So, you’re thinking about starting a trucking business, but perhaps you aren’t sure how to truly succeed at it. A career as a trucker is both potentially lucrative and rewarding. But at the same time it is incredibly competitive. To be frank, many truckers try to break into the business every year and do not succeed, for whatever reason.
But don’t let that dissuade you. The key differentiating factor is that many can be a good trucker, but not everyone can be a good business owner. The fact of the matter is this: Knowing how to operate a successful trucking business is about more than being able to drive a truck or map out a route.
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Today we will cover five essential steps to ensuring your trucking business is successful. First, you have to make sure you acquire the right equipment for the job.
The Right Equipment
Procuring the right equipment will be the most expensive decision you will have to make as you get your business going. What kind of trucking do you plan on doing? Do you want to go regional or national? Furthermore, what part of the country are you operating in? Will you be going over mountain passes and through hilly regions?
Once you have figured out the application, the next decision is whether to buy or lease the equipment. Buying is straightforward. Like any normal vehicle purchase you put a down payment and finance the rest. These are expensive machines, so rarely will one have the cash on hand.
Leasing the equipment is a bit more complicated, though in some cases you may end up with a lower payment. With a lease you pay a monthly fee for the use of the equipment. Other options are structured in such a way where you own the equipment once the last payment has been made. With leases, there are a dizzying array of options.
In the end, there is no final answer. It really depends on the specific situation you and your business is in. Just make sure you don’t wind up making the wrong choice.
Acquiring Customers
Most new truck operators get their shipping customers from a load board. And while load boards should definitely be part of your long term strategy, they certainly shouldn’t be the only component. Even so, they have many benefits.
Once you have settled on a good, quality load board to rely on, you can begin making sales calls and also building a customer list of your own. While building a customer list is hard work, there are advantages to it. Working with a set group of customers provides you with a level of consistency that’s hard to get when you are always working with new customers.
Bid Smart
While your bid must be low enough to be competitive, you’ve still got a profit to make. The only way you can be sure your bid will meet your needs is to know your expenses. Whether it be truck maintenance, repairs, payments fuel or overhead, you need to know the intimate details of your cost structure.
Once you have that information pinned down, you will know exactly what you need when the time comes to put in a bid. Always remember to bid low, but bid smart.
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Run an Efficient Back Office
The size of your back office needs depends on the type of business you are running. Obviously, a small fleet will need a more expanded back office than a single owner-operator.
Think about your back office operations from a process and procedure standpoint. From utilizing technology to enhance your business operations to streamlining payments and contracts, how well your back office runs could make or break your business.
Keep the Cash Flowing
Cash flow problems are some of the toughest a trucker can deal with. Many shippers pay on a net-40 or net-60 payment cycle. When you have to wait two months to get paid, you can run into some serious cash flow problems.
There are a few ways to combat this, whether it be through freight factoring or using third-party finance companies, the fact is you need to get your bills paid when they are due.
Looking to start a trucking company? Whether you want to run a small fleet or hit the road as an owner-operator, keep these principles in mind!