Last Updated on Mar 30, 2020 by James W
Trucking is both one of the most lucrative and competitive niches in the world. Countless businesses depend on long-haul logistics to keep their operations moving. Countless more businesses have taken advantage of that! Although the demand is certainly there, there are many pitfalls tied to this particular niche. Many trucking companies fail within their first year. If you don’t want this to happen to yours, then read on. Here’s my best advice for setting up a trucking company.
The first thing you need to think about id the equipment. A trucking company isn’t much without trucks! This is going to be one of the most important and most expensive decisions in the course of your business. After figuring out the kind of equipment you need, decide whether you’re going to buy it outright, or lease it. Semi truck financing is a pretty big niche in itself, and there will be many different options available to you. Just remember to do your homework. The truck salesmen are going to be chasing the best deal for them. This won’t necessarily be the best deal for you. When you do some extensive research on the market, it will be easier to avoid being taken for a ride.
The next thing you need to sort out is customers. Every business needs customers, and trucking certainly isn’t an exception. When most trucking companies start out, they get their clients from what we call “load boards???. These are essentially online job boards for trucking businesses, and can be a great place to get your name out there. However, you shouldn’t lean on these completely. Load boards are a real buyer’s market. You have to bid for jobs, offering prospective clients the lowest possible rates. Obviously, this is going to eat into your profits! Furthermore, these boards are usually used by clients that need a one-off job done quickly. When you’re running a trucking company, you need to have strong, long-term relationships. Load board clients are liable to drop you as soon as you help them out!
Finally, get a hold on your cash flow as early as possible. You may not think it, but trucking companies run into all kinds of cash flow problems. In a lot of instances, they spring up at the worst possible time! Most shippers you’ll be dealing with will pay on 40 to 60 day terms. This means that if you made a delivery today, you may not receive payment for it until two months later! Be sure to consider this before you start cutting into the budget, or looking into taking advantage of invoice factoring with companies like TBS Factoring. Other, ongoing expenses have to be considered too. Costs for fuel and repairs will come up often. Obviously, if you don’t keep your trucks on the road, you’re going to lose your customers very quickly! Freight factoring and other business loans will offer temporary relief. However, the best cure for your cash-flow problems will be foresight and care.
So, there you have it. It may be tough to get a trucking business off the ground, but once it pays it pays in buckets!