Let’s face it, amid the outbreak of the COVID-19 pandemic, digital revolution, and recession. The freight business has acted as an engine of the economy. The freight industry allows companies to transport their goods worth billions of dollars to every corner of the world.
Various types of freight services exist, among which land freight, specifically freight trucking, is the most popular. The reason is it is cost-effective, flexible, versatile, and reliable.
So, if you’ve been considering starting a business in the freight industry and enjoy driving, becoming a freight line driver might be the right choice for you.
Establishing a freight line business is a big move and needs a well-defined strategy if you wish to make a profit. So if you are up for the challenge, read on below and learn effective steps to ensure your trucking business thrives:
1. Identify Shipping Rates
Of course, before calling the shippers, you must know your rates. Thus, one of the most vital steps in your freight line business is determining the rates you will charge for hauling the load. Your rates must be high enough to help you make a profit and cover your operational costs.
Shipping rates depend on various factors, including weight, dimensions, freight class, etc. Therefore, knowing the proper measurements is necessary. You can only type in the correct information and get an accurate quote. Else, you might have to deal with costly delays and reclassification issues.
Are you wondering how to determine the freight class for your shipment? Well, in that case, you must consider a few factors: density, liability, stowability, and handling. For instance, if your shipment’s density is between 35 to 50 pounds per cubic foot, it will be a freight class 55. Furthermore, you can read this blog article about class 55 and clearly understand this freight class.
2. Don’t Forget To Create A Robust Plan
Before you rush to determine your shipping rates and get out on the road, make sure to have a solid plan. Experts say every company must have a clearly-defined business plan for at least the next 3-5 years. A business plan serves as a roadmap for business owners and helps them remain focused. In addition, formulating a business plan can come in handy when working with prospective clients and employees.
Your business plan must include financial information, services you would offer, hiring and retaining employee plans, ways to generate revenue, etc.
If you have a budget, you can consider seeking help from a business advisor who can help you understand whether your established plan makes sense.
3. Get All The Paperwork Done Properly
Once you have created a robust plan, your next step is to get started with the paperwork. So start by getting your business registered with the local or federal government.
However, before doing so, you need to identify your business entity. For example, if you are a self-owned trucking company, you might want to consider LLC (Limited Liability Companies). For this, you need to choose a unique business name and set up an Employer Identification Number (EIN) with the IRS.
Next, you need licenses and permits. Thus, you need a Commercial driver’s license (CDL), United States Department of Transportation (USDOT) number, and a Motor Carrier (MC) number to start operating your business.
4. Secure Insurance For Your Trucking Company’s Assets
Insurance must be your top priority for your business. Did you know that in 2020, large trucks accounted for 107,000 injury cases? Therefore, your freight line business needs insurance to protect your losses (injuries and damages).
Keep in mind that freight line businesses have different types of insurance. The type of insurance you may consider can include:
- Passenger Accident: Offer medical benefits to the passengers who got injured in your commercial truck
- Physical Damage: Provides coverage for damages to your truck
- Cargo: Protects from damage or theft of cargo
In addition, you can refer to FMCSA (Federal Motor Carrier Safety Administration) and learn more about filing requirements.
5. Manage Your Finances
Irrespective of the niche or size, finances can either make or break the entire business’s success and growth. Freight line business is a cash-flow-intensive industry – from purchasing fuel and truck payments to paying for insurance.
Often you will get delayed payments in this business, so there is a high possibility that you may experience cash flow problems. For this reason, you must keep your trucking company’s necessary records, such as receipts, invoices, checks, etc., to stay on top of your money. A better way is to track your income and expenses transparently.
Moreover, don’t forget to separate personal expenses from business and vice versa. Lastly, you can hire an accountant or leverage accounting software to help you manage your accounts efficiently.
6. Make Sure To Run The Back-Office Efficiently
What better way to build a profitable trucking business than keeping your back office efficient? Put this way, the success of your freight line business significantly relies on how efficiently you manage your trucking operations. Good organization can help boost your efficiency and streamline your processes.
First, determine whether you wish to run your back office or hire a dispatcher. If you choose the latter one, you need to interview them thoroughly. Be mindful that outsourcing to a dispatcher may be pretty expensive.
Regardless of your preferred option, it would be best to have high-quality tools such as internet service, computer, accounting system, GPS-tracking, fleet management, etc.
7. Hire & Retain Skilled Employees
Unquestionably, you can’t run a successful trucking company solo. You need highly-qualified and well-trained professionals to help you grow your business.
While drivers are necessary for your trucking business team, they are not the only ones. Other professionals include marketing and sales personnel, accounting manager, freight specialist, administrative staff, logistics coordinators, etc.
Hiring professionals is one thing but keeping them happy at their jobs and retaining them is an entirely different story. You can increase your employees’ job satisfaction by offering various benefits such as loyalty bonuses, flexible schedules, health insurance, gift cards, etc.
With more and more people purchasing products online today, there is no denying that the freight line industry is profitable. As more people shop online, the trucking industry is always in high demand and will continue to grow over the years to come. Moreover, it is relevant to note that the trucking industry generated over 212.17 billion US dollars in 2021.
And while the stat shows the trucking industry allows you to make more profit, don’t forget that the competition is fierce in this industry. Having a fantastic vehicle and driver isn’t enough. You’ll also need a sound strategy, a well-run back office, effective expense management, and much more to get on the road to success.