2019 wasn’t an easy year for the trucking industry. Thousands of trucking companies closed down, leaving business owners bankrupt and staff members unemployed. This can be disheartening to hear, especially if you’re running a trucking company. Your trucking business doesn’t have to end up in the dumpster. With proper management and trucking business loans, trucking companies can be very profitable. Here are five secrets you need to know about running a successful trucking business.
- Create or Update Your Business Plan
Whether you’ve been in business for years or you just opened your doors, it’s important to update your business plan every now and then. Thankfully, there are various software and apps that help you make a detailed business plan. Having a comprehensive business plan allows you to carefully outline your business strategy.
Every business plan should include the following:
- Executive Summary
- Mission Statement
- Company Description
- Business Structure
- Employment Policy
- Sales Strategy
- Marketing and Advertising
- Financial Forecast
When setting goals, entrepreneurs make the mistake of setting far-reaching goals within a short amount of time. However, it’s important to be realistic because otherwise, you’re just setting yourself up for disappointment.
- Identify Your Target Market Niche
One of the keys to owning a successful trucking company is to support the right market. Identifying your target niche should happen before you open your trucking company. The market niche you choose will determine the type of vehicles you’re going to purchase, the rates you should charge, and the equipment you’re going to buy or lease.
Since the trucking industry is competitive, small-time trucking companies should focus on markets that bigger companies tend to avoid. With that said, you may want to consider focusing on hauling specialized loads.
Think about it; there’s too much competition from larger companies and other trucking firms often haul the “easier” loads. You may need to work twice as hard to maintain decent revenues in a cutthroat industry. Some of the highest paying market niches you can focus on are private fleets, ice road trucking, hauling fresh produce and meat, union drivers, and more.
- Have an Efficient Back Office
Every growing trucking company should have an efficient back office. Trucking companies have two options when it comes to having a “back office”:
- Do It Yourself: The first option is to do everything by yourself. This is more common among startup companies. In this case, you can run your entire operation using a laptop, a stable internet connection, a printer, and a trucking accounting software.
- Outsource Your Back Office: Another option is to outsource it to a dispatcher. Keep in mind that doing so can be expensive, so make sure you have enough funds to back it up. If you choose this option, interview potential dispatchers thoroughly because hiring the wrong one can kill your business.
The importance of having an organized back office becomes more apparent as you start hiring more drivers.
- Have Quick Access to Working Capital
By now, you probably know that running a trucking company is capital-intensive. Fuel, truck repairs and maintenance, insurance payments, lease payments, and so on can be expensive. If you’re like most trucking companies, shippers and brokers often pay their invoices in 15, 30, and even up to 45 days. The costly expenses and the delay in payments can cause a dent in your cash flow, especially during the early years of business.
You can use those pending invoices to your advantage using invoice factoring. With invoice factoring, lending companies will give you a lump sum of money in exchange for your invoices. They can advance up to 95% of the total invoice value within 24 hours. The remaining balance, minus a small fee, will be given to you once your customers pay their invoices.
- Track All Your Expenses
No matter how trivial it is, make sure to track your expenses. To be a successful business owner, you need to know the amount of money that goes in and out of your business. You can use a profit and loss statement or bookkeeping software to track insurance payments, fuel, daily business expenses, maintenance and repairs, payroll, etc.
Once you have all your expenses in one place, you’ll be able to know the cost of running your business and therefore set realistic goals to keep it profitable. You can set a minimum amount for your cost per mile to avoid bring undercharged.
Set Your Business Up for Success with Trucking Business Loans
Just like any other business, running a trucking company requires grit, effort, and a huge amount of working capital. If you aren’t careful with your finances, cash flow issues can easily creep in. Applying for trucking business loans ensures that you have sufficient capital for daily business operations. Just make sure to work with a reliable lending company.