It is normally believed that trucking businesses are quite profitable. Truly so, the startup costs are quite low for this business, and the legal requirements, such as BOC 3 filing require a fixed fee. You certainly do not need to own the trucks to start a trucking company. All these reasons make it even more compelling.
However, ever since Covid 19 pandemic hit the world, trucking companies have faced some serious repercussions. However, as the world is coming back to normal, businesses have started to regain their momentum.
So should you consider starting a trucking business or not? Here is a guide that can help you decide better for yourself.
Need For Truckers In Pandemic World
When Covid 19 hit the world, many businesses were forced to shut down. Trucking companies were one of them because the lockdown made it impossible to move cargo. However, now as the world is coming back to normal, the demand for truckers is also rising again.
Today, many people have found a way to run online businesses. Such businesses require frequent shipping services. If you have not decided on starting a trucking company, then start thinking about it now because the demand for truckers is on the rise.
How To Earn Profits In Trucking Business?
Even though the demand for truckers is on the rise, not every trucking company can make its way to the top. If you truly want your trucking company to be a successful business, then you should keep in mind the following things.
1. Avoid Involving Brokers
Brokers are the middleman between you and the shippers. Shippers are your clients. Brokers play a very important role if you are new in the market. They can help you get a good amount of clients and keep your trucks busy. However, they charge a significant fee for their services.
If you keep involving brokers, 10-20% of your profit will go into their pockets. This is a loss for you. Try to get direct with your clients to keep the profit to yourself.
2. Choose The Right Niche
The type of business you want to target in the market is called the niche. There are various niches for trucking companies. Some of the options you have are,
- Food delivery
- Small freight delivery
- Heavy items delivered interstate,
- Or intrastate deliveries
Choose the niche carefully because you will have to buy the equipment accordingly. Delivery services within the same locality or state can be good as it can save up fuel costs, and you can be down with the job within a few days, however, the profit margins are low.
If you deliver to larger distances, such as to different states, you might have greater profit margins. Choose the way you can manage without straining yourself.
3. Keep Your Charges Competitive
The charges you set for your services should be reasonable. You might want to keep your charges high so that you can pay for the fuel and other expenses while making profits.
You should check with the brokers and keep your prices competitive with them. One good way of deciding on your charges is to find out the cost per mile and then add a few percentage extras to get your profits. Your earnings should always be greater than your expenses.
4. Keep An Eye On Your Expenses
You should always keep an eye on your expenses. Make sure that you know where your money is going. Spending too much aimlessly might not make your business profitable.
You should calculate all the fixed expenses that you have to pay for doing business. This includes your driver’s wage, insurance money, fee for legal requirements, etc. You should also know your variable expenses, which mostly include fuel costs. Make sure to count unforeseen expenses.
Once you have calculated all, try to find ways to keep your expenses to a minimum.
5. Get Your Fueling Strategy Right
Many truckers waste a lot of their money on fuel. If you do not have the right fuel buying strategy, then you are not helping your business become profitable.
Fuel prices are normally the same in all the states. However, the secret lies in the taxes. Some states charge more taxes than others. Normal drivers have to comply with the local tax laws. Whereas, truck drivers have to follow IFTA rules no matter where they get their fuel from.