How to Make a Successful Trucking Company: 7 Steps May15

Tags

Related Posts

Share This

How to Make a Successful Trucking Company: 7 Steps

The trucking business can be very profitable, but it is incredibly competitive. Many truckers try to get into the business every year and end up failing.

This outcome usually happens to people who are great truckers but are not good business owners. Knowing how to run and grow your trucking business takes more than knowing how to drive a truck or choose a route.

These seven steps point you in the right direction. They help you make the transition to becoming a successful business owner. Bookmark this article as you will come back to it often.

1. Support the right market niche

The most important step to be a successful owner-operator is to support the right market niche. This step affects small fleet owners as well. The market you choose determines the equipment you buy, the rates you charge, and the freight lanes you can service.

As a rule, owner-operators should focus on markets that the large carriers avoid. In other words, consider hauling specialized loads.

Making decent revenues with a dry van is very difficult as an owner-operator. There is too much competition from large carriers and other owner-operators trying to pull the “easier” loads.

There are many markets that you can focus on. However, hauling fresh produce and meat in reefers has many advantages, including: less competition, year-round work, and it’s resistant to recessions. The last one is very important.

2. Charge the right rate (per mile)

As an owner-operator you need to determine what rate to charge your clients to haul a load. Your rates need to be high enough to give you a nice profit and pay all your operation costs.

You need to know your rates before you start calling shippers and making sales. Remember, when you call shippers, you want to be competitive with what brokers charge them.

There is a simple way to do this:

  1. Select your freight lane
  2. Go to a load board
  3. Find 10 loads going in one direction
  4. Call the brokers and find out how much they pay
  5. Get the average
  6. Add 10% to 15% to get the price brokers charge shippers
  7. Repeat the process for the opposite direction

Now you know how much the lane pays for a round trip – taking and bringing loads back. We outline this process in detail (and provide a great tool) in this article: “Determine your rates (per mile).

3. Determine your operating costs

Knowing your operating costs in detail is important. Otherwise, you have no idea whether you will make a profit.

Determine your fixed costs. These are costs that stay the same regardless of how many miles you drive. Examples are truck payments, insurance, permits, and so on.

Now determine your variable costs. These costs depend on the number of miles you drive. For example, fuel is a variable cost. The more you drive, the more you fuel you use.

Use your fixed and variable costs to determine your “all-in-cost per mile.” This figure is very important. If you subtract your “all-in-cost per mile” from your rates (calculated in step #2), you get your profit – the amount of money you keep.

We explain costs in detail and provide a spreadsheet in this article: “Calculate your cost per mile”.

4. Use the right fuel-buying strategy

Fuel is the largest expense for owner-operators. However, new and experienced owner-operators often buy their fuel incorrectly. They think that the cheapest pump price provides them with the cheapest fuel. This approach is wrong. You could lose hundreds (or thousands) of dollars by doing this.

The issue is taxes. Regular drivers pay fuel taxes in the state where they purchased the fuel. Truck drivers, on the other hand, must deal with IFTA. Truckers pay taxes based on fuel used as they drive through states, regardless of where they bought the fuel originally.

Because of this tax issue, you should buy fuel at the cheapest base price regardless of the pump price. Base price = fuel price – tax. We explain this in more detail and provide a strategy in this article: “Find and calculate the cheapest fuel price”.

5. Work directly with shippers

Load boards and brokers have their place in your business. They can be very useful when you have an empty truck. However, they are also very expensive. Brokers keep about 10% to 20% of the load price. That’s fair, as they must make a living and they provide the shipper (and you) with a service.

Minimize your use of brokers and load boards. Instead, develop a client list of direct shippers. Done right, you can develop a list of reliable shippers that will keep you busy. Charge them a price that is competitive to what brokers charge – but keep everything for yourself instead. We have written the following resources to help you grow your shipper list:

6. Run an efficient back office

Having an efficient back office is key if you want to stay profitable and grow. The importance of the back office becomes more important as you start adding leased drivers to your operation. You have a couple of options.

One option is to do it yourself. You can run your business out of the cab of your truck. All you need is a laptop, an Internet connection, and a printer. You also need accounting software to run your business. There are several options on the market. One well-known solution is Truckbytes, which offers a free entry-level package.

Alternatively, you can outsource your back office to a dispatcher. However, they can be expensive. If you choose this route, interview them thoroughly. The wrong dispatcher can kill your business.

7. Avoid cash flow problems

Trucking is a cash flow-intensive business. You are always buying fuel, making insurance payments, making truck payments, and so on. Unless you get quick-pays, shippers and brokers can pay invoices in 15 to 30 days. Sometimes they take 45 days. This delay can create a cash flow problem for you, especially in the early days of the business.

Source:https://www.comcapfactoring.com/blog/how-to-make-a-successful-trucking-company-one-important-tip/

Call or Click to get 50% OFF for the First Month
Rightnowloads.com
24/7 Dispatching Service 888-852-4238
247support@rightnowloads.com

Protected by Copyscape Plagiarism Software
Load Board

LOAD BOARD FEATURES

Post, Search & Bid on UNLIMITED truck loads
Over 30,000 new loads NO DUPLICATES. Sort by combination of weight, trailer, radius & multiple destinations. Easy to use!
g Owner Operator & Truck Driver Search
Great for Shippers & Brokers! Search Drivers by trailer type and any location. Get Freight Quotes directly from drivers by email.
No Contract Month-to-Month Billing
We have 100% no questions asked Money Back Guarantee policy. You can cancel and renew your membership at anytime.
Mileage & Routing Directions
Calculate dead head miles and total miles of trips. Intergrated Map with US Highways and dirving directions from pickup to deivery.
Credit Score Reports & Factoring
Freight Broker credit score search. Invoice matched with Freight Factoring companies.
Dead Head Mileage Calculator
Calculate dead head miles between trips. Radius search for loads within dead head mile limit.
Bookmark, Notes and Favorites
Easily manage your dispatching services with Bookmarking important shippers or drivers, with custom notes.
Load & Driver Email Notifications
Receive email or SMS alerts of loads or owner operations that match your posted loads or trailer types.
Auto Match Loads & Drivers
After you post your Open Truck or Open Load on the load board you will automatically be matached with drivers or shippers.
Send Load Details to Phone SMS Message
Great for dispatchers! allows for drivers to get info while driving and not stop on the raod. Easy to call back from phone.
Daily Fuel Prices & Locations
Daily current diesel fuel prices at all major truck stop locations.
Upload Forms: Cargo Insurance, W-9, & Permits
Great for dispatching! have all your driver's paperwork ready in one location. Documents can be faxed or uploaded as files.
How To Videos Guides
Step by step video tutorials on how to use all the features of the admin to find loads, find drivers and other resources.
Weather & Road Conditions
Live weather forcast from pickup location and destination. View Current and weekly forecast.