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.
The unpredictability of the truckload segment continues to be the biggest challenge faced by many trucking executives—whether they’re running a Fortune 500 company or one truck and trailer. The last three years have been one heart-pumping ride on this highway we call trucking. It seems like every time we think we have a handle on our business, on customers’ needs, and on the right mix of equipment and truck drivers, something throws us into a downhill ride of epic proportions.
There’s a rumor circulating that the micro-trucking companies and owner-operators (O/O) are becoming a fast-dying segment of the trucking industry. But as a business coach, I’m finding these small-business entrepreneurs are very adaptable.
When it comes to a small business, and especially so as a startup company, you’re a one-man operation. You’re looking for loads and you’re trying to find clients for whom to haul stuff. You’re trying to get things leveraged. You’re trying to schedule loads, drivers, maintenance and repairs. You’ve got to keep track of things for taxes and CSA compliance. You’re tracking all those little invoices and receipts—from fuel purchases, to repairs, to maintenance.
Our entire industry needs to wake up. The purported driver shortage, driver pay, working conditions, and highway safety are all interconnected. To solve one of these problems, it’s necessary to address and resolve them all.
According to many studies on the subject, you’ve got fewer than 30 seconds to make an impression on someone. In business, this can mean the difference between losing, landing or keeping a customer. So, ask yourself, “What would impress me?” If the initial contact is by phone, then that impression is determined by the manner in which you handle the phone call.
- Do you answer the phone in a professional, business-like manner?
- Do you speak clearly and slowly enough so the listener has time to understand what you are saying?
The days of parking a truck in the lot and tearing down an engine are long past. Instead, the best course of action for the micro- and small motor carrier is investing time in finding, hauling and delivering loads.
There are no guarantees when it comes to making money as an entrepreneur. It’s a learning process that continues every time you pick up a new skill or knowledge. Each enterprise develops a life of its own, equally as true in trucking as in any other small business. The hardest lesson to learn is that it takes years to grow a start-up to the point where it’s generating a sustainable profit and enough revenue to cover costs.