Delivery & Installation, Operations, V10I2

Financial Check Up for Shed Haulers

(Photo courtesy of Glenn Carstens-Peters on Unsplash)

Many people who have started a business had knowledge or skills that translated into a product or service people needed and could use.

Shed haulers have the knowledge and skill to move portable structures from point A to point B—and overcome all of the challenges in between.

Of course, shed haulers need to make money to buy and maintain equipment, acquire permits and licenses, and make a living.

Unfortunately, skills with trucks, trailers, and Mules don’t automatically translate into success on the financial side of the business.

However, shed haulers can improve their financial skills and improve their overall businesses.

MADE FOR SHED HAULING

“Many independent haulers are young men who have been employees without employer or self-employment experience,” says John Zook, a business advisor for Gehman Accounting in New Holland, Pennsylvania. 

“They see an opportunity to get into business and run many hours and miles which in turn puts a lot of stress on their lives which leads to burn out.” 

Finally getting tired of that, he says, they simply quit. (For advice on staying motivated as a shed hauler, turn to page 70.)

“As an allegory, shed haulers can’t sit in every seat of the truck they drive,” says Catherine DuPerrieu, CPA, who leads the assurance practice for Blythe CPAs & Advisors in Paducah, Kentucky. “In this, I mean that a shed hauler is likely in this business because they enjoy hauling, and it is a good opportunity for them.  

“As with many careers, this likely does not translate directly into also being an accountant or bookkeeper.”  

Zook finds that many haulers operate on the cash that is in their accounts and haven’t had much experience in forecasting or cash management. 

“Many haulers live a life of payments,” he says, “and while it is easier to get financing from the equipment manufacturer, it generally is worth your time to check with your local banker because many times rates will be better.”

Zook cautions that sometimes haulers figure if the bank is willing to loan the money, why not borrow it—only to discover later the payments aren’t affordable, and they need to sell out.

He also says that some haulers don’t have a working knowledge of cash flow, don’t know how to read P&L statements, and don’t know how to budget or forecast.

FINANCIAL BASICS

Financial basics haulers need to know, according to Zook, include tracking expenses for each rig, operational cost per mile, operational cost per day, and what the fixed and variable costs are.

“The fixed expenses include vehicle payments, permit costs, insurance, licensing fees, physical damages, and other miscellaneous expenses,” he says. 

“The variable expenses can include costs like fuel, vehicle maintenance, tolls, and taxes.”

Other basic financial knowledge Zook recommends includes knowing how to use accounting software to track income and expenses and then being able to get an accurate P&L and knowing how to create a forecast so a decision can be made whether or not to add or replace equipment.

“These things are important to know because they are helpful when deciding if it makes sense to replace a piece of equipment,” he says.

Two other basics Zook recommends are having a separate bank account for the business and having an LLC or a Corp to hold the assets of the company to minimize the potential personal financial loss in the case of a lawsuit.

Before making any moves related to finances, shed haulers need to determine the state of their finances and their financial knowledge.

“Have a financial advisor/business advisor review your numbers annually,” shares Zook. “Attend financial seminars. 

“In recent years, there has been a group called Shed Hauler Brotherhood (www.shbrotherhood.org), and they put on annual events, which is a place to talk to other experienced haulers in the industry. 

“Talk to friends in the industry because there are haulers that have a good understanding of numbers. Talk to a knowledgeable tax preparer and contact a business advisor for a review of numbers. This could be a quarterly, semi-annual, annual, or one-time review.

“A reputable banker can also help in putting a business plan together and to review financials.”

FURTHER FINANCIAL ADVICE

There are several factors to consider based upon the size of the hauling business, whether someone is a single-person operation or a large multi-asset operation, says DuPerrieu.  

First, the hauler needs to have adequate software for their respective accounting needs.  

“There are several software options for accounting that can be considered to assist in tracking and documenting the daily business operations,” she says. “Every transaction should be accounted for, supported, and frequently reconciled.  

“Without doing these steps it is incredibly challenging to determine the financial well-being of a company and to make strategic business decisions.”  

If this seems too much, DuPerrieu recommends hiring an experienced accountant, either internally or as a third party to assist in developing an understanding and procedures for the business’ financials.   

“This could be on a short-term basis or as a long-term relationship,” she points out. “Lean on relationships with manufacturers and RTO management companies for recommendations of qualified professionals to assist in this process.  

“The more accurate your financial data, the more power there is in operating a successful and thriving hauling business.”

FINAL THOUGHTS

Since many haulers operate on a percentage basis set by the builder when a hauler knows their true costs, then they can more accurately bid on move jobs and other work that they might have the opportunity for, says Zook. 

“If you’re losing money or money is tight, adding another truck won’t fix the problem,” he points out. “Running more hours or miles won’t fix the problem until the rates change. 

“While new shiny equipment is nice, remember that stainless steel and lots of extra lights never makes money.”

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