Trucking businesses are a profitable venture, but the industry is highly competitive. Many truckers attempt to establish their own trucking companies only to end up failing. When running a trucking company, being a skillful truck driver isn’t enough. You need to know how to run and grow your trucking company. To help you get started, here are six tips on how to become a profitable truck driver:
Take a Closer Look at Your Finances
Putting up a small business requires your personal investment. You can fund the loan out-of-pocket, or you can apply loans for drivers. Before anything else, you need to evaluate your finances. Put all the necessary information on a spreadsheet – potential income and expenses so you can determine how much you need each month to cover your expenses.
Estimate how much you can earn on different routes, but use low estimates to be safe. This should give you a ballpark of how much time you need on the road to sustain your business.
1. Charge Accurate Fees Per Mile
Once you know your potential expenses, the next step is to calculate your rate per mile. You need to charge rates that are high enough to pay for your expenses and give you profit. This is one of the things you should do before you start connecting with shippers and making sales. Your rates should also be competitive with other brokers.
Here’s how you can calculate your rates:
- Choose a freight lane
- Go to a freight board or load board – an online marketplace where shippers, truckers, and freight brokers can post and look for loads to keep freight moving.
- Look for ten loads that go in the same direction
- Contact freight brokers and ask how much they charge
- Get the average amount and add at least 10% to compete with the price brokers charge shippers
- Repeat the process for other directions
2. Know Your Operating Costs
Your operating costs let you know whether you’re going to make a profit or not. There are two types of operating costs you need to know about: fixed and variable.
Fixed costs are the ones that stay the same despite the number of miles you drive. For instance, insurance, permits, loan payments, license fees, phone payments, leases, etc. On the other hand, variable costs vary depending on the number of miles you drive. For instance, fuel, maintenance, tolls, lodging, etc.
The data from your fixed and variable expenses can help you calculate your “all-in-cost per mile.” If you subtract your all-in-cost/mile from the rates you charge, you’ll get your profit.
3. Save Money and Cut Back on Unnecessary Expenses
It’s safe to say that trucking business owners focus on maximizing profits and growing their business. You’ll need to save money and minimize operational expenses.
For instance, you can reduce your fuel expenses by staying within the 65 MPH speed limit rather than going faster. Studies show that you can improve fuel efficiency by driving at 65 speed. You can also save money by finding the quickest and shortest route, stay on top of repair and maintenance, and reduce vehicle idling.
4. Have a Well-Organized Back Office
One way to stay profitable is to run an efficient back office. Having one is especially important as you grow your trucking business and add more drivers and vehicles. If you don’t have enough capital to hire employees, one option is to do it yourself. You’ll need to invest in a good laptop, a stable internet connection, and a printer. You also need to get accounting software to track your finances; check out Q7, QuickBooks Online, and Axon.
Another option is to outsource your entire back office to a dispatcher. However, this option can be expensive. Be sure to do a background check and interview them.
5. Work with Shippers Directly
Load boards and brokers are beneficial if you have empty trucks, but they’re also expensive. They get a 10% to 205 cuts of the load price, which is fair since they provide you with clients and service. But you can save money by minimizing the use of brokers and load boards.
Build your network and develop a list of direct shippers. Charge a price that’s competitive to what other brokers charge, and instead of giving the cut to brokers, you can keep everything for yourself.
Running a trucking business is an exciting venture. With the tips mentioned above, you’ll be run a profitable truck driving business in no time.