Being in trucking can be incredibly profitable...and, also extremely complex and competitive. It’s unfortunate the number of truckers who try to get into the business every year and end up having to close up shop. Why? Because being a great truck driver doesn’t mean you’re a great business person.
Understanding what it takes to run and grow a fleet is so much more complex than knowing what route to pick or what truck to drive. Here are four tips from our customers on how to build a profitable and sustainable trucking company:
1. Focus In On One Market
Make the choice: Do you want to haul specialized loads? Do you want to only do livestock? Or, perhaps meat and fresh produce?
The types of loads you choose and the markets you intend to specialize in determines the equipment you buy, the freight lanes you can service, the trucks you use, and the rates you charge. When choosing a market, consider these three important factors:
- Competition? How many other carriers either big or small are competing for the same loads as you?
- Recession-proof? If a recession were to hit the country, what types of loads would still be in demand? (this is where fresh produce and meat comes into play)
- 365 days a year? What types of loads are in demand no matter what time of year it is?
2. DIY vs. Dispatcher
When you start adding more trucks and drivers to your fleet, it can be a struggle trying to manage it all on your own -- especially without the right tools and support team. When you look at it from this perspective, achieving a certain level of efficiency becomes key to growing and staying profitable. In fact, we definitely believe that the efficiency of your back office is what enables your fleet’s growth and sustainability.
So, what are your options? You can certainly do it on your own and from the cab of your truck if you want to conserve overhead. As long as you have a printer, a laptop, a fast internet connection, and accounting software, you should be good to go. At least until you get even bigger and, subsequently, much busier.
Your other option is to hire a dispatcher. Dispatchers can help find loads, manage drivers, optimize your routing when inclement weather and traffic jams become a problem (and they inevitably will), and handle your billing and collections. Just be mindful of the fact that they can also be expensive. It’s a fine balance.
3. Understand Your Operating Costs
The only way to know how much profit you’ll make every month is if you know what your operating costs are. Let’s take a look at your fixed and variable costs.
Fixed costs are the ones that stay the same no matter how many loads you carry or how many miles you travel. Truck lease payments, permits, insurance, license plates, commercial rent, and the like.
Variable costs change depending on the number of miles you clock in. These include fuel, meals and lodging, phones, tolls, loading and unloading fees, factoring fees, tires, maintenance and repairs, and more.
4. Steady Cash Flow Is Key
Cash flow is critical for big and small fleets. Immediate access to cash is needed to fuel your trucks (one of the highest variable expenses for fleets), repair and maintain your vehicles, and pay your drivers, to mention a few.
If cash flow is an issue for you because of slow payments from brokers and shippers, consider taking advantage of freight factoring. Freight factoring companies like Thunder Funding conveniently take over the collections duties you have with your customers so that you can get your cash quickly. The great thing about factoring is that it allows you to focus on growing your fleet and meeting your business goals. Factoring companies like Thunder Funding also provide other services like fuel cards, which allow you to purchase fuel at the cash price or even at a discounted price rather than using a credit card and over-paying at the pump for credit pricing. And, it’s hard to say no to fuel savings.
Be sure to check out our Thunder Funding Blog for more trucking industry news and trends from the team at Thunder Funding!