Trucking Business 101: Start Here
With the trucking industry raising over $875.5 billion in revenue in 2021, there is clearly a profit to be made in the trucking business. As with every other business owner, you’ll want your venture to grow and compete with the leaders of the industry. You’re in luck, as there are 5 essential tips on how to grow your trucking company.
1. Think Outside the Box
Hanging on to just one client is hardly going to be the most successful route to growth. To grow, you are going to have to build a network of customers rather than basing the stability of your business on one manufacturer or one broker.
Building a list of your own shipping clients, and working with a variety can help your trucking company have a sense of reliability which will go far in acquiring more clients in the long run, and therefore grow your business.
A good way to go about this is to visit the local manufacturers in your area, present your business as the solution to all their transportation needs, and build relationships with them.
Not all manufacturers considered need to become clients, only the ones that seem the most profitable and beneficial for business have to stay on the client list.
It may seem like a tedious task at first with mediocre loads, but building relationships with the right clients will give you a basis to command better rates and a good reputation that’ll give you better standing when attempting to approach more clients in the future.
2. Determine Your Costs
Before you can save money, you need to know how much you’re spending.
First, what are your fixed and regular costs, such as your insurance, permits, etc. Next calculate your variable costs, such as fuel. Then subtract your total cost from your rates and you’ll get your profits.
Once you have this you can set goals for how to increase it going forward.
A blog post from Truckstop sets out several tips for newbie truckers to conrol their expenses. Here are their top 6 recommendations to cut trucking costs:
1. Use a Transport Management System (TMS)
You can control loads, make payroll simpler, and automate IFTA reporting with the use of a Transport Management System. A TMS should also let you produce BOLs and invoices and offer comprehensive reporting and data about your company. A TMS will reduce the time you spend on office duties while also saving you money.
2. Calculate your mileage expense.
The most crucial metric you can know for your company is the cost per mile you incur to maintain a vehicle on the road. However, the majority of owner-operators don't spend the time to accomplish this. You can't find cost-cutting opportunities if you don't know how much you're spending. Spend some time tracking your vehicles; it will be worthwhile.
3. Monitor your spending each month.
To calculate your costs per mile, you must keep track of every dollar that comes in and goes out. Examine every cost to determine if there are any areas where you can reduce back. Obtain a profit-and-loss (P&L) statement from an accountant at the conclusion of the quarter and search for expenditure trends.
4. Safeguard your cargo.
One of the most expensive crimes in the United States is cargo theft, which is still a genuine threat across the nation. Thieves always come up with daring new ways to steal trailers and goods. It is vital to familiarize yourself and your drivers with the best practices for safeguarding cargo as well as the ways in which truckers may be the targets of thieves.
5. Use fuel-saving techniques
Although you can always cut down on idle time, there are a lot of other techniques to reduce fuel use that you might not be aware of. Make sure you're employing measures to save fuel expenditures, and educate your drivers so they're doing the same. Examples include maintaining tires at the proper pressure and installing a roof fairing.
6. Prepare routes and stops in advance.
Although you can't plan for everything, keeping an eye on the weather, traffic jams, detours, toll booths, truck parking, and road restrictions can help ensure a pleasant journey. Even while it may take some time initially, finding the fastest routes will ultimately save you time.
3. Make Sure The Paperwork Is In Order
The office is not the most visual part of a small trucking business and therefore it can often be the most neglected. Especially for small fleet owners, it's easy to see the paperwork as an unimportant part of the business that can easily be done when it is desperately needed.
However, a well-run office equals a well-run trucking business. Constantly monitoring things like routing and fuel, as well as dispatch and planning tools, can really increase the profitability of a business without having to increase your load.
To make handling paperwork even easier there are companies like Authority Express LLC who can allow you to stay on top of paperwork without having to add back office staff to the payroll.
This means you can prevent fines and delays by avoiding mistakes, and spend the valuable time you would’ve spent filing paperwork to secure your next load and grow your trucking business.
4. Organize a load board
Another way to grow your business is to start using load boards. As a small fleet owner, you’ll be spending time building relationships with shippers, and you most likely won’t have constant work scheduled, so load boards are a safe bet to tide you over when loads are sparse.
Using multiple load boards at once such as DAT, Sure Way and Truck Stop can ensure you get the best rates for your needs and capacity.
(Good to know: The DAT load board takes its name from the company DAT Solutions. A DAT load board is key to creating a more intelligent trucking company by helping establish relationships with freight brokers and shippers.)
You can also pick up loads with the Federal government such as:
Remember to not make load boards something you rely on; your main priority is to build your own relationships with shippers to create the stability that working with different shippers too often from load boards cannot.
However, this does take time so, until then, organize a load board until you have established enough relationships where you won’t have to rely on load boards.
5. Buy Fuel Correctly
Fuel can often be the biggest expense of a trucking business, with over 53.9 billion gallons being used annually, so you need to make sure you are buying fuel in the most cost-efficient way possible.
New and experienced truckers alike have the tendency to buy fuel as if they are a normal driver, in that they think that they will pay taxes based on the state where the fuel was purchased.
However, truck drivers pay taxes on their fuel differently as they deal with the International Tax Fund and get taxed on the amount of fuel used on the journey (in each particular state driven through), regardless of which state the fuel was originally bought from.
This is why it is better to not buy fuel based on the cheapest pump price but rather based on the cheapest base price. To find this out you would use this formula: fuel price – taxes.
Growing any business can be tough but by following these tips you should be able to take your trucking business to the next level, ensuring more stability and profitability, making the most out of your opportunity to create a successful company of your own.