When owning your own trucking company one of the most crucial parts of the business is determining profitability. Although it may seem obvious, it can be a very daunting and complicated process. Tracking money in and money out is a key part to calculating revenue and profit per mile. This will help determine you company's financial health.
Always begin this process by tracking any of your expenses. After analyzing your miles and learning your cost per mile you can then begin by examining your companies revenue. By simply subtracting the cost per mile from the revenue per mile will begin to determine the amount of profit for every mile your trucks drive. If you have trouble calculating these numbers you can always consult a certified public accountant to help you. In turn, once you have these numbers start to find ways you can grow the profitability for every mile driven. Are there quicker solutions to reduce downtime or are there ways to haul more for each mile driven?
How This Helps Your Business
Knowledge is power in the fast-changing trucking industry. You need to identify what markets to serve and which lanes that will generate the most revenue. It is equally crucial to know how much money your trucking company needs to charge in order to post a profit. Understanding how to calculate cost, revenue and profit per mile arms you with information you need to successfully negotiate rates with shippers and brokers.
There are several aspects to financial management for your trucking company. It all starts with knowing what it takes to be profitable. Calculating cost, revenue and profit per mile is a key step to putting your trucking company on the road to success.
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