The trucking niche is a lucrative one to say the least. Pretty much every business supplying a physical product depends on long-haul trucking or a similar logistics service somewhere in their supply chain, so the demand certainly isn’t going to disappear any time soon! Although the trucking niche has a lot of potential for the right kind of entrepreneur, it’s also fraught with challenges, notably fierce competition. Still, if you’re determined to start a trucking business and milk some profit from it, it’s certainly not an impossible feat. Here’s a guide with some essential steps to starting a successful trucking company.
Equip Yourself
Obviously, a trucking business isn’t going to be able to function without the right equipment, e.g. Goodyear truck tires, load boards, etc. Sourcing this equipment is going to be the first, and in many cases, most expensive step in your mission to establish your trucking firm. Start off by listing the equipment you’re going to need to get your trucking company off the ground, then decide whether you want to buy or lease it. If you don’t have the cash reserves or can’t get a loan to buy your equipment outright, remember that there are various online truck finance alternatives that are generally more accessible. Remember though, the key-holder businesses in these situations are always going to push the option that allows them to make the most money from leasing or selling the equipment. They won’t necessarily give you the option that’s best for you. Due to this, you need to ensure you’re planning how you’re going to source the equipment for your trucking company well in advance. I can’t tell you whether you should lease or buy without looking at your personal finances in detail. Both options have various benefits and drawbacks, and what could be a brilliant plan for one business could be a terrible one for another, so as this blog post explains, thorough research and planning are paramount. What I can say for certain is that if you don’t find the option that’s best for you, it could drive your business into the ground!
Find Good Customers
A lot of new trucking companies will get their first few jobs from a public load board. While these can be excellent for networking and getting yourself established in the first place, they certainly shouldn’t be part of your long-term strategy. Because of load boards being so popular and competitive, you’re going to need to bid exceptionally low to secure any lucrative jobs. Because of this limitation, you’ll have little room left for profits. To make matters even worse, there’s no guarantee that a load board will lead onto any long-term client relationships. A lot of the clients who use load boards already have a trucking company that they go to for the majority of their needs, and only use boards when their business goes through a rough patch and demands are too high for their primary trucking service to accommodate for. By all means, use a load board, but only as a means to get started. With the money you make from these smaller jobs, get some quality marketing materials out there, and start making sales calls and build up a client list. This is going to be a tough time for your business, but with enough hard work you’ll eventually build up a list of companies which will turn into your repeat customers.
Know Your Expenses and Learn How to Bid
One of the significant expenses you can expect is your commercial trucker insurance policy. This is necessary to ensure that your company is protected in case something happens to your equipment, cargo or even your workers.
When you’re bidding for jobs on load boards and similar platforms, you’re going to need to learn a very delicate balancing act. You need to keep your bids low enough to ensure that they stay competitive, and yet high enough for your business to turn a profit. So, how do you submit a bid that achieves this perfect balance? It all comes down to knowing your expenses. The truck and trailer payments you have to keep up with, the fuelling and maintenance costs, any additional loading equipment that’s needed and driver’s salaries all have to be factored in here. Although low charges are obviously going to be attractive to clients, make sure that you’re factoring the cost of your troubles into the price you charge. If you’re driving a load through a heavily congested metropolitan area, like Melbourne or Sydney, the job’s going to be harder, and should cost more. Don’t worry about driving away business here. Every other company is going to charge more for these harder jobs, and you may need the extra capital to cover any difficulties your drivers run into. Finally, as obvious as it sounds, make sure you factor in the cost it will take your driver to get their rig back to the depot after delivering a load. Deadhead miles can take a massive chunk out of your profits if you forget to factor them in.
Beware of Cash Flow Problem
Almost every trucking company will go through problems with their cash flow at some time or another. In a lot of cases, they’ll spring up at a time when you need them the least! At times like these, issues can occur because shippers won’t accommodate for quick-pays. Countless trucking customers run their payments on a net-40 to net-60-day cycle. This essentially means that you could have to wait up to two months to receive payment for a load you delivered today. Other expenses, for repairs and fuel, can happen a lot more regularly. If your trucking business is going through a period of rapid growth, then expenses can easily get ahead of revenues. In this situation, you can run down your cash reserves, and won’t be able to deliver any more loads until you receive payment. In that downtime, your competitors are going to be closing in and stealing your bread and butter. One of the best ways to prevent these kinds of problems in your cash flow is by applying freight factoring to your business. This is a financing model which allows you to get an advance on the deliveries you’ve made, but are still waiting to be paid for.
