The Insurance Review - April 2008
A SIGN OF THE TIMES
By Roland L. Enz - President, California Plus Insurance
It’s the sign of the times – but does it have to be? I cannot tell you how many truck insurance policies cancelled, for non-payment or requested by the insured, in the past six months throughout California. Judging by the activity in our office, it was and still is substantial. It’s the old adage; if everyone is talking about how bad the economy is, sooner or later we will all believe it and there is no sense getting out of bed in the morning.
It boggles my mind how many of you run your trucking business without a clear, simple business plan, which includes monthly income and expenditures, without blowing smoke up your lower extremities. Be truthful and stick to your plan. You have money invested in your equipment, tangent and non-tangent expenses and time – don’t let it slip out of your grasp without putting an honest effort into it.
The failure rate for new owner operators in the first year is over 50%, and of those that survive that year, only half will survive the second. If you are only looking to buy yourself a driving job, stay with your present employer. Being an owner operator is no different than owning any other business – the concept is the same – income verses expenses with, of course, the expectation of a profit. Left out of this equation is reserve. Without proper reserves you’re pushing a wet noodle uphill. Recurring major costs such as insurance renewals, major unexpected repairs, replacements and maintenance, have to be addressed prior to the event.
Can you survive an accident? There are deductibles to consider, lost time and the expense of renting equipment to continue your business. Many times I have seen owner operators faced with catastrophic loss due to their inability to cover those immediate costs. Insurance covers only part of this kind of loss. Take the time to review and understand what is and what is not covered by your insurance policy, with your insurance agent, at the time that you have purchased coverage.
There is no doubt that the economy is in a negative cycle and costs are rising almost daily. But products still need to be moved and the consumption and appetite of the American public for goods and services has to be fed. There is always money to be made by those that want to work. The economic environment is grim, but not dead. For those of you that want to treat your business as a business and dedicate time and effort to it, money can be made.
I am often reminded of an old life insurance salesman that I once knew and his sales philosophy. He was successful in his approach – so successful that he rose to be a vice president of one of the largest life insurance companies in America. Basically, when you are busy, you lose track of the most fundamental of all business axioms – sales. Whether you own a truck, an ice cream shop or sell real estate, you are in the business of sales and service. If you do not spend time pursuing new business on the days you are not driving, than you have no business being in business. There is a mountain of shippers and brokers out there that need your services, and you have to communicate with them – not once – but continuously.
My business is no different than yours; we sell both products and services, we have competitors, and persistence pays the bills. Treat your life and business in a proactive way. Nothing is worse than waking up in the morning and not knowing what is going to be thrown (or not thrown) at you. If you have just started in the trucking business with the promise from one shipper or broker that he will keep you busy, don’t believe it. The chance that you will be disenfranchised within a short period of time has been proven time after time. Prepare yourself in advance; knowledge is paramount in your ability to stay alive in this market environment.
As a participant in the trucking industry, it is important to support those associations that represent you and that will act in your best interest. It is important that the entire transportation industry be heard as one voice, putting your issues in the face of your elected legislators at all levels of government. State as well as national elected representatives have to be in the loop. The major issue facing the industry today is fuel costs – what is going to be done about it? The oil industry is making obscene amounts of money – more than ever before. What efforts are going to be made to curb the cost of fuel? Now is the time to participate and be a part of the continued success of the trucking industry. Don’t just complain – do something!
Going out of business costs money. Think about it. You have a financial obligation in the equipment that you have purchased or leased, personal credit, money invested in your authority and money in your insurance. Walking away from it hurts, but it will hurt more when collection agencies start knocking on your door. Instead of failing or quitting, work smart, work with a plan and succeed.
I wrote an article in February of 2007 that looked at getting into trucking. You can find it in the “Archived Articles” section on 10-4’s website. Look under “Regular Features” and then find my column for February 2007 entitled “Tips for Getting Started in Trucking.” I recommend that you read it if you haven’t already. If you cannot find it, call me – I’ll make sure you get it. And, as always, if you have any insurance-related comments or questions, I can be contacted at California Plus Insurance Service at 1-800-699-7101.