How to Grow Your Trucking Business
If you’ve been employed in the trucking industry for any amount of time, then you understand how profitable it can be to haul freight. The demand for owner-operators always appears to be high.
If you want to set up a trucking business, then you’ll need to raise capital from a bank, grant agency, or other sources by creating a comprehensive business plan that describes your business idea, details costs and profits, outlines operations, and presents a marketing plan.
After you have raised the capital you need and set up a legal structure, here five things that you will need to do to effectively grow your business:
1. Trucking Authority.
Your first step in business is to get your trucking authority, which basically means that the FMCSA will let you transport freight, and as a motor carrier, you will now be free to search and book loads, as well as set up your own schedule, make decisions on the type of loads to haul and what routes to take. One way of getting this may be through a financial factoring company assisting you with your company's cash flow. Many will bundle a trucking authority in with their other services.
2. Freight Factoring.
Since your customers will expect you to give them 30- to 60-days of credit, this places an additional financial burden on you. This means you will have to initially pay all expenses out of your own profit. One way to cope with paying for the work before you get paid for it is to work with a factoring company. They will buy your invoices then collect the money when it is due from your customers.
3. Marketing and Advertising.
While loadboards may help you get started, they are not a reliable way to build your business. For one thing, you will not be paid what you are worth because there will always be someone willing to do the work for a lower price. For another, you will rarely get steady work from a single client. Most businesses just offer one-time gigs.
In short, loadboards may be convenient but they are a race to the bottom.
Once you develop long-term clients, you will double your earnings. For instance, you will earn only about $10,000 for each truck once a month from a loadboard contract but earn at least $20,000 for each truck once a month from a regular shipping client.
So, for these reasons, your trucking business will not get far unless you create an effective marketing, advertising, and promotional plan to attract new clients.
When developing your marketing plan, you will need to make the following decisions:
- Decide whether you want to do the marketing in-house or outsource the work to a marketing agency.
- Decide how much you want to spend and what return on investment to expect.
- Decide where you will spend the money. For instance, you might use pay-per-click advertising to drive customers to your website to book your services, use Yellow Pages, or place ads in trade magazines.
- Decide how you will track your marketing progress. For instance, you could use spreadsheets, graphs, and charts to analyze your results.
The quickest way to grow your business is by building a fleet. While it’s fine to start with one truck and do all the driving, plan to reinvest your profits, as well as improve your financing options, to buy or lease more trucks and hire drivers.
Simply relying on a single truck and your own driving is not a sustainable business model. Both you and your truck will suffer from wear-and-tear and your business will proceed in fits-and-starts.
5. Run your business like a business
It’s easy enough to forget you’re in business, especially if you only have one truck and do most of the driving. If you do most of the work yourself, you will feel more like an employee than a business owner.
Think like a business owner, and begin by renting office space and hiring employees. It will be better to hire an office manager than to do all the administrative work yourself. Hire staff to manage to paperwork and coordinate assignments. Also, be sure to hire an accountant or outsource this work to a third party. If you don’t manage your books, you will not be able to keep track of your cash flow and balance your budget.
In conclusion, it takes a lot of hard work and planning to be a successful owner-operator, but if you plan well and run your business properly, with plans to grow your fleet, increase your staff, and manage your money well, your business will flourish.