Road Grit! What is an income statement?
I'm going to give you something that is probably very different from what most of you have been taught about an income statement.
But first let's look at what an income statement is. An income statement is very simply the income coming in minus the expenses going out, and that equals profits. Those profits are either going to be the black, which means you are making money, or the red, which means you are losing money.
Most people forget what is most important about the income statement. Many people would say it's the profits. The penny pinchers might say it's the expenses. Those that grow their businesses big understand the income is the most important part of the income statement.
You need to grow revenues in your business because without the income, the expenses don't matter. Most businesses don't go out of business because their expenses are too high, they face new government regulations, they don't have the right contacts, or they aren't well capitalized. They go out of business because they don't generate enough income to offset the expenses and make a profit.
I want you to focus on income generation. Let's say the gross revenue of your transportation office for the month is $20,000. Out of that you have expenses including truck payment, insurance, fuel, payroll, overhead, utilities, and taxes. Let's say those expenses total to $15,000, leaving you with $5,000 profit.
Most of your expenses are fixed with exceptions being fuel and possibly repairs and maintenance. Once you hit $15,000 in income, a large percentage of what you make beyond that goes straight to profit.
The key isn't trying to figure out how to get to $15,000. It's how to get to $20,000 or $30,000 per month. At that point you are seeing the profitability of your trucks.
You can create an income statement very easily.
How much came in?
How much went out?
What was left over?
You could use a piece of paper, an Excel spreadsheet, Quicken or QuickBooks, or hire a CPA. I want you to look at your income statement each month based on how much income or revenue you can generate.
We were taught to watch the pennies and the dollars will come. I disagree with that. In business today, we need to watch the income and how we can make it higher. Without the income, the expenses don't matter.
Matt Manero combines his business brilliance with more than 20 years of hands-on experience in transportation equipment finance. Today, he is a CEO leading four companies that generate over $100,000,000 per year in business with a base of more than 10,000 clients.
Matt launched his first business, Commercial Fleet Financing, Inc., in 1995 with a phone, a folding table and the unyielding confidence of a single client, a trucker. Fast forward 20 years: Commercial Fleet Financing, Inc. made Inc. magazine’s Top 500/5000 list of fastest growing companies in America in 2014. Matt is the creator and personality behind CFFnation.com, the first and only online video network featuring original programming for and by innovators, operators, movers and shakers of the transportation industry.
His companies have been recognized in trade publications such as Overdrive, Transport Topics, Commercial Carrier Journal, and Dealer Solutions Magazine. Matt hosts his own weekly Radio Show aptly named, “The Grit” which airs on lifestyletalkradio.com and also on CFFnation.com. In addition to “The Grit,” Matt has authored a series of quick read books entitled “Tower, Mover and Construction Co. Need to Know NOW”, and also a forthcoming book, “I NEED MORE MONEY,” which reflects his battle to build his business and guides readers in creating their own future and financial success.