Top Six Reasons Why Many Trucking Companies Fail
Owning a trucking company can be a very rewarding career, but it’s not for everyone. Many come into this industry with unrealistic expectations. As with any business, for it to be successful there are certain precautions and practices you should adhere to. At the end of the day, it is all about money. The key is to bring in more money than you spend and to save up for emergencies. In this article, we are going to give you a hand up in the industry by covering the top six reasons trucking companies fail. These are key issues that are avoidable with proper planning and by having the right help in your corner. Check these items off your list and get your company on the road to success.
Utilization / Time = Money:
Many enter into this industry with less than realistic expectations. Some think that just because they own a business now they will be making lots of money. While the potential is definitely there to make good money in this industry, it does not come without hard work and dedication. If you are not willing to be away from home or restrict yourself by only wanting to run easy routes, then you can expect to fall short on the expectations you had coming into this. You have a set number of hours per week that you are allowed to drive. If you plan to be successful in trucking, you have to go get it. When you are sitting during these hours, you are losing money that you cannot make up.
Bad or No Business Plan:
Starting a business can be a rewarding and life-changing decision. However, just getting it going is not the biggest step. If you plan to be successful in your endeavor you need to know exactly what you are going to do with that business, and how. A proper business plan is imperative to the success of any company out there but especially with a trucking company. A good place to start here is figuring out what your operating costs will be. You also need to examine where the ceiling is with the type of freight you will be hauling. Without knowing this information you will fail to know how much you need to make to be profitable, as well as what is realistic in your business’s current setup.
Lack of Professional Help:
A new business requires a lot of tending to and many business owners today are a one-person operation. That may work for some, but the key to successfully running a business is not doing it all yourself. Instead, knowing who and how to properly delegate tasks to for maximum efficiency can get you far. You should find partners that are motivated for success in the same way you are. With the right help in your corner, you will stand out from the rest and operate more efficiently than ever before. Some of the services out there which can provide that level of professional help are Brokers, Dispatchers, Factoring companies, etc. The key here is to know what the services do and which ones are the best option for your personal business scenario. A Freight Broker works with both the shippers and carriers, serving as the middle man in the relationship. A Dispatcher, on the other hand, represents the carrier directly to negotiate the price of freight in the carriers favor. Factoring is the sale of your accounts receivables to a third party factor in order to generate instant cash to continue operating your business. Without this kind of service, a carrier could have to wait anywhere from 30-60 days, or even more to get paid on the loads they haul. Evaluating these services appropriately will give you the advantage in knowing which will most benefit your business.
Poor Collection Strategy:
No matter the size of your business, having a strong collection strategy is always of the utmost importance. Simply put, this is how you get paid. Without proper attention and time given to this aspect of your company, you can really set yourself up for failure in the big picture. This is one of the many areas that a factoring service can save the day by taking a large chunk of that weight off of your shoulders.
Failure to Stay Compliant:
This area should be a no brainer, but many fall victim here. If you are not DOT compliant, the hard simple truth is that you will eventually get caught and shut down. Some try to cut corners here to save on operating costs, but when staying on the road is the sole key to your success, this is not a risk you should be willing to take. Instead, try looking into what advantages your service providers can offer to lower those costs in this area. TAFS offers way more than just factoring and can hook you up with some sweet discounts to keep you on the road, compliant and profitable. Find out how.
Low Paying Freight:
Booking loads can be a full-time job in itself. Are you up to date on what each type of freight is paying right now? You need to be comparing brokers and diversifying your customer base. Many Trucking business owners are not and get taken advantage of for that very reason. Dispatch services like Pro Dispatch are a huge asset in the industry. Good dispatchers are up to date on the different rates and take the time to negotiate and work diligently on your behalf to get you profitable rates for the loads you haul.
Interested in learning more? Our team on trucking consultants are ready and willing to help you get on a path for success in the industry. Give us a call today!