons: to be your own boss and to make money. In order to meet those goals, you’ve got to stay in business. Knowing where your money is going or where it’s coming from is up to you. So, here are the top 10 expenses you should be tracking:
- Vehicle payments
- Permit costs and license fees
- Insurance premiums
- Cell phone payments
- Accountant costs
- Tires and maintenance
You may not be able to lower your fixed costs by much, but you can shop around and compare prices on insurance and cell phone providers.
Reducing variable costs can really make a difference and may put some extra cash in your pocket. Here are a few examples:
- Prepare your own food for the road.
- Plan lodging and dining locations ahead of time to save money.
- Change some of your driving habits to improve fuel mileage.
- Purchasing high quality parts for maintenance can save money in the long run.
You have many options for cutting costs when it comes to variable expenses, so make a list, and get started.