Running a successful trucking business can be a profitable adventure, but only if you operate in a way that gives you an edge over your competitors. Owning a thriving trucking business calls for more than being a good truck driver or knowing the routes to take.
Below are the tips to complement your exceptional driving skills and turn your trucking business dream into a reality.
Excellent targeting – focus on the right market
Accurate targeting sets you on the road to success in any business, and not just in trucking. The audience you choose to serve will help you decide on the equipment to purchase, the rates/fees you charge, and the freight types you can transport.
To get an edge, focus on niches that the major carriers avoid or consider hauling specialized products. Avoid going for markets that will put you in cut-throat competition with large carriers.
An excellent idea is hauling fresh farm and animal produce because; you face less competition, you get work all year round, and operate without the risk of recessions.
Rate per mile- Set the right rates
If you own and operate a truck driving company, you must learn how to set the rates for hauling a load. Use rates that are high enough to give you a profit and cater for all your operation costs.
Here’s how to set rates:
1. Select a line of freight
2. Review a load board depending on your preferred routes
3. Choose 10 loads headed towards one destination
4. Call a broker to confirm how much they pay
5. Calculate the average
6. Add 10 to 15 percent to calculate the price a broker charges a shippers
7. Do the same for your journey
Work out your operating costs
Learning all your operating costs will help you know whether you are making a profit or not. When determining operation costs, check for;
Fixed costs: the expenses that remain the same no matter how far you drive, e.g., permits, truck payments, insurance, etc.
Variable costs: expenses that depend on how far (in miles) you drive e.g., fuel costs.
Here’s why calculating the two is essential;
Fixed Costs + Variable Costs = “all-in-cost per mile.”
“All in cost per mile” – Rate per Mile (calculated in step 2 above) = profits
Fuel can take a toll on your business – use the purchase strategy.
Because fuel is your biggest expense, make sure you buy it economically.
N/B: Filling at the cheapest pumps does not necessarily mean you buy fuel the cheapest. This practice can be costlier than you think
Tax is the problem. While other drivers clear fuel taxes in the states where they buy the fuel, truck drivers must pay through IFTA. In other words, a trucker incurs taxes depending on how much on fuel they use driving through a state, not considering where they purchased the fuel.
Due to this tax regulation issue, always fill your tank at the lowest base price no matter the pump price. Here’s how to do the math; Fuel Price – Tax = Base price
Have a direct link to shippers
Brokers and load boards play a significant role in the trucking business. But they can be very costly, keeping 10 to 20 percent of the load price, successful truck drives create a list of direct shippers.
A smart approach can expose you to a group of reliable shippers. Charge competitive prices compared to broker rates– but have everything for your pocket instead of sharing with a middle man.
Run a Well Planned Office off The road
Driving a truck means you are out on the track, but running an efficient office is essential if you are looking to make profits and grow.
You can either get the resources you need to run your own productive office in a physical location or outsource office duties to a trusted, competent dispatcher.
Lastly, after considering all the above, you also want to ensure you don’t interfere with the flow of cash in your company. Maintain steady cash flow, and you can trust your trucking business will be a goldmine and not a minefield.