Recovering from the Holidays.

Well here I am, the first day back from holidays diving in the pile of paperwork that has seemed to somehow have magically reproduced over the past few days.

I'm working on a few deals, however I wish the volume would be a little bit higher while setting up my lease accounting system, while finalizing my official written business plan. All of this going on at the same time has given me a sense of exhilaration that I haven't felt in a while. I love digging down to the root of a problem and fixing it. 

Last week, I had the sudden realization, that my business plan that I had toiled so hard on for so long, was basically a big pile of crap. I failed to address many of the questions that investors wanted answers to. And I was unable to communicate my business intent succinctly enough. So, I hired one of my friends, who has done this before, to tear apart my business plan and to assist me in diving in making the needed corrections. Hopefully when my business plan is completed, it will be more than an expensive pile of toilet paper.

Concurrently, I am working to try and get as much financing business as I can. It seems that the holiday season has been unusually slow, even when compared to previous years. I hope that this isn't a new trend. I just completed a thorough analysis of the DMV registration data for 2011, and there did not appear to be the last-minute buy up that we've seen in previous years. The transportation industry still seems like it's being very cautious and only acquiring assets when they are absolutely needed. On the good side of things, it appears that values for 2008 and newer trucks, that are California compliant, have leveled out to become somewhat predictable. I am sure that by 2014, when the next round of omissions compliance issues hit, that many of the transportation companies will have learned from this round and be better equipped to handle any drastic devaluation of their assets.

I am still surprised that many of the small ticket lenders that I work with still have a limited understanding of the compliance issues that the state of California is going through. Many lenders have simply short midterm and not taken into account the drastic rate of depreciation that will hit their assets. As long as you're not repossessing the truck, this shouldn't be a big issue. But, I would expect to see a large increase in the amount of losses that these lenders report. This is one of the reasons that on paper, my company seems so heavily reserved. I would far rather be over reserved and short my own near-term profit reporting then to be under reserved and show a dramatic loss while suffering a cash flow crunch during the next downturn. Trucking as we know has always been cyclical usually in about a year pattern. However, I am willing to bet that this time the cycle, because of California's regulations, is much shorter. I would expect to see a similar pattern that we did in 2008, in 2014.

I hope that everybody has enjoyed a happy holiday season with the family and I hope that you don't forget to carve out some time for them, when you return back to your normal work schedule.

If you have any truck and trailer financial deals that you need assistance with, feel free to send them over. Either to my e-mail address (jwales@spotlightfinancial.net) or via fax (760-927-6254)

Thanks,

John