I’m finally settled into our house in Baja. It took five days of driving all told. It wasn’t a hard drive, but five days on the road is a long time and I have a reinvigorated respect for truckers.
While I was on the road, and when it wasn’t my turn to drive, I re-read Profit First. It’s one of my favorite books on small business operations. And a section of the book made me think of a trucker I recently met.
In December, I was on a flight home from Sacramento and I happened to sit next to a chatty Kathy who revealed that he was a truck driver. He told me that he delivered semi-trucks and would fly around the country, pick up a set of trucks, and deliver them somewhere else. You’ve probably seen a semi-truck towing two other trucks stacked on their hitches- that’s what he did.
We talked a lot about his work, his family, and his life, but right as the plane was circling Portland on its descent he mentioned that he used to run a trucking business.
“Used to?” I asked him, “What happened?”
“I financed three trucks, hired drivers for two of them, and drove one myself. Things were going well, but then one of the trucks broke down. The cost of paying the loans and not having all the trucks utilized was too much.”
I asked him what advice would he give to someone trying to start a trucking company. He said that if he could do it again, he would have only bought one extra truck and would have purchased a newer model with less miles on it because it would be a more reliable vehicle and less likely to run into problems.
In Profit First, the author, Mike Michalowicz, advocates operating at a healthy profit and building reserves by running as lean as possible. One of the rationales for this approach is that there’s a relationship that all businesses must maintain between obligations and cash. When you’re running super lean, you can take hits, even big hits, because that relationship is heavily skewed towards cash. But the smaller your profit margin and the closer you are to balancing obligations and cash, the more likely that any bump in the road will cause trouble for the business and even shut it down.