As we head toward the end of 2014, it’s very important to look at where your trucking company is financially. Has your revenue over the past 11 months increased or decreased? Have you achieved the necessary cash flow to pay business expenses? Do you have any money left to sustain and grow your operation? What do you need to do going forward? Set your annual goals, then your monthly revenue bull’s eye.
You can have all the needed capital, the right people, the right customers, and the opportunity to grow; however, if you micromanage your business, all the above will be for naught. One of the greatest problem areas that prevent most micro-trucking operations from growing to become a small carrier and then on up the line to a larger carrier is the ability of the owner(s) to delegate and let go.
What causes an owner to micromanage his/her operation?
As we move further into the 21st century, businesses—yes, even those small motor carriers with fewer than 20 vehicles—are becoming more and more entrenched in the global market. The global supply chain has become increasingly local as raw materials are shipped around the globe only to find their way into finished products. Through all this movement, small motor carriers are finding that they have become an integral part of the overall global supply chain.
Long-term survival in the business world requires the discipline to frequently reinvent your company. If you don’t adapt to the constantly changing business environment, your business will fall behind that of your competitors.
In reality, the majority of micro- and small carrier freight is ‘wholesale freight,’ meaning brokered freight. Is this a good way to do business?
While the objective of any carrier, regardless of size, is to haul loads at the highest rate possible, there are multiple variables when determining the highest rate possible. Who has the freight? Direct shipper, 3PL, freight broker or another trucking company?
You would receive a retail hauling rate from the direct shipper; wholesale rates from the other three.
By the time you read this, you will have but a short time left before having to file your 2013 Federal income tax return. While it’s likely too late to change what you’ll pay this time around, start looking to the future now and put a strategy in place to reduce your tax bite in 2014 and beyond.
A huge challenge for many micro- and smaller trucking companies is getting cash flow to actually flow. There are many financial tools available to assist this process; one is a bank line of credit. But what exactly is it? How will it facilitate cash flow for a trucking operation?
In business, when we think of making a deposit, we picture getting checks from customers, listing them on a deposit slip, taking them to the bank, and having the money added to our business checking account. Without question, those deposits are the lifeblood of our business, providing money from which we pay our fuel, employees, insurance, vehicle and business loan payments. But are those the only deposits you should be making at your bank?
With the stagnant economy and the impasse in Washington, putting together a business strategy for 2014 has been a challenge. Each hauling segment, region, and lane is going to have its own set of circumstances. To forecast freight volumes in 2014, here’s a list of questions to which you need answers:
What if competition becomes tight and rates go down in the lanes within which you operate your trucks? Do you have an exit strategy in place? This is about finding a new, better and more profitable direction in which to take your business or a way to gracefully get out of the business with the least damage to your finances.
Trucking’s a very interesting business in which few carriers survive and thrive from decade to decade. Think of the trucking companies that ran for 40-plus years, but when deregulation hit in the 1980s, many of those “old” companies didn’t exist by 1990; however, there are a few still running strong today. Why did they not only survive but continue to grow year after year?
Calculating workable hauling rates is one of the biggest business challenges facing most micro or small trucking companies. Many smaller carrier owners and managers are under the impression brokers and shippers are responsible for low freight rates, when in reality there are multiple forces fighting in both directions. The trucking company is trying to get the highest freight rate possible; shippers are trying to get the lowest rate they can; and the broker, in many cases, is trying to please both while getting as big of a piece of the rate pie as possible.