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Introduction

When thinking about opening a NEMT business, it is important that you consider all of the financial concerns upfront. Having a good accountant on board that understands Transportation Accounting is very important to help set your plan and make sure that unnecessary expenses are eliminated and that you can understand what your bottom line looks like. After all, we are in this to make some money!

First Steps

The key to developing a NEMT Business Plan and working with your accountant is to put together a spreadsheet and list all of the assumptions.  So, what are assumptions? Assumptions are a listing of expenses and revenue that you will strive to calculate for your plan. This will take some time to work on and will be well worth the effort to complete.

What is on the list of Assumptions?

The assumption listing contains the following categories:

  1. The Number of Trips Expected.
  2. Estimated Trips per hour will you do?
  3. OER – Estimated drivers paid hours to revenue hours
  • Staffing

-How Many, What Positions and Wage that you will pay.

– Hourly or Salary, or a combination?

– Calculate overtime

– Targeted turnover rate %

-Uniform Costs

– Payroll Taxes

– Benefits

  • Vehicle Information  / Maintenance

– How many vehicles estimated will you need?

– What type of vehicle, new or used

   – Cost per Vehicle

 – Cost of Equipment Installed (radios, cameras, decals, Mobility Device Securement system.

 –  Repair – Parts needed

 –  Outside Repair vs. In house repairs

  – Accident Repair

  – Towing

   -Tires

  – Oil and Lube- PM Program

  – Shop Supplies

  – Environmental Disposal

  – Major Component – Engines, Transmission

4. License, Registration, DMV Fees, Taxes, Plates, Registration Costs

5. Estimated fuel usage, MPG, and Total Miles Estimated

6. Training Costs / Hiring Costs

       – Training cost per driver to include classroom, btw, and cadet training

       – Substance Abuse Testing program.

       – Physical Exam program.

       – Background checks including Criminal, and DMV

7. Facility Costs 

            – Rent for facility

            – Any leasehold improvements

            – Utility Costs

            – Phone / Communication Costs

            – Shop Equipment

– Shop Supplies

8. Other Information Needed

            – Office Supplies

            – Bank Charges / Misc. Expenses

9. Marketing your Company

               – Web Site Design

               – Advertising

               – Vehicle Wrap

10. Professional Needs- Choose the Right Firm.

            – Legal representative

            –  Banking

            – Accounting /Tax

11. Insurance Costs

            – Vehicle Liability Insurance

            – Worker Compensation Insurance

            – Umbrella Coverages

            – Garage Keepers Insurance

            – Health Insurance

            – Non- Insured Motorist Insurance

            – No-Fault Insurance

Strong Relationships

It is important that in the very beginning you establish strong relationships in the following areas:

Banking

    Accounting / Tax

    Attorney

    Industry Consultant

    Insurance Broker

These professionals will guide you through the process of establishing what the assumptions will be for your business and the proper calculations.  They can also provide you with industry insights and introduce you to the business providers that will assist you in your start-up.

In Summary

As you can see, there is quite a bit of thought that needs to be done before jumping into the NEMT world with both feet. One of the most important items that I did not mention in the list above, is that you will need access to capital. Getting a foothold into the NEMT business is not as easy as some people think. “I’ll just go out and buy a van or two and start hauling passengers” is not something that can be done. Make sure that you take the time to review what is needed to get started and determine if that is the direction you want to go. If so, then proper planning is the order of the day!

Thanks, and See You Next Time!

Frank J. Ciccarella

For more information contact me at frankc@synergizeconsulting.solutions or visit my web at www.synergizeconsulting.solutions.

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