If you’re trying to start a trucking company there is both good and bad news. The bad news is that there is plenty of competition in this sector. The good news is that the transport industry is exploding. There’s plenty of room for growth, especially in the LTL market, and is just a matter of getting the advance business capital you need and getting in there. Here are some tips for making your small transportation company a success.
It’s More Than Trucking
One of the reasons that startup transportation companies go under quickly is because they know everything there is to know about trucks, but not about business. A successful business involves figuring out where to get advance business capital, how to choose the most efficient routes, and how to grow a business. If you are aware that you need some business help, you’re already ahead of the game.
Get Advance Business Capital
The first thing you’re going to need is money. If you’ve already got a truck or two, you have a way to get advance business capital. You can get it by using freight factory services.
What Is a Factoring Company?
Freight factoring companies will buy your invoices from you for immediate cash. They are then be paid by the customer or client at the normal time. This allows you to get a cash flow going immediately rather than waiting on client payment, which can sometimes come in weeks and months after delivery. This is a great way to get advance business capital so you can start growing your business, investing in good trucks, or pay off immediate bills.
What Do Trucking Factoring Companies Charge?
Invoice funding companies will take between 1% and 6% of the invoice as payment, depending on certain factors. Those factors can include whether you assume the risk of default on payment or whether they assume it; how big the load is or how frequently you work with them; and the overall creditworthiness of the client in question.
Work Towards Getting the Best Customers
A lot of new trucking businesses use load boards to get their invoices, but this should not be your strategy for the long-term. These are competitive boards where customers are looking for the lowest possible price. Use the load boards to get started but work hard with sales calls to start building your own personal list of clients. You want to have repeat, reliable customers who are sending you loads automatically and paying regularly.
Consider Freight Dispatch
Depending on how large your company is, you may want to use a freight dispatch service to keep everything running efficiently. In the transportation and trucking industry, efficiency equals success. Just a bit of confusion about where to pick up a load, when it was to be delivered, or precisely what was to be delivered could be disastrous. Avoid this by making sure your offices run efficiently. Either get the right people to manage your own office or use the freight dispatch service to get it done.
When it comes time to start getting a few more trucks and a few more drivers, you have to decide whether you’re going to hire full-time drivers or not. Subcontracted drivers are always an attractive choice for a newer business because they can save a lot of money in the short term. Just bear in mind that in the long term this is by far less profitable. You will be getting lower returns from your earnings with subcontracted drivers, so always be working towards hiring your own drivers and owning your own trucks if you want to be profitable in the long term.
When you’re first for loads, it can be tempting to try to undercut all the competition with significantly lower bids. While this might be a decent strategy to get your first few customers under your belt and a bit of a reputation, in the long term you have to take into account all your expenses including repairs, payments, insurance, fuel, etc.
You can make it work in the trucking industry if you’re smart. Get advance business capital, plan for the long game, work efficiently and you’ll be on top in no time.