While it can be very profitable, trucking is a highly competitive industry. Each year, many new trucking businesses are opened but a large proportion end up in failure. Often, such businesses are started by individuals who are experienced truck drivers and understand the operational aspect, but who have poor business skills.
Running a fleet takes more than simply being a competent truck driver. The following tips can get you going in the right direction and increase your odds of success.
The Right Equipment
You cannot get business right if you don’t have the right tools. For trucking, acquisition of equipment is the first and most expensive step. You have the choice of buying trucks or leasing them. If you’re not buying in cash, there are a number of purchase and leasing financing alternatives.
One thing you have to bear in mind is that the salesperson’s primary goal is to close the transaction. It’s up to you to know what option is best for you. Think through your business plan, tap on your knowledge of trucks, search the internet for reviews, set a budget, and then develop a clear strategy on what you intend to purchase.
The Right Customers
Majority of new trucking companies will use a load board to get their first customers. While this is a reasonable way to get your business up and running quickly, it’s not something worth relying on long-term. Load boards are ultra-competitive and it’s a race to the bottom in terms of pricing.
You may win many projects but you won’t necessarily make a profit. What’s worse, load boards are full of short-term, one-off loads; it may be a while before a client you had done some work for has something new in the pipeline. That means a considerable part of your time will be spent looking for work as opposed to organizing logistics.
To ensure the sustainability of the business, only use the load board at the very start. Have a parallel strategy of directly calling potential clients and build your own list of steady customers. It’s a tedious path with lots of closed doors and disappointing responses. Nevertheless, it pays off eventually. You’ll have better margins and more solid referrals.
Understand Your Costs
In business, it’s said that the customer is king and that they are always right. What this statement presumes though is that the business owner has already understood what it will cost them to deliver the product to the customer’s satisfaction. Never accept work that doesn’t cover your expenses: fuel, maintenance, repairs, financing repayments and administrative overheads.
When calculating your costs, don’t forget to factor anomalies. For instance, transporting a load through the heart of New York, Miami or other congested metropolitan area adds a new layer of time and complexity. It should therefore cost more.
Another make or break consideration is deadhead miles. Once you deliver a load to the required destination, you must find another load nearby or get the truck back to base. The former option is preferable since it keeps the vehicle generating revenue longer. Deadhead miles can easily kill the business.
Identify Opportunities for Efficiency
Running a successful enterprise is an exercise in focused efficiency and constant improvement. As your fleet grows, you have to make sure that every truck and driver is pulling their weight at all times. You could for instance use a GPS tracker to know where each vehicle is at any time. Such trackers are usually compatible with both smartphones and desktop computers thus ensuring you can monitor movements in real time.
Pay attention to the back office as well. Naturally, the larger the fleet, the bigger the back office. Still, regularly go through back office processes to identify opportunities for automation, merging jobs or outsourcing.
There are many issues that one must think about in order to start and grow a trucking business. Overall, it comes down to having the mentality of a business owner.