Graham Cotter’s passion is for small business, especially the road transport sector, and the significant role it plays in the Australian economy.
Having both managed and owned a small-fleet operation for a number of years, Townsville-based Cotter has witnessed first-hand the difficulties small-business operators face in the day-to-day aspect of running a transport business and has now dedicated his life to assisting other business owners.
To that end, the managing director of KISS Business Management has just released the timely book Don’t Suck The Pencils, a common-sense business guide for every transport operator looking to maximise their bottom line in these challenging times.
Below is an exclusive extract for Big Rigs readers.
Are You Just Buying Yourself a Job?
Often when a new operator sets out and buys a truck, or any other small business, one of the biggest mistakes they make is they end up simply buying themselves a job. And then, when they have to hand over $1500-$2000 every week to the worker doing an 8-hour day, 5-days a week.
Total Hourly Rate
(with 4-weeks annual leave and 10-days sick leave), this can feel like a real kick in the guts. Especially when the worker didn’t have to put up the money and doesn’t have to bear the responsibility of running a business that probably cost more than a million dollars. It doesn’t have to be this way.
The best way to avoid this happening is to know your costs and charge accordingly. I’ve owned many small businesses and one of the first things I do when taking on a new venture is calculate the total hourly rate. To get to this figure, I first look at the total labour hours. This is the total number of hours that it’s going to take me to get the job done. I then crunch the numbers and work out what’s left after the expenses have been and divide this by the hours.This gives you the Total Hourly Rate for my time and effort. Remember though, when looking at the financial costs and liabilities, you have to factor in things like annual leave, sick leave, Work Cover, insurances, and superannuation, as well as any cost you’ll incur covering staff when they have to take time off. And I assure you, they will.
If you have a business where you can take leave without having to get someone to step in for you while you’re away, all the better. But if you have to pay another wage while you’re away, you’ll need to factor this cost into the mix as well.
Knowing Your Costs Leads to Smoother Operation
Understanding all the costs involved in running a business will also lead to more efficient business practises. By undertaking the Total Hourly Rate exercise, and having to work out what costs might arise, you’ll also have to think about what processes and procedures you might put in place to deal with (and minimise) these costs. Not only will this ensure you’re prepared when these costs do arise, and they will, thinking about the ensuing procedures and processes will ensure the administration and compliance obligations of your business function smoothly. As we will discuss in more depth later, managing this aspect of any business is as important as the operational side, especially if you’re planning for growth. And again, this applies equally to taking on a new venture or when re-evaluating your current situation.
Be Open to Everything and Attached to Nothing
Innovation has already played an amazing role in streamlining business administration and compliance. In the coming years, the Wizz kids behind these technologies will continue to develop even more new and amazing tools for small businesses. The small business operator who recognises and adopts these systems will be far better positioned to take advantage of any technological advances, leaping ahead of those who continue to do things the way they’ve been doing so for years. Be open to everything and attached to nothing. This way you’ll find what fits your business now, and more importantly, into the future. Due to their breadth and constant evolution, I will not go into the specific names and details of the apps and software packages available; instead, I encourage you to spend the time researching what is out there and examining how these tools can reduce the time and costs involved with running your business. Remember, your time is your money. And the more you can improve efficiencies, the better the Total Hourly Rate of running your business will be.