Sleeper Markets: Trucking And Shipping
July 14, 2017 (Investorideas.com Newswire) The trucking business is alive and well. Although many businesses have automated many of their business processes and conduct most of their business online, there is still a need for trucking and there will be for the foreseeable future. Unless, we humans come up with a better way of transporting products from one place to another across land, trucking will be necessary. Retail locations still need to have inventory delivered to them, restaurants need their supplies brought in, and even offices have things that are brought to them by trucks.
However, if you're thinking of getting into the trucking business one thing you have to be aware of is that it is a business based on extending credit to customers; usually for a period of 30 or 60 days. If you're not willing to extend credit, then you will lose a customer to another trucking company that is willing to oblige.
While this credit system works out for the customer, you will have to pay out of your own pocket for delivering freight for the customer. This will create a negative cash-flow if you don't have enough reserve capital. Moreover, even if you do have some kind of business savings account you can borrow from, you will soon exhaust it if you have a large number of customers.
How do you get out of this awkward financial situation? How do you manage to work free for 30 to 60 days? How do you manage to self-finance a number of trucking contracts before you get paid?
If you're thinking about getting a high-interest loan, you'll be making a mistake. While the loan may help you finance the service you're providing the customer, paying off the interest on the loan will cut into your profits. A far smarter solution is to use TBS Factoring. TBS will buy all your invoices for cash, so that you can get paid before you do the work. They will then collect their money from the customer when the invoice is due. The fees for factoring are well-below what you'd be paying if you were to get a regular bank loan.
4 Common Business Mistakes to Avoid
Here are some common mistakes made by trucking companies that drastically reduce how much money they can make:
Mistake # 1: Relying on lease operators.
If you're subcontracting your freight delivery gigs to independent contractors, you may not have many overheads, but your profit margins will be low. Despite paying the upfront expenses, you can earn much more if you have your own truck and drivers.
Mistake # 2: Overdependence on load boards
One of the fastest ways to get new customers is through a load board. While this is a quick way to get your first customers to get your business moving, it's not a long-term strategy. The downside to load boards is that it's price competitive so only the lowest bidders get the job. Moreover, these jobs are one-time gigs, rather than an opportunity to build long term contacts. So over time, you want to build a list of steady clients so that you have predictable cash flow.
Mistake # 3: Making poor hiring decisions
You will need good people to help your business grow. Unless you develop a comprehensive way of interviewing people, you will hire the wrong people by default. Many people have good resumes (usually because they hired a professional resume writer) and can appear to be honest and competent during the interview process, but they turn out to be unproductive employees once they begin to work for you. Unless you hire reliable drivers, experienced office managers, and the right people for sales, your business will not flourish.
Mistake # 4: Working with the wrong clients.
Just as you have to carefully screen the people who work for you, you have to screen the people you work for. The wrong clients are people who whine and complain about every little thing, blowing small freight delivery issues out of proportion, and blaming you for everything that goes wrong. Often these people also find excuses to not pay you, or pay you late, or insist on a lower rate. If you get enough of these types of clients, you will be completely stressed out trying to please them. By contrast, the right clients appreciate the work that you do, will pay you your full price without any complaints, and will pay on time as a matter of principle.
Although the pay range for delivering freight for a customer can range from $10,000 to $20,000 or more per truck, you will only get to keep a lion's share of this revenue if you avoid making these four mistakes.
About The Author:
Jane is a online freelancer who has worked on writing projects for fun and work since college. Jane's education comes from the John Cook school of Business at Saint Louis University. Whether it is writing about online business and digital marketing which she is heavily involved, Jane also likes please pieces about history and education when she can write about more open ended topics! Reach out at firstname.lastname@example.org anytime!
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