If owning a trucking business is something you’ve been wanting to accomplish, keep in mind that it’s indeed highly competitive. Many tried getting into this business but failed in the venture. 

According to statistics, in 2013, there were at least 800 carriers with more than five trucks that were forced to shut down their business. There is a thin line between profit and loss—one wrong move or decision can lead to bankruptcy.  

It truly takes massive hard work and effort when starting and growing a truck company. There should be a disciplined approach involved when leading your company. Business-wise, it’s vital that you know how to properly deal with people, make the right choices and make calculated actions.  

Is Owning a Trucking Company Really Profitable? 

Owning a truck sales service in Sydney is not easy, and that’s a fact. However, when talking about profitability, it greatly depends on how you manage your business. According to the National Association of Small Trucking Companies (NASTC), making your trucking business profitable may seem unfeasible. 

Well, the truth is that the rate of failures from small businesses has been steadily declining for more than 30 years now. There are also a wide variety of tools available, such as money saving apps, that can help you run your trucking business and make profit at the same time. 

Some of the factors that affect the trucking industry are the following: 

• Peaks and troughs of production of goods 
• Contrasts of fuel costs
• Huge industry competition 
• Payment delays or unpaid invoices
• Administrative requirements. 

The trucking business over the last couple of years had been flourishing, with consistent fuel price, minimal regulation and high profits. Several trucking companies were opened because of positive income. Yet, the challenging requirements and conditions over the past years lead many of these businesses to cease their operations and shut down. Only 15% of newly operated trucking services will survive in the second year of operation, according to NASTC. 

Understanding Your Biggest Operational Expenses

Since 2011, experts reported that truck driver wages and not fuel is the biggest operational cost of a trucking business. Of course, that is related to the lower fuel costs during such time, but the change in truck driver wages has progressively spiked for years. Paying truck drivers high wages isn’t a negative thing as it reinforces one essential point that will help you obtain more loads—give great customer service and keep your top drivers. 

Sometimes, competition and freight rates can become an uncontrollable potence that can negatively impact your trucking business. However, if you provide outstanding services to your clients, together with having the best drivers, these can make a huge difference in terms of building and growing your business. 

What Are Ways to Succeed in Trucking? 

If you’re ready to take on the challenge of opening a trucking business, a concrete business plan is what you need to overcome potential obstacles. Proper financial planning is a key to building a business plan that’s profitable. Here are some tips that’ll help you drive your way to profitability. 

• Choose a Fruitful Market Niche 

If you pick a specialised market role where there’s no direct competition with large companies, you have a great chance of turning a profit. Take note that niche selection forms a crucial financial planning step because it will decide what materials to buy, rates you charge and services you provide. 

• Establish Connections with Shippers 

Another thing that can cause a trucking business to go out of service is the challenge to find shipping loads. Therefore, an efficient strategy for finding shippers should be part of your comprehensive business plan. Most trucking companies usually locate shippers through middlemen known as freight brokers, or through online postings. They charge a fee which cuts into your profits; nevertheless, these services are useful. 

• Assess Costs for Operation Precisely 

Before you start developing your financial plan, make sure you know what your expenses will be. This way, you’ll know how much revenue you need to get to earn a profit, as well as how high your prices need to be set up. 

• Check Your Customers’ Credit Status 

Regardless if you’re dealing with brokers or shippers, it’s best practice to choose customers with good credit standing. Doing so lessens your risk of not getting paid. You can use a credit check service to review clients’ credit scores prior to entrusting a new customer. 

• Make Use of an Effective Dispatching System 

One way for you to find loads is to utilise a dispatching system. This helps you assign loads to truck drivers, manage issues with customers and shippers, maintain compliance, and manage billing and drivers. 

• Make Your Billing Processes Automatic 

You can definitely save time and money if you opt to automate your billing procedures. This also lessens the risk of fees not being collected in a timely manner. You can use accounting software with complete add-ons or invoicing features or get independent software for invoicing. 

• Charge Your Services Effectively

This plays a major role if you want your trucking business to be profitable. Once you’ve thoroughly considered your expenses, such as driver wages, broker arrangements, fuel and systems, you can then estimate the proper pricing of your services. Figure out what other carriers are charging so you can build a more competitive yet profitable price. 

•  Project Your Cash Flow for Profit Sustainment 

Cash flow planning must be done meticulously for you to keep your trucking operations running. Broker and shipper payments are delayed for about 30 days. That’s why you need a management strategy for your cashflow to make sure there is sufficient funds available to keep your trucking operations alive while waiting for payments. 

Takeaway

The trucking industry moved its way to 2021 with consistent force, even after the pandemic struggles. As data suggest, the trucking business is setting a course for solid growth in the years to come. However, obtaining success in the trucking business can still be challenging. Problems like fuel costs, high contract costs and driver shortages are potential hindrances to your success.

Therefore, have a thorough planning focused around financial management. In order to sustain a profitable trucking business, these roles must also be considered—efficient strategies, pricing, niche selection and cash-flow planning.