Are you about starting a trucking business and you need management strategies? If YES, here are 20 smart tips on how to run a trucking business successfully.
The trucking industry is one of the most successful industries in the United States till date. According to forbes.com, In the U.S, trucks were responsible for transportation of 14, 547 million tons worth of cargo in 2013. This total was approximately 73% of all cargo weight transported in that year.
American Trucking Associations in its report estimated that in the U.S, trucks moved 10.42 billion tons of freight in 2016, which was 79.8% of the country’s freight bill. This goes to show that trucks move the majority of the cargo in the United States.
Most people get into the trucking business because they are great truckers but they end up failing after a while because they 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. You need to know the intricacies involved in the industry. These few tips provided in this article will help you transition from being just a truck owner to a successful business owner.
20 Smart Tips on How to Run a Successful Trucking Business
- Understand the basics of the business
One of the very important ways of being successful in the trucking business is to actually know the business inside out. There are many ways to learn the fundamentals of accounting, management, and marketing, and to make it as an owner-operator or freight broker, you have to understand how those business basics apply to trucking.
To improve your chances, you may be compelled to take a class on bookkeeping and accounting. You need to know a lot more about trucking accounting than you might learn in a class.
Management rules apply to all businesses and they are all different. Managing a truck stop might look different than managing an owner-operator business, but the fundamentals are the same. You can gain these abilities by taking classes or simply by reading books and watching free educational videos online. The Internet has a lot of good information for you. Use it to the advantage of your business.
- Flow with the right market
Another very important step in owning a successful trucking business 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.
- Follow the Regulations
Every industry has regulations that governs the department, including the trucking industry. You must keep to everyone of these regulations if you must have a successful trucking business. In the USA, every state has a website about commercial transportation, with updated information about licences, taxes, safety and other requirements.
So visiting your state’s transportation website is a must-do activity. You do not want your business to start having hiccups along the way. Depending on your type of trucking business, SBA are highlighting these regulations as especially important:
- Federal DOT Number and Interstate Operating Authority: Apply for certifications online on the Federal Motor Carrier Safety Administration’s website
- Heavy Vehicle Highway Use Tax Form (2290)’ With this IRS form, you are complying with tax regulations related to the heavy use of U.S roads
- International Registration Plan (IRP) Tag l
- International Fuel Tax Agreement (IFTA) Decal:
- BOC-3 Filing: File this form to maintain active operating status
- Hire Dependable Employees
Having trustworthy and dependable employees is an invaluable asset to a company. Good drivers and good back-office support helps you run your trucking company more efficiently. The trust you have in your employees to make the right decision can relieve some stress and pressure from your job as the owner. So, for you to have a good trucking business, ensure that you have great employees.
- Pick and choose your Customers
While some people may frown at the idea of being choosy with your customers, but that may be a good way to give yourself peace of mind in this business. When you search for customers, you’ll want to make sure they’re credit-worthy customers.
Make sure the customers agree to pay you a good rate to account for your time and expenses. But most importantly, make sure the customers you agree to work for will pay you. You may have to check the credit-worthiness of your customers to help ensure you will get paid for the work you do.
- Get Contracts not just one-off jobs
Getting a job to haul one load is nice, but if you can secure a contract for a length of time with multiple loads, it’s guaranteed money for your trucking company. But of course, before you secure a contract, make sure you’re working for good customers who agree to pay you enough to cover your expenses in order to turn a profit.
- Bid Jobs Effectively
Bidding on jobs the right way is one way to ensure the profitability of your trucking business. When you bid on jobs, make sure you factor in all of your expenses, including your time. If the customer is requesting anything special or out of the ordinary that will take extra time, make sure you factor that into your cost.
Another thing to consider when bidding is where the load needs to be dropped off or picked up. Try to plan your loads so that your truck is empty as little as possible. As we all know, an empty truck doesn’t make any money, but fuel and labor costs still occur.
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:
- Select your freight lane
- Go to a load board
- Find 10 loads going in one direction
- Call the brokers and find out how much they pay
- Get the average
- Add 10% to 15% to get the price brokers charge shippers
- Repeat the process for the opposite direction
- Make Frequent Preventative Maintenance Checks
Keep your trucks running on the road as long as possible by scheduling preventative maintenance checks. Scheduled checks keep trucks on the road as long and as often as possible. It also prevents unplanned truck troubles. It is usually better to be safe than sorry.
- 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, you get your profit – the amount of money you keep.
- Be Able to Effectively Manage Your Expenses
Your business expenses are something you have to keep on a tight leash if you want your trucking business to be profitable. Budget for your expenses and plan for them by having some cash in reserve. Make sure to leave extra room for unplanned expenses such as truck repairs, new tires or even new equipment.
- Get Feedback And Improve
Quite a lot of people are averse to criticism, but if you want to make it in business, you need these. During the course of running your trucking business, you may be making mistakes, which is normal. But a secret to conducting a business successfully is to learn from mistakes and make improvements.
You should invite suggestions from your clients on social media and also on your business website. Pay attention to concrete suggestions regarding improvements in your services. Consult some experts of trucking industry and see what they suggest to move forward in your market.
- 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. Keeping a steady and positive cash flow can be difficult for trucking companies because of slow-paying customers.
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. One way around this problem is to use freight bill factoring.
Factoring solves your cash flow problem by advancing up to 95% of the invoice, often the day you submit it. The remaining 5%, less a small fee, is rebated once your shipper pays. Many factoring companies provide fuel advances, cards, and other services as well.
- 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.
One solution to this problem s fuel cards. Fuel cards provide your trucking company with discounts on one of your biggest expenses – fuel. The funds from your invoices are deposited directly into the fuel card account. The fuel cards are accepted at more than 10,000 truck stops in the United States and Canada. They are businesses that give out these cards.
- Endeavor to sideline brokers as much as possible
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 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.
- 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. 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.
- Get Your Company A Unique Logo
The potential clients of your trucking business will more often see your company’s logo. In fact, the logo will appear on your advertisements and marketing campaigns. An ordinary and cliched logo may not make any impact on your audience, but a well designed unique logo makes a lasting impression, which helps in winning new customers.
For example, if the choice of colors, typeface, and symbols is strategically made in creating a logo, it can successfully drive potential customers to a company’s business. Your unique logo can draw attention of people toward your business.
- Get your own list
Many new trucking companies use a load board where they get customers by bidding lower prices for their services. Bidding is advisable in the initial phase of your trucking company. But bidding is extremely competitive. Since you have to bid lower prices than the other trucking companies, there is very little room left for profits.
Moreover, load boards do not usually provide long-term relationships with customers. Also, you should be bidding low enough to win it and at the same time it should be high enough to earn you profit. By building your solid list of loyal customers, you are on the right path to start an awesome trucking business.
- Put Trucking Details In Your Website
While a lot of people may not think that a website is that useful in building a trucking business, but it actually is. Your website is a window through which your clients can see details of your trucking company’s business. People mostly look for a company’s website before buying its products or services.
Your clients will also first visit your trucking business website to see what type of trucking services you offer. Your web pages, therefore, must provide all the relevant information that clients usually seek from a business.
Make sure that the site has crucial pages such as about us, contact, home, services, your prices, testimonials, and other pages. But make also sure that your website design is not only unique but user-friendly also. Use images of your business and employees to fill your clients with confidence in your company.
- Take Your Business To Social Channels
Social media is indeed an answered prayer to businesses, trucking business not excluded. There is hardly a business that is not on social media. Even small businesses want to enhance their social media presence by reaching an increasing number of people.
For example, five to six tweets daily about your startup trucking company can generate a lot of awareness for your business. Your Facebook page with trucking images and relevant content can engage many potential customers with your company’s services.
Similarly, your LinkedIn page will be seen by thousands of people who are looking for professional trucking services. But you need to only have as much social media pages as you can handle. It will not do you good to leave your pages unattended to.
19. Continue trucking
Just like in any market, the demand for trucking services will rise and fall. Don’t get discouraged during the tough times. Keep on with the business by working hard and bidding on jobs to grow your business and increase your profits.
Hard work and dedication set trucking companies up for success. Starting a trucking company is a smart choice. With the manufacturing industry grinding on to meet increasing consumer needs and the e-commerce industry exploding, the demand for trucking services to move goods will keep surging, so never give up.
20. Learn to relieve stress
Recreation is needed when you are running a trucking business too. This I guess is why they say that all work and no play makes for an irritable motor carrier owner and trucker. Schedule a hobby or activity that has nothing to do with trucking.
This is your escape from your day-to-day responsibilities as a trucking company owner. Plan to do this at least once a week. Again, don’t forget to provide time and encouragement for your employees and drivers to do the same.