Very few people realize that the trucking business is actually very profitable. Millions of people around the world need to transport their goods in bulk to different parts of the globe. And with online shopping becoming a popular method of purchasing products, trucking companies are popping up left and right in order to cash in on this opportunity. We’re seeing just how essential truck drivers are as industry and supply management got hit hard due to the COVID-19 pandemic.
Because the trucking business can be competitive, many newcomers often end up with less money than they started with. Running a successful trucking business takes more than just knowing how to drive a truck or being familiar with the roads.
Find a niche market and stick to it.
If you are an owner-operator, there’s a good chance that your small business won’t last long if you play with the big boys. While there is definitely some profit to be had in markets that large carriers dabble in, you face tougher competition since they have a better capacity to service these markets.
Try to look for markets that large carriers avoid. You’ll most likely end up dealing with specialized loads, but there’s less competition in niche markets. You could also go to an entirely different industry and set up a food truck business. The important thing is that the market you choose offers work all year round and is less prone to recessions.
Understand your operational costs.
In order for your trucking business to make money, you want to make sure that the costs to run your business do not eclipse the money you are generating from it. Otherwise, you aren’t making profit, but instead bleeding yourself dry.
That’s why you need to know what your fixed costs are. This can range from permits, truck payments, truck insurance, among others. Then you need to look at your variable costs, like fuel for example. Once you have an idea of your fixed and variable costs, you can then price your rates accordingly, to ensure that you profit off of your business. You can check out this spreadsheet to determine your cost-per-mile.
Avoid issues with cash flow.
While they may seem very similar, being in the trucking business is a lot different than being a four-wheel courier. Sure, they do the same thing like delivering things from one location to another. The main difference lies in how they get paid.
While courier jobs get invoiced on a weekly basis, truck owner-operators are often dependent on the payment schedules of shippers and brokers. This means that their cash flow isn’t as consistent.
Trucking companies get around this by using freight bill factoring to get paid on a more regular basis. Unfortunately, using these services often means a lot of hidden costs, so coursing the freight bill factoring through a service like TAFS.com allows you to maintain a steady cash flow without bleeding your resources dry.
The trucking business is a very interesting industry to be a part of, especially if you like to drive around the country and want to make money doing so. By following these tips, you will be running a profitable trucking business in no time.