Hello again everyone. I'd like to share with you one of my favorite quotes from "Alice in Wonderland" by Lewis Carroll because it's a great introduction to my topic for this blog. Alice is lost in the woods when she meets the Cheshire Cat for the first time.
Alice: I was just wondering if you could help me find my way.
Cheshire Cat: Well that depends on where you want to get to.
Alice: Oh, it really doesn't matter, as long as...
Cheshire Cat: Then it really doesn't matter which way you go.
Unfortunately, that's the way many owner-operators run their business. They often don't know "where they want to get to," don't have goals and even if they do, aren't really sure what they need to do to achieve them.
Exactly how much money will be needed and how will this money be spent? How much is required for truck expenses and how much for personal expenses? How much should you pay yourself for driving? How much will be left over for things like savings and retirement accounts? A budget helps you answer these questions and understand how you should spend your money.
A budget is one of the most effective business tools an owner-operator ever learns to use. Think of it as a financial roadmap that allows you to track income and expenses over time, with the goal of reaching your desired financial rewards. Just as the Road Atlas tells you which roads to travel, which to avoid and where to stop for rest breaks, your budget tells you what you can expect to make each day, each week, each month and each year based on how you operate your truck. The budget is your plan for success in your business-it makes sense of things and helps you predict the future.
A budget also helps you understand when to make changes. By comparing your budget-your plan-to your monthly profit and loss statements-your actual performance-you can determine if you are meeting your goals. You can adjust your operation whenever needed, making timely decisions in order to make the most of your time and investment.
The best time to begin the budgeting process is before you even start your business, but, even if you have been an owner-operator for many years, it's not too late to think about budgeting. Budgeting can help improve the performance of your business and help you recover from a difficult situation. It's also a good idea to update or prepare a new budget any time your business or personal situation changes.
Without a detailed breakdown of your income and expenses, you can only guess at how your business will perform. Don't live settlement to settlement hoping it will all turn out okay. Instead of leaving your profitability to chance, use a budget to achieve the very best results possible.
In my next blog, I'll go into more detail on the budget, including what should be included and the importance of knowing your break-even point.