New owner operators may feel overwhelmed with the task of running their business and this can lead to making mistakes when managing finances. To many, it can feel like a rite of passage to have more month left at the end of the money, wondering where it all went. That is because one of the biggest challenges that owner operators face is managing money and tracking expenses.
Small business accounting and bookkeeping can seem like a daunting and time consuming task, but tracking your finances weekly, monthly, or even quarterly, will help you see exactly where your money is going and will reduce the time needed to get everything in order. Managing money as an owner operator is as important as making sure your cars are all strapped down. As an owner operator you are not just a driver but you are the CEO, the dispatcher, and even the secretary.
The most useful way to keep track of your finances is to calculate the cost per mile of all expenses. Start by writing down the total mileage for the month. Spreadsheets work great since they can process calculations and are easily edited. To calculate, take the expense and divide it by the mileage.
If you ran 6,000 miles during the month of February and you want to find the cost/mile of your truck insurance, take the monthly cost of insurance ($1500) and divide it by 6,000 miles.
$1,300 / 6,000 miles = $ .25/mile
The cost per mile can be done weekly or daily to get a view of your expenses, which makes it easier to see where your money is going.
You can add expenses to your load on Super Dispatch. Expenses can be added to each load from the app under the Expenses tab. There you can input the expense and snap a photo of the receipt.
TIP: Keeping track of your expenses and cost per mile could be done on your USDOT required 30 minute break. At the end of the month just simply add all the weeks and you have your monthly finances in order.
Tracking revenue can be tough without the right tools. Spreadsheets work well but you have to remember to input all data.
For me, Super Dispatch has been a great tool for tracking revenue. A weekly report of delivered loads is sent each week to your email and highlights the paid loads for that week, as well as a quick summary comparing the current week to the past week. When tracking company revenue in a spreadsheet be sure to include the company, price, and date the payment was received. The whole point of tracking revenue is to see exactly how much money is coming in. You can include due dates and payment types on the spreadsheet, however, this is only to serve as a record for you for future reference.
One of the biggest mistakes that owner operators make is how they pay themselves. Many owner operators believe that they earn what each load pays.
The truth is that the company, not the owner operator, earns what the load pays.
The truth is that the company, not the owner operator, earns what the load pays. The driver only makes a percentage of what a load pays; the company's revenue has to pay for it's expenses and the driver is one expense. Owner operators should pay themselves as if they were paying a driver. The industry standard is 25% of gross revenue for car haulers.
Most owner operators starting off, fall into the trap of thinking that the company's revenue is the owner's profit; they fail to separate between personal and business finances.
I use Super Dispatch to simplify the process of calculating driver pay with the Driver Pay Report. It allows you to input the percentage pay to generate the driver pay for that pay period. If you follow this mindset, it will discipline you into not spending more than you make.
A majority of small business owners face financial issues because they fail to keep track and manage expenses. We are always told that knowledge is power and this is entirely true when managing a business.
We are always told that knowledge is power and this is entirely true when managing a business.
Small business owners must keep track of all revenue and expenses to understand where the money is going and know how much money needs to come in for the business to be profitable.
Owner Operators in auto transport use a variety of tools to keep track of their business, from things like Quickbooks to paper ledgers to Super Dispatch. Personally, I use the tools and features within Super Dispatch because they save time and simplify the process for me. Regardless of what you start with, you must keep track of all revenue and expenses, and it's a lot less confusing when you keep it all in one place.
If you are puzzled wondering where all your money went, start by writing down all your expenses. When you have all your finances on paper, it is easier to solve the problem of missing money. As an owner operator, you must treat yourself as an employee of the company and not as the CEO. This means you should be paying yourself as a driver and not as the business.
Tom Stec is an Owner Operator at Fury Transport and a customer of Super Dispatch. He occasionally writes guest blogs