Comment: Getting the best advice for your business

By: David Boyce, NZTA chief executive


Looking at starting a new business? NZ Trucking Association could help.

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Getting the right advice and an accurate cost model for your business is the first consideration

Are you looking at starting a new trucking business or are you wondering if your trucks are making a profit? Then take advantage of the free members cost modelling service offered by the NZ Trucking Association. This is a well-respected industry knowledge-based document that will provide the answers you are looking for.

Based on our industry experience, we can analyse your business opportunity or your existing trucking business and see if it stacks up. The detailed cost model considers all the factors that need to be considered: capital, finance, fuel, wages, RUC, R&M, tyres, insurance, depreciation, resale value, and your other overheads.

The cost model details all these costs as per kilometre and per hour. Arming you with the correct information to make informed decisions, negotiate finance or new freight rates.
We’re constantly amazed by the number of people who come into this industry without seeking professional advice or understanding their costs.

Many just accept the contract rates on offer or obtain new work by undercutting the rates of a competitor without understanding their own costs—a sure recipe for future failure. We can benchmark your business against similar operations to your own, providing you with the tools and advice to make your business a success.

Today, more than ever, it’s important that you know this information, with margins continuing to be squeezed by ever-increasing costs and increasing pressure from customers to maintain or even lower your rates.

Getting the right advice and an accurate cost model for your business is the first consideration. We also help you to understand each of the components that make up your total operating costs, starting with the big ones first.

Getting the most appropriate equipment for the task—buy the truck you need rather than the truck you may want. It needs to be fit for purpose. If you’re doing 300,000km per year, then you may be able to justify the flash truck, with all the chrome and extras, but if you are only doing 100,000km per year, then your aspirations need to be more modest with a lower capital cost unit being more appropriate for your situation.

Employ the best people for your business rather than focusing on employing drivers for the lowest wage rate possible and then wonder why they are never making any money. The answer is to employ the best drivers in the first place, pay a competitive wage rate, provide a work environment, including ongoing training that makes your drivers feel valued and respected.

This approach will save you thousands, as good and happy drivers tend to look after your gear better, use less fuel, drive safer, and have better customer skills. An extra $5 per hour might seem a lot but put that against the cost of gearbox and engine repairs or higher fuel use, customer complaints, or worse still time off the road for repairs, and the cost starts to look like a ​​good investment in your business.

Talk to your workshop service provider about your maintenance schedule. By investing in the correct preventative maintenance schedule for your vehicles, you will save thousands of dollars in the longer term, with fewer breakdowns, longer component life, better fuel efficiency, and safer vehicles.

Also reducing that all-important downtime cost if your vehicle is unavailable due to repairs. If your vehicles are off the road, then they are not earning any income. Most new trucks are offered with extended maintenance and warranty contracts that if structured carefully can save you more in the long term.

Most trucking operators will have their vehicles insured, but have they done their homework and sorted out all the small details? If your vehicle has an accident, what is your excess? Do you have cover for a hire truck, will the insurance company write the vehicle off, or do the repairs in a timely manner?

Or will they leave you parked up for months waiting on repairs with second-hand parts? If this is the case, you may be putting your contracts at risk or, worse still, go broke with no income coming in. You also need to consider the type of Carriers Liability Insurance you have, Public Liability, Employers Liability, Sickness and Health and Income Protection Insurances.

Remember that the cost is only one factor to consider; the fine print in the policy is equally as important. Having a broker who will fight for your corner is important at claim time. We can steer you in the right direction.

Look at how your business is financed. Many financial institutions are offering competitive finance at rates only slightly higher than current mortgage rates. Also worth considering is leasing your equipment, which solves the problem of equipment disposal when replacement time arrives.

Long-term rental of your equipment is also an option for some, with most contracts having the bonus of including the equipment maintenance costs and, in many cases, providing replacement equipment if the rental equipment is off the road for long-term repairs. We can advise you on the options and put you in touch with the best people.

Compare your current suppliers to see if you’re getting the best deal for your business. Members of NZ Trucking Association enjoy preferential pricing on fuel, tyres, insurance, finance, and many other consumables.

Getting this advantage for your business can save the average trucking operator thousands of dollars per annum. If you would like to compare against your current suppliers, contact us on 0800 338 338 or info@nztruckingassn.co.nz.

Don’t be the last one to find out about some new legislation after it came into force. Not having the latest information can end up costing you a lot of money. There have been many examples of this in recent years, such as HPMV and RUC changes.

Members of NZ Trucking Association enjoy access to all the latest business information and advice, in many cases before it’s even in the public arena, via the association’s e-mail and ENEWS services and by direct contact with one of the association’s knowledgeable team, giving members a significant advantage.​  

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