7 Business Plan Basics for Fleet Owners

You have finally made the decision, and you are ready to take the plunge. You are going to start your own OTR trucking fleet! Your enthusiasm is high, and you cannot wait to get started. Do not move too fast. As with most endeavors in life, if you are going to be successful in this new venture, you need a plan. In fact, the very first step you need to take on the road to achieving your dream is putting together a comprehensive business plan.

This article will help you get started on writing a solid business plan. You will learn:

• Why you need a business plan
• Essential elements of a good business plan
• How to focus on minimizing expenses as you start your business

Why You Need a Business Plan

According to the U.S. Small Business Administration (SBA):

“A business plan is an essential roadmap for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.” 

In other words, a good business plan will describe in detail what you intend to do, and how you intend to do it.

Why is writing a business plan so vital to getting your new company started on the right foot? Here are some of the things developing a good business plan will do for you:

Disciplines you to plan in depth

Only about a third of startups survive for ten years or more. In explaining that dismal reality, entrepreneurship expert George Meszaros cites inadequate short-term and long-term planning as number one on the list of reasons why new businesses fail.

Why is planning such a crucial element of business success? Entrepreneurs are naturally optimistic, or they would never take the risk of starting a new venture in the first place. With that enthusiasm often comes a tendency to overlook potential pitfalls. Planning helps to inject some needed discipline into the process.

Meszaros quotes occupational physician Dr. Graeme Edwards as saying, “It’s not the plan that is important, it’s the planning.” The very act of working through a detailed plan for your new business trains you to carefully think through not only the opportunities, but also the obstacles you will face, and the measures you will need to take to overcome them.

Shows you whether your business is really viable

Writing a business plan helps you to think through the elements of success in your particular market segment. It will encourage you to carefully consider all the factors that will have an impact on whether your business will be able to survive in the short term, and become profitable in the long term.

The planning process will force you to identify specifically what you bring to the table that gives you a reasonable chance to succeed in the face of the stiff competition that characterizes the OTR trucking business. With that information, you will be able to realistically assess whether the hard, cold numbers really support your aspirations.

Compels you to do in-depth research on your market

Getting started as a fleet owner requires a substantial financial investment. Completing the market analysis section of your business plan will require you to do in-depth research on your target market to identify the factors that promise a good return on that investment, as well as the negative factors that, if not proactively addressed, could carry the seeds of eventual failure.

Provides a roadmap for developing your business

Your business plan will outline specific goals you aim to achieve. As each checkpoint is reached, the plan tells you what needs to be done next. If checkpoints are being missed, the plan will alert you to the necessity for proactive corrective measures. For example, if you expected to be making a profit after six months, but at the four month mark you are still far from profitability, that is an indication that some mid-course corrections may be needed.

Helps you get funding

If you will need outside funding to get your new company off the ground, a good business plan is indispensable. There are very few lenders that will even consider offering you financing until they have seen and approved your business plan.

Essential Elements of a Good Business Plan

There is no one way a business plan has to be structured. You just need to be sure to cover the information a reader will need in order to fully understand your business and how it will meet its goals. Here are seven key sections that should be included in your business plan.

1. Executive Summary

As the name implies, the executive summary provides a brief overview of the entire plan. It introduces your company to readers, and outlines the business you will be in, the market environment you will face, the assets you bring to the table, and the steps you will take to overcome marketplace obstacles and make this new venture successful. Although the executive summary appears first in the plan document, it is typically written last, after the body of the plan is completed.

2. Company Description

In the company description section of your plan, you want to give readers insight into the unique identity your business will have. You can do that by answering questions such as the following:

• What, exactly, will your new company do?
• What is its mission?
• What particular market niche will it serve?
• How will your company differ from competitors that are already involved in the market; what makes it stand out?
• How will your company be organized legally?
• Who will be its officers and key personnel?
• What experience and credentials do they have in the industry?

3. Services Provided

In this section you will want to describe the trucking services your company will provide. As a new carrier, you will likely want to concentrate on some specific areas rather than trying to accommodate all types of customers and loads. For example, will your focus be on less-than-truckload (LTL) or on full truckload (FTL) hauling? Will you provide flatbed or perhaps air-ride trailers? What is the main “value proposition” you will be offering that will attract customers?

4. Market Analysis

Building a successful business is all about meeting the needs of the particular marketplace you are serving. That means you must know that market well. Your business plan should demonstrate that you have a good grasp of industry trends and of potential customers and their needs. Your analysis should explain how the unique characteristics of your company will enable it to satisfy the requirements of the particular market niche you intend to serve.

In addition, you need to know your competition. You should be able to name the competitors with which you will have to contend, and identify their specific strengths and weaknesses that provide opportunities for your company to differentiate itself by delivering superior service to customers.

5. Marketing and Sales

This section of the business plan will explain how, based on your market analysis, your company will build its customer base and get loads to haul. Most new OTR companies start by using load boards to find their first customers. However, because load board bidding is extremely competitive, profits from such jobs are low. You will want to develop and build relationships with your own set of loyal customers as soon as possible.

So, in this section you need to answer questions such as the following:

• How will you promote your business to potential customers?
• What media avenues will you use to get your message across to customer decision makers?
• How will you identify and make contact with prospects?
• What procedures will you put in place to actually book sales and collect on your invoices?

6. Financial Projections

This section of the plan is critical for at least two reasons. First, you will need to assure yourself that the revenue potential of the market segment you intend to serve is high enough to outweigh your operating expenses, and thus provide a profit. Secondly, if you will be looking for external funding, the financial projections you provide in this section will be a key factor that potential lenders will examine very carefully.

You will want to address your projected sales, expenses, revenue, and cash flow over at least the next five years. Include supporting information to validate these estimates. Be sure to discuss the assumptions on which your projections are based.

If you will be seeking funding, specify how those funds will be used and why they will be adequate to support your operations until your company becomes profitable.

It is also a good idea at this point to consider how you will handle financial matters. For instance, will you be doing all your accounting manually, or will you utilize such tools as business expense apps and accounting software to help you run your business smoothly? The more detail you can provide about the operation of your business, the more likely it will be for financial institutions to help you with financing.

7. Appendix

It is not necessary to include an appendix, but it can be a convenient place to put additional information, such as resumes, credit histories, letters of reference, and other supporting documents that demonstrate that this new venture has a solid foundation.

Focus on Minimizing Expenses

In making your financial projections, be sure to consider all available means of lowering your operating costs. One way to do this is to choose a business expense app that helps you track all your business expenses. Such an app will help you identify where your money is going and make adjustments as needed to optimize profits.

Another way to lower operating costs is by use of a fuel card like the Fleet One EDGE card. By having your drivers pay for purchases using this card, you will save an average of 12 cents per gallon on fuel, and about $40 on tires. The Fleet One EDGE card is designed for fleets of 1 to 25 trucks, and is accepted at over 8,000 locations.

If you would like to know more about how the Fleet One EDGE card can help your truck fleet minimize expenses, please contact a sales representative.