You may have decided on a career as a truck driver because you like the idea of being your own boss. You can set your own schedule and be independent on the road instead of in an office. But is the trucking business profitable? On the surface, statistics suggest that no. And the National Association of Small Trucking Businesses said that only 15% of new trucking companies will reach beyond their first year of operation.
But you don't have to be one of those statistics. Whether you are an owner-operator or a rental truck driver, you can create a profitable trucking business with careful planning (in addition to hard work and dedication). Here are six of the most important things you need to know to be a successful and profitable business owner. A key to determining if a trucking business is profitable is to understand what is an acceptable U.
S. While carrier revenues and profits vary depending on their particular situation, most truckers should aim for a profit of 6% to 8%. Plan your earnings based on your annual gross truck revenue and then determine your expenses (we'll talk about this later). Then you can increase those margins by looking for loads that pay more, reducing dead miles, and being aware of competition in lanes.
Although numerous factors determine the profitability of a trucking business, the two main factors to consider are fixed and variable costs. Fixed costs are already set and relatively predictable, whether you're on the road or parked at home. These are costs you have to pay, no matter how much you earn. Variable costs occur while you're on the road and can vary depending on where and how far you're driving.
They also affect cash flow, so it's good to make estimates at the high end. After counting all these costs, you may wonder again: “Is road transport a profitable business?” The good news is that it can be if you consider the following six steps. The best way to do this is to know how much you are spending, including fixed and variable costs. For example, you can reduce fuel consumption by paying attention to speed and driving habits.
Ongoing maintenance can prevent costly road breakdowns, and careful planning can reduce off-road miles. Charging shippers a higher percentage on top of your expenses is one way to increase payments. In addition, picking up cargoes from the headhaul market and taking them to backhaul markets could increase that rate per mile. Reducing dead miles by transporting LTL would also help.
Using a reliable load chart known for higher value loads is another way to increase your options per mile. Miles charged are when you drive paid cargo. Try to match your routes to the shipper's demand and be willing to roll back to ensure your trailer is always full. There is nothing more frustrating than waiting at a pick-up or drop-off point longer than expected.
While chargers allow a two-hour delay in stopping, it can sometimes be extended to three hours or more. It's time you didn't get paid. Worse, it could slow you down in other jobs. The best way to reduce dwell time is to incorporate additional space or “pay per stop” into loading and unloading times.
And avoid taking loads from facilities or carriers known for their long waiting times. Factoring means you can sell your invoices for a job to a third-party finance company, also known as factor. You leave with the money right away (minus the factor fee) instead of waiting for the typical 30-90 days it takes for a broker to process your bill. Meanwhile, the factoring company tracks the broker's payment so you don't have to.
With a little planning and easy-to-use technology, you'll grow your business in no time. A common complaint among carriers is the struggle of negotiating with brokers. As long as your rates stay above their cost per mile, every mile will be profitable. That means that the more miles, the more money you earn.
The more your company can scale and grow, the more confident you can be sure that your trucking business is profitable. At National Funding, we understand that sometimes growth requires a little investment. Our small business loans can help your business seize new opportunities and start earning higher profits than before. The trucking business can be very profitable, but it's incredibly competitive.
Many truck drivers try to enter the business every year and end up failing. Each company has different profits, but on average, the figures say it is 6 to 8 percent of annual revenue per truck. Wait a minute and try again! For those able to overcome the challenges of growth, the money earned with large trucking companies is well worth the hard work and dedication it takes to succeed. Large trucking companies require more than a large customer base, fleet management and a strong pool of drivers; they also need effective financial management and access to working capital.
Well established, protected and very well managed Fedex route: P&D that comes with 6 paid trucks and a full and excellent crew. Fixed costs are expenses that your company incurs, whether your trucks are on the road or in the parking lot. The demand for cargo that must be moved on a daily basis exceeds the supply of trucks that carry cargo on a daily basis. A common problem that most transport companies share is keeping messy books, the inability to understand some key business metrics, and not introducing the right measures into their accounting. Establishing a competitive per-mile rate that attracts customers and supports your company's bottom line is critical to the success of your trucking company. Magoci and I will send you a FREE e-book where you can discover the 100 best tools to run a trucking business.
In recent years, the road transport industry was in its golden years with high profits, not so much regulation, constant fuel cost. With careful planning (in addition to hard work and dedication), any truck driver or owner-operator can create a profitable trucking business by following these six steps: understanding what an acceptable U. S., planning earnings based on annual gross truck revenue; increasing margins by looking for loads that pay more; reducing dead miles; being aware of competition in lanes; reducing fuel consumption; ongoing maintenance; careful planning; charging shippers higher percentage; picking up cargoes from headhaul market; transporting LTL; using reliable load chart; matching routes with shipper's demand; factoring invoices; negotiating with brokers; establishing competitive per-mile rate; understanding key business metrics; introducing right measures into accounting.