If you’re thinking of launching a business in the trucking industry, your timing couldn’t be more perfect. US consumers are spending more money on goods than ever and that increased spending has led to increased freight shipments.
Those factors have created a trucking industry that’s currently worth 700 billion dollars.
While there’s a lot of money to go around in trucking, getting your piece of that massive pie is certainly easier said than done. In order to make creating a splash in trucking as simple as possible for you, our team has outlined a few important steps that you’ll want to take in order to launch a freight shipping business.
1. Choose The Right Kind of Truck
What kind of truck are you going to build your business around?
Are you going to drive a refrigerated truck to haul groceries? Are you going to opt for a standard 52-foot van or dry van?
Whatever truck/trailer you opt into, ensure that it’s going to give you the best odds of succeeding in your area. If you buy into a trucking niche that doesn’t have enough demand in your vicinity, you could end up missing out on a ton of opportunity.
Not sure what kind of truck/trailer to buy and which niche to serve? Talk to other owner-operators in your area to see where the work is.
You can also go on “load boards” that are serviced through brokers to see what kinds of freight are being offered in abundance.
2. Think Carefully About Your Rate
We can’t tell you how many freight shipping business owners have gone out of business because they didn’t think carefully enough about their rate.
The story usually goes something like this:
A driver is making $19.00 per hour driving for a company which equals $152.00 per day. The driver then buys their own truck and a client offers them $200.00 per day for the same route.
The driver takes the deal thinking that they’re making more money and then promptly goes out of business.
The mistake that driver made is that they weren’t factoring in the costs of running a business. Things like healthcare, truck maintenance, fuel and more all need to be factored in carefully when accepting rates.
If you neglect to factor in those elements, you won’t last.
3. Build Relationships With Brokers
Brokers build relationships with shippers and get loads from them. Brokers then turn around and sell those loads to drivers at a slightly lesser rate.
In a perfect world, you could cut out the broker and work directly with the shipper (more on that in a moment). To get started though, brokers represent a good way to start getting loads and cash quickly.
Never be afraid to negotiate your rate with a broker.
4. Market to Shippers Directly
In order to get lucrative contracts with shippers, you need to market to them. This marketing can be done by cold calling, emailing, building a marketing funnel online and more.
Building relationships with shippers is a lot more work than getting loads from brokers.
The amount of extra money these relationships will be worth to your freight shipping business though is immense.
5. Keep Fuel Prices Down
Fuel is going to be one of your biggest expenses when you’re the owner-operator of a big rig. Do what you can to keep those expenses as low as possible.
Find a gas station that has diesel nearby your truck’s parking lot and that offers low prices. Then, opt into a rewards program with that station in order to get a few cents shaved off of your rate.
A 10 cent savings per gallon over the course of the year could equal thousands of extra dollars in your pocket.
6. Never Forget About Return Costs
When you do a load for a shipper, you have to drive to your destination and then drive your truck back to your lot. That return trip is all expenses for your business and no income.
Always keep what it costs to drive your truck back in mind when accepting rates.
In a perfect world, you’ll have another client that’ll give you a load to pull going back so that you can profit both ways.
7. Prepare For Cash Flow Issues
Most shippers have net-30+ terms in their invoicing policies. That means that it’s going to take a while for your freight shipping business to actually get paid for its work.
Be sure that you have enough cash socked away to deal with those long waiting periods.
If you need an extra boost when it comes to cash to stay operational, there are a number of factoring companies out there that will buy your pending invoices off of you for a small fee.
Factoring company fees usually range from 1% to 2% of your invoice amount.
Wrapping Up Essential Tips for Starting a Freight Shipping Business
Starting a freight shipping business can turn out to be a lucrative venture in today’s bullish economy. By following our tips above, you’ll put yourself in a great position to be successful right out of the gate.
As your business expands, be aware that there will be a lot of paper work (invoices, bill of lading documents, etc.) that you’ll need to manage and fax. If keeping up with this paper work begins to weigh you down, we always recommend that trucking business owners invest in a physical or virtual assistant to keep their back-office running smoothly.
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