“When men are the most sure and arrogant they are commonly the most mistaken, giving views to passion without that proper deliberation and suspense which alone can secure them from the grossest absurdities.” –David Hume
One of the most frequent scenarios I’ve observed over my years covering the trucking industry is a good driver (male or female) struggling to make ends meet. Same goes for a lot of small trucking companies, too. In most of these cases, the person or carrier in question really has a passion for the business – understands how to drive, load and unload, navigate roads and weather, plus maintain equipment to high, professional standards – yet just can’t seem to make a profit hauling freight.
The horrendous times we’re in now, of course, are even forcing folks with good thrifty business sense off the road, but that’s usually rare. The brutal truth is there are lots of good people in the trucking business that are great at it – at everything, however, except making a decent living from it.
Not all of it is the driver or small carrier’s fault, either – too many times to count, the deck gets stacked against them by underhanded deals, bottom-dollar freight rates, and sleight-of-hand pay schemes. Despite their passion for trucking, the harsh reality of business (unfortunate as this may be) wins the day
“Trucking is a risky business,” noted my editorial colleague and former owner-operator Tim Brady in a recent blog post. “Equipment is expensive to acquire and maintain, revenue is elusive, (here one day; gone to a cheaper hauler the next), and the liability risk is astronomical with one’s drivers constantly one vehicle away from a lawsuit eleven hours a day.”
Added to this, anyone with a CDL and a few thousand dollars can be trucking in just a few weeks – regardless of his knowledge of the business of trucking, stressed Brady. “So what separates the men from the boys, the women from the girls, when it comes to succeeding in trucking? The answer is another question: Are you bankable?” he asks.
Being bankable isn’t only what your credit rating is or what your company’s Dunn & Bradstreet report looks like, Brady stressed. It has to do with what you know, how much revenue your company produces against your costs, what your accounts receivable look like, and also considers the quality and diversity of your customers.
“Being bankable is not robbing Peter to pay Paul, but managing all of your assets: cash, equipment, property, accounts receivable, customers, employees and contractors, with a plan,” he said. “This plan must include being prepared for the lean times, equipment breakdowns and replacement, and covering the daily cost of operations while waiting for customers to pay. This strategy must not let growth out-pace capacity, and above all, there needs to be a vision of building net worth.”
[You can also hear Tim and I discuss such trucking business issues – in this instance "Why is Cash Flow King?" – during our weekly online radio segment at American Rig Radio.]
Tempering passion with reality is an important point reiterated by another business expert I follow regularly, Professor Jerry Osteryoung from the college of business at Florida State University.
He’s worked with over 3,000 entrepreneurs spread across many different industries over the last 14 years and it’s his belief that while they all had tremendous passion for their business and care about their staff and their customers, they did not succeed by having passion alone.
“My colleague, Barbara Lay, and I were meeting with an individual that had just been laid off and now wanted to start a business. We asked her many times why she wanted to do this as she had been an employee all of her working life – more than 20 years,” Osteryoung noted in a recent missive. “She responded that she had been laid off four times and just did not want to go through this again. She also said that she had so much passion for a new web concept.”
As he and Lay delved more deeply into her idea, they quickly realized that yes, their client had a passion for this web concept, but she did not care if there was a demand for the service. All she wanted was to follow her passion, and she was sure she would be a success.
“One of my favorite ways to deal with cases like these is to remind the person of the classic baseball movie, Field of Dreams. There is a memorable quote from the movie that says, ‘Build it, and they will come.’ I am here to tell you that this is just not true,” Osteryoung said. “What the quote should have said is, ‘They will come only if there is a good reason for them to.’”
When he brought this up to the entrepreneur in question, the woman’s eyes rolled and she just refused to recognize that what she wanted might not play – or pay – well in the marketplace.
“While she had tremendous passion and skills for making the concept work, there was no real demand for the service,” Osteryoung explained. “That’s one of the hardest things about our jobs: we can give people good advice, but they may not follow it. In this case, I am sure that this individual will move forward with her idea, and unfortunately, she will crash. I hope that I am wrong, but it is very risky for an entrepreneur to move forward on faith without any market validation or demand.”
In short, Osteryoung stressed that those in business today definitely need to have a passion for what they do – but not just passion alone. “Passion is definitely a prerequisite for success, but you also must make sure that passion is tempered with wisdom,” he warned.
