Opportunities in the trucking industry are vast. Savvy entrepreneurs have caught on and trucking companies have been popping up across the United States for the past several decades.
These businesses can be quite profitable if run properly, but this industry represents a unique niche among small- and medium-sized businesses. While many of the principles of running a small business apply to trucking companies, there are a few things business owners should know before starting a trucking business.
Just as there are many different industries in business, there are several specializations within the trucking industry. You can specialize in healthcare, courier services or refrigerated transport, just to name a few.
Do your research and learn the ins and outs of each niche before deciding which one will work best for you. The more you focus your efforts on a single market segment, the easier it will be to target new clients and jump start your business.
When you start your business, you won’t have a dole of regular customers handing you business. Instead, you will have to compete with other truckers by bidding on jobs. When you bid, factor in fuel costs, time on the road, wear and tear on the equipment and more before bidding. Do your best to plan your trips so that the trucks are empty as infrequently as possible.
This is challenging because you want to offer the most competitive bid, but you can’t afford to compromise on profits. Once you have enough regular clients to sustain operations (and then some), stop bidding! At this point, your focus should be on keeping your existing clients happy and finding more long-term clients to grow your business.
There’s nothing like a good customer. They have ample jobs to keep you busy, reliably pay their bills and provide excellent referrals. These are the clients that you should put under contract.
To find more clients like these, ask for a referral or specifically target similar businesses that you believe would benefit from your services. The more quality customers you have, the more reliable your cash flow will be.
Cash flow is an issue for nearly every business, trucking included. One of the biggest trucking expenses are maintenance and equipment costs. Breakdowns happen, but they don’t have to break down your business. Proactively plan for these costs and keep some cash reserves on hand to cover these costs.
If cash reserves are an issue, establish a business line of credit. This is an account you can draw from, when needed, to continue operations when cash flow is low.
Consider loans for truck and freight if a truck isn’t worth fixing. These loans are specifically designed for the trucking industry to affordably purchase new equipment.
Use a freight factor to handle your invoicing. Most trucking clients take 60 to 90 days to pay an invoice. A freight factor takes the waiting out of invoicing and pays you when the invoice is issued. They take care of the messy task of paperwork and collections, saving you time and a lot of headaches.
There are rules of the road which we are all expected to follow. As a trucking company, one of those rules is to undergo a safety audit. This audit, done by the Compliance, Safety and Accountability Initiative, is done at random sometime within your first 18 months of operations. Register for this audit as soon as possible!
There are more than 777,000 trucking operators working America’s highways. In such a large industry, it’s easy to feel overwhelmed and inadequate. Know that you have what it takes to run a successful, solvent trucking company. Your goals are within reach, you just have to take your time and do your research. Follow these tips and you’re sure to keep your trucking company on the road for many years to come!