Agriculture and transportation are related to each other. More than that, agriculture highly depends upon the trucking industry. Once the yield is produced it is the heavy-duty commercial trucks only that transport the yield to the market. Sometimes, there are few trucking organizations that deal in business as well as farming too. They use trucks to transport industrial commodities as well as agricultural commodities. It is recommended that for ascertaining the profits, it is necessary that both the activities must be managed separately. Other than this, there are few other tips too that can be taken in order to manage the farm trucking business successfully as well as profitably:Read More
1. Independent Accounts
The first and foremost recommendation that one must understand is the usage of separate accounts. Furthermore, by separating accounts, a business can understand the strengths as well as weaknesses that involve particular segments. Thus, the best thing an organization can do is separate the accounts of trucking as well as farming segments. It is not a choice but in fact a mandatory thing that every business must do. By doing so, a business will also be able to understand whether the trucking segment is profitable or non-profitable.
2. Financial Power
A profitable business is one that maintains a stable financial position. Talking technically, a business’s profit is directly related to the working capital of the organization. For a better and strong financial position, a business must maintain at least 25% of working capital out of its revenue. In addition to this, this is highly beneficial for an organization as it helps in monitoring its financial strength. One can also ascertain the relationship of working capital with the revenue via which profit and loss can be determined. A better financial position is one in which debt payments can be covered effortlessly without bothering about future or present income.
Video Credit – ET Transport
3. Using Profits
Once a business generates profits, the major task is to use them in a better place. When surplus cash is available in hand a lot of money is spent without proper planning. This sometimes also creates the problem of deficit in the future for business organizations. Hence, in order to stay away from this kind of situation, a business owner must learn how to spend the surplus in a better and productive manner. Areas, where a business can use profits, are interests, payment of income tax, repayment of taxes, and growth and development of business. Other than this, a business can also use the amount in purchasing assets for further expansion of the business segment.
4. Separate Account For All Costs
A business has to incur various costs at regular intervals. Some of these costs are fixed in nature while some are recurring in nature. Thus, it is recommended that for best and profitable results that a business must maintain different accounts for each kind of cost. Here are a few costs for which a business can maintain a separate account:
For trucking, organization fuel is an essential as well as a basic commodity. Thus, one can rightly say that trucking corporations cannot function without fuel. Thus, fuel costs are something that will be incurred at almost every interval. Therefore, for this cost, a business must maintain a separate account. Other than this, consumption can also be recorded which in turn a business can control costs too. By maintaining a different account for fuel costs a business can determine the average costs spent on a particular cost. Thus, a profit margin can also be determined. The average cost per miles tracker is the most important number that you should know how to calculate. To give you an idea about what you can expect to spend and how you can add your own numbers to determine the cost of your trucking company, we have created a list.
Repair and Maintenance
While driving a truck is subjected to a lot of wear and tear as well as depreciation. Thus, even for repair and maintenance, a trucking organization must maintain a separate account under the head of maintenance. Moreover, wear and tear are natural in nature, As the load is increased, the time period of repair also increases. Additionally, by maintaining a different account a business can also ascertain its fuel cost as well as consumption per mile. In case, if there is fluctuation in maintenance as well as repair costs a business must look at the root cause of the problem and try to solve it as soon as possible.
5. Utilizing Time
Other than money, a business must also learn to use time efficiently as well productively. For this purpose, an efficient and skilled workforce must be hired. Efficient employees always do the work on time and do not delay it. Other than this, the workflow must be established that must be followed properly.
Thus, by following the above-mentioned tips and tricks a business can turn their farm trucking business into a profitable venture. Moreover, as the market situations are majorly unstable in nature, hence, a business must try to maintain a proper equilibrium between two businesses so that proper financial stability is maintained.