Ever found yourself at a highway stopping and thinking you want to have more control over your career by becoming your own boss and an owner-operator running your own trucking business? A lot have, but most of them never get to achieve their dream because they end up rushing into it without any type of planning.
You can’t just become a business owner overnight and hope to grow your business to a 100-truck fleet by next Friday. It takes dedication, patience, planning, and hard work. That being said, starting and managing your own company is not a walk in the park, especially in an industry – the trucking industry – where lots of new small fleet owners don’t even make it to the second year of operation.
Good news, though, because since the shipping business is continuously growing due to the fact that more and more products are being moved all over the world, trucking businesses can still be considered as a booming industry. It’s now just a matter of how you manage your company that will dictate your business’ fate. Here are our five tips to get you on the right track of achieving your very own American trucking dream.
Sometimes, it’s in our nature as humans that we act or do something without forethought. Anyone can decide on Friday night that they want to be among those small fleet owners and run a trucking business starting Monday morning. Imagine that’s you, and Monday morning comes, what will be your next steps? Do you know where you have to go? How much money are you going to invest? Do you have an idea of how much you’re going to make? What is the right trucking insurance for you? Are you going to operate your own trucks and find loads from load boards yourself, or are you going to lease? If you’re going to lease, to which company are you going to lease your trucking fleet, and for how much? There are too many questions, right? So, making impulse decisions is definitely a no-no when you’re planning to start your own trucking company. You need to have a road plan if you want to run a successful trucking business.
Yes, we get it, sitting down and writing a proper business plan, as well as writing a cash flow plan, is boring and very theoretical. However, doing this is not only important for your business and your credit score, but it’s also crucial on a more personal level. Planning what you have to do, and writing it down, gives you a clearer vision of various elements of starting and managing a business. It’s like a map that points you to where you have to go. And it somehow gives you a glimpse of whether you’ll have a steady cash flow that can supply your household.
Slow and steady wins the race
Many truckers start their small business and want to grow waaaay too fast. So, what they do is they buy a truckload of trucks, and then very quickly they get overwhelmed and crumble. This shouldn’t be happening if they only had patience.
Before you start growing your fleet, think if it’s already necessary and analyze if your finances permit it. If, after analyzation and computation, you realized that, yes, it’s time to grow your trucking business, do it by purchasing one truck at a time. This way your adjustments won’t be that huge and you can make sure you can keep up the pace. And, of course, there’s this thought that you want to make sure that your drivers are qualified and will take care of your investments, which will also take time. What some recommend is to do a test drive with your drivers before you hire them so you can experience firsthand how they operate and correct eventual mistakes they make. Others suggest to first find the driver before getting the truck. We say look inside your existing network first and see if you know someone who’s a pro in the trucking industry that might need a job. This, somehow, gives you an assurance because you know the person, but you still have to be careful and take the same measures you used with your other drivers. Don’t rush. Hiring truck drivers is one of the most important decisions that you’re going to make, so take your time to ensure that the person you’re hiring is a good fit for your business.
No deal is better than a bad deal
In August 2018, the American Trucking Association (ATA) forecasted a 4.2% rise in transportation volume in 2018, and a growth rate of 2.3% per year from 2019 through 2024 (Source:). This means that the trucking business is booming and sure is a great business. However, this could also mean that more and more people want to start (or have already started) their own trucking business, making the trucking industry even more competitive. Because of this stiff competition, some owner-operators begin to lower their rates, which we believe shouldn’t be a priority.
As the business owner, you surely know the value of the service you’re offering. If you’re confident enough that you’re providing quality service, lowering your rates shouldn’t be on the list of your priorities just to keep up. If your company is known to provide great quality service – and you continue to do so – your customers will willingly pay you at your rate. Although you cannot avoid low ballers, there are still a lot of customers who prefer to pay more for quality service than eventually get a headache from poor service. So, it’s okay to say no and turn down work offers sometimes if you believe that it won’t be profitable for you.
Speaking of profitability, make sure that you measure your profits not just by the amount that is paid. One offer might sound bigger compared to the other, but if you try to compute it, it’s really not. A simple example would be: Deal A offers $600 for a one-day-job and Deal B offers $900 for a shipment that will require a layover and 40% more distance to travel. Depending on the demand you have, Deal A might be much more interesting. Don’t just look at the amount that you’re getting; look also what’s behind it. Use other metrics such as the revenue per mile or per hour so you know that you’re getting the best deal.
Develop a Loyal Customer Base
Being the owner-operator, you should know what sets you apart from the competition – and knowing what sets you apart from your competition goes a long way like you will be able to know what your customers appreciate you for. And because you’re aware of what makes you stand out, you’ll keep on doing it – or you might get motivated to offer more – driving your customers to keep on coming back.
By providing a service that your customers will appreciate, you will begin to develop a solid customer base. And just like in any type of business, having a strong and loyal customer base will help you ensure stable revenue during tougher economic periods. These satisfied and loyal customers also drive word of mouth that will bring in new customers, which will help you grow your business. Make sure you don’t accept any customer with the only goal of growing as fast as possible, though, as this could be fatal. Todd Amen from ATBS recommends: “The ultimate goal is to get freight directly from a shipper. It’s going to be higher paying and consistent. Find that customer that can be your head haul and core freight.”
It’s a Business – Not a truck driving job
You are the owner of your trucking business, meaning you’re in charge of everything. So, in order to run your trucking business successfully, you might want to consider taking classes to learn about the basics of running this type of business. At the end of the day, you are running a business, which is quite different from driving, thus, learning about new skills could be a great help. Otherwise, find the right people to do it for you.
Of course, you can be the owner of the business, making the main investment decisions, and then can simply have a general manager that will be running the business or advising you on major decisions. As the owner-operator, you cannot be afraid to hire people smarter than you – like what they say: “If you’re the smartest person in the room, you’re in the wrong room” - Marissa Meyer. Hiring the right people for the right job not only allows you to learn from them and have a reliable person run your business, but it also gives you more chances to focus on some other areas that you know you’re great at.