Published on April 25th, 2019 | by Sunit Nandi0
Tips On How To Have A Successful Trucking Business
A trucking business can be profitable however the competition is tight. Many entrepreneurs try the business and then fail in the first year.
This usually happens to people who are great drivers. However, they are not well-versed in running a business. Indeed, the trucking business is more than knowing how to drive and choosing the route.
Thus, the tips below will lead you in the right direction. This will aid you to make the transition of how to become a successful business owner.
Support the Proper Market Niche
One of the essential steps on how to become a successful trucking business owner and operator is to support the appropriate market niche. This will affect the small fleet owner. The kind of market you choose will determine the equipment you purchase. This can also affect the rates you charge plus the freight lanes of the service.
The general rule is that the owner-operators must focus on the markets which the large business owners avoid. Consider hauling those that require specialized loads.
As an owner-operator, making good revenues with a dry van can be challenging. There is a wide competition from other owner-operators and large carriers who are pulling these easier loads.
There are various markets that you can choose from. But hauling fresh meat has various advantages. This includes few competitions throughout the year and it can resist recessions. This is the most important of them all.
Know the Operating Costs
It is important to know the operating costs of your business in detail. Otherwise, you will not have any idea whether or not you will make a profit.
Know the fixed costs of your business. These pertain to the costs that stay the same no matter the miles you drive. It can refer to insurance, truck payments, permits, and others.
The next step is to identify your variable costs. This pertains to the costs that depend on the miles you drive. For example, fuel is one variable cost. The longer you drive, the more fuel you utilize. You can use software like gpswox.com/en/fleet-tracking-and-management-software to note of your operating costs.
With the variable and fixed costs, you can determine the ‘all-in-cost per mile’. Whenever you subtract this from your rates, you can get the amount of your profit.
Have a Back Office
The key to staying profitable is to have an efficient back office. With a back office, you can start adding leased drivers into your business.
For DIYs back office, you can do it inside your home. You need to have a laptop, good internet connection, and printer. Accounting software will help you with your business.
Alternatively, you can outsource a back office. However, this can be expensive. If this is your choice, make sure to interview the service provider and know what are the things they offer. Wrong dispatchers can affect your business in the long run.
Prevent Cash Flow Problems
Trucking has an endless cash-flow. You will always need to buy fuel, pay insurance, and pay repairs. Unless you have quick-pays, brokers and shippers can pay the invoices in 15 days and more. With this delay, you can experience cash flow problems in the end.
To solve this, you can use factoring of bills. You can also use software like gpswox.com/en/fleet-tracking-and-management-software. Advance 95% of your invoice and the 5% will be rebated as the shipper pays.