Securing Your Business with Equipment Service Contracts

by TJ on December 19, 2010

Running a trucking operation, whether as a fleet operator or owner-operator, requires you plan for all contingencies.  Even brand new equipment gives out, and how frequently you need to arrange for repairs and overhauls will depend on a number of factors.  If you are a hard driver, are running your semi tractor trailer rig 24/7, 365 days a year, the quality and age of your equipment and the types of roads you are crossing are all going to have an impact.

Bottom line is you need to keep your equipment and running gear well-maintained – even the quality of the maintenance you get is going to have an impact on how well your wheels run, and how much business uptime you get out of your investment.

A major problem is that maintenance and repairs can be required when you least expect it.  You need to be able to finance routine and emergency repairs into your trucking business plan, and that means establishing a budget and sinking fund to take care of these expenditures.

There are a couple of recommendations we can give you.

First: establish service contracts with nationwide providers who can deliver 24/7 service.  You never know where you will be when you need help, so it pays to have a contract in place with a nationwide provider.  You get peace of mind that if anything breaks down on the road, you are going to have the support needed to get yourself back on the road.  This will also help you when it comes to your reputation as a service provider: if you can demonstrate a good delivery record, or can demonstrate that your business has this kind of “risk” and contingency insurance in place, this gives you a competitive edge over less well-prepared competitors.

As a minimum standard, you are looking for towing, tire services and routine, preventative maintenance.

Second: establish a contingency fund to finance equipment maintenance and replacement. Typically, you should set aside 10 cents per mile to go into this fund, and you should maintain it as a separate account so you don’t dip into the funds and fritter them away (that mileage allowance is for total miles, loaded or unloaded).  Don’t rely on your service contract to bail you out every time, because there will come a point when you simply have to replace equipment which no amount of repair work is going to put right.

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