Waynes World - February 2009
NEW I-9 FORMS & MEDICAL RULE, BLACK
BOXES, THE VALUE OF LIFE, AND...
THE SECRET TO STARTING
A GOOD BUSINESS
by Wayne Schooling
START WITH A SOLID PLAN
Imagine a team of basketball players that never practice, have no game plan or a backup in place to allow for change should something go wrong during the game. Should they expect to meet a professional team on the court and win? Of course not! You are probably laughing because it would never happen. However, imagine you have an idea or think you have a better way to accomplish a goal than someone else. What do you do? You gather up some money, get started and away you go, right? Wrong. There is a reason why 90% of all start-up trucking companies fail within the first two years of inception - because they don’t have a solid business plan!
The “secret” to success is establishing a game plan and learning how to make a profit. It sounds simple, but the vast majority of small company owners are never taught how to make a profit. There are many factors that contribute to financial success or failure, but they all fall into three main categories: revenue, operations and accounting – and there is continuous interplay between these three factors. For instance, establishing a profitable price requires an understanding of all the costs associated with the movement of goods, as well as the ability to allocate your overhead and utilize breakeven costs. Profitable operations require that you, as the owner, take an active role in the day-to-day management of the entire operation.
When examining the revenue of your business, it is important to remember that 80% of your revenue comes from 20% of your customers. Therefore, it may also be said that 80% of your profit comes from only 20% of your customers. As earlier stated, in order for a business owner to accomplish the goal of running a successful company they must know and understand all of the costs. This is the foundation for management-based accounting. The process starts with a highly developed chart of accounts that serves as the road map of the company operation. It starts with revenue and breaks it down into specific expenses.
The best accounting software for your money on the market today is QuickBooks. But NTA discovered that QuickBooks did not have a built-in trucking chart of accounts, so we approached the Intuit organization, which owns QuickBooks, about this problem. They in turn assigned to NTA their closest Certified Professional Advisor to help NTA develop the ultimate chart of accounts in conjunction with one of the best trucking accountants in Southern California. The result is that NTA members now can have the best accounting setup of all for their trucking business.
You simply must identify your costs through this chart of account – you have no choice. You cannot figure out what to charge for a load unless you know the fixed costs, the trucks variable costs, and the individual variable costs. After you figure the numbers out, you can then divide in your mileage and bingo you have your cost per mile. Once you have established your cost per mile, you can now determine whether or not the load will be profitable. You can learn more by obtaining the NTA New Entrant Survival Guide. Visit www.ntassoc.com for more details.
NEW I-9 FORMS MUST NOW BE USED
Employers must now use the revised Form I-9 (Employment Eligibility Verification) for all new hires, and also to re-verify any employee with an expiring authorization, as of February 2, 2009. For more information, contact your local trucking association.
PROOF OF MEDICAL CERTIFICATION
The FMCSA has issued a final rule requiring all interstate truck drivers to prove they have passed a medical examination and proposed a separate rule that would set up a national registry of qualified examiners. The rule would require proof of an exam to obtain and keep your commercial drivers license. This would require all of the states to merge their commercial driver’s license records and truck driver’s medical exam certificates into a single electronic record that law enforcement could check at any time. After the new rule is fully implemented, drivers will no longer be required to carry a medical certificate card with them in their wallets.
SERIOUS CRASHES MAY TRIGGER EOBR USE
The soon-to-be-released federal rule governing electronic on-board recorders on trucks will require all fleets that have serious crashes related to hours-of-service violations put the devices in all of their vehicles. The apparent trigger for a motor carrier is at two compliance reviews that found acute hours violations in a two-year period. In 2007, there were about 4,600 fatal truck-related crashes and 56,000 crashes that caused an injury. The FMCSA said it believes roughly 2% of all crashes are related to fatigue, meaning that the expanded mandate could be applied to as many as 1,200 additional motor carriers.
WHAT IS A HUMAN LIFE OFFICIALLY WORTH?
Recently, the Office of Management and Budget (OMB) changed the value of a human life – setting it at $10 million dollars – which increases the potential benefits to society from the new EOBR rule mentioned above. It is this writer’s opinion that there should be electronic on-board recorders on every truck in commercial use, period! In fact, I think it should be mandatory that they (trucks) be built with them. After all, the pilots have their “black boxes” and they don’t seem to have a problem, so why don’t trucker’s have them? The roads would be safer for everyone.
~ NTA remains a name you can trust. Our website (www.ntassoc.com) is your official U.S. DOT Internet Training Site and we are administrators of a Nationally Accredited Drug and Alcohol Program. If you have any questions, call me at (562) 279-0557 or send me an e-mail to wayne@ntassoc.com. Until next month, “Drive Safe – Drive Smart!”