In today’s ever evolving business climate, lenders are seeking comprehensive business plans when they are considering capital requests from trucking and logistics enterprises that are seeking to establish or expand their operations. In almost all instances where a trucking enterprise is seeking more than $100,000, the lender will typically require a full-scale business plan that showcases every aspect of operations as well as the anticipated financial results over a five-year timeframe. In this article, we are going to discuss the key sections that need to be included in a trucking or logistics focused business plan.
Market Research and Analysis
Financial Plan
Of all the sections of the business plan, this is the most important as it provides the lender with an overview of the anticipated revenues and profits of the business over a five year timeframe. This section of the document should include a profit and loss statement, common size income statement, cash flow analysis, balance sheet, and breakeven analysis. The business plan can also benefit from including a debt service coverage ratio analysis (or “DSCR analysis”), which showcases the annual debt service as a function of EBITDA. Most lenders have a threshold that requires that EBITDA is at least 1.25 times higher than the annual debt service. For most freight and logistics focused enterprises, these entities typically operate far above this threshold.
Operations
In this section of the document, the focus should be on the number of vehicles that the trucking enterprise will have in its fleet, human resources considerations, as well as adhering to the numerous regulatory framework that guide freight-based enterprises. This section of the analysis can also include a discussion regarding the required insurance for liability as well as worker compensation policies.
Marketing
Unlike traditional retail business, trucking enterprises are able to quickly receive orders once they commence operations through load boards as well as relationships with freight brokers. When we develop trucking business plans, we typically place a substantial focus on this aspect of marketing. Beyond relationship developments with brokers, trucking businesses are able to establish dedicated late relationships with product wholesalers, retailers with numerous locations, as well as other entities that have ongoing freight transportation needs. This can be accomplished through direct outreach as well as by maintainingan expansive online presence. One of the things that’s commonly discussed within the marketing plan is the use of a regional search engine optimization campaign so that when online searches are conducted, the website can be very quickly found within the body of the search results.
The Financing
In this section, an overview of how the capital that is being sought should will be allocated. This includes a complete overview of the entire use of debt capital as well as any equity contribution that is coming from the owner. This section of the business plan also typically includes a short discussion regarding the potential sale of the business.
Risk Analysis
As with any enterprise, there are significant risks in launching a new venture. This is no different for a trucking enterprise. In this chapter, an overview regarding the risks that are faced should be addressed including economic risk, financing risk, development, risk, as well as exit risk. One of the most positive aspects for a trucking and logistics enterprise is that these are relatively low risk businesses given that they are able to generate substantial and highly predictable streams of revenue from their operations. The primary risk that is faced by these businesses are severe economic recessions as well as extreme volatility in the energy markets.
SWOT Analysis
This segment of the document discusses the strengths, weaknesses, opportunities, threats. For strengths, many freight and logistics business owners will indicate the regularity of earnings, operational scalability, and relationships with freight brokerages as well as use of load boards for sourcing transportation orders as the primary strengths for this type of business. As it relates to weaknesses, severe changes in the underlying economy can impact profitability. In regards to weaknesses, these businesses can easily scale their operations by acquiring additional operating assets in order to boost year-on-yearrevenues. These businesses are able to acquire ongoing financing for the acquisition of additional trucks and related operating assets. For threats, this industry has relatively low barriers to entry.
Executive Summary
Although we are discussing this chapter last, this is the first chapter of the business plan. The primary reason why it is best to develop this section of the business plan once everything else is finished is that the executive summary is designed to operate as a roadmap for the rest of the document. In this section, you can indicate the amount of capital that you’re looking to raise, the number of initial trucks that you’relooking to acquire, biographical information, as well as location information.
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These are the key elements for a trucking business plan. In regards to length, most business plans typically are 25 to 40 pages. In some instances, trucking business plans can extend beyond this page count if the lender prefers to see monthly and quarterly profit loss in cash flow statements.
Biography
Matthew Deutsch is a professional business plan writer and the owner of Human Intelligence Business Plans. His firm has been an operation for the past twenty years, and it works extensively with entrepreneurs that are seeking to develop or expand trucking, logistics, and freight based enterprises.
