Many don’t fully understand the trucking and freight business. Although the freight business can be very profitable, it can be incredibly competitive.
If you are looking to start your own trucking or freight business, there are many points you should consider.
5 Steps to Starting a Successful Freight Business with Invoice Factoring
Each and everyday, we work with a wide variety of freight businesses. We have compiled some of the best tips to ensure that your new freight business can run safely, smoothing, and bring you much success.
Step 1: Don’t Settle For Poor Equipment
When starting your own freight business, it is important that you choose the best and the right equipment for your needs. This is the first and most important step in starting your new business—and also the most expensive.
It is important to do ample research on the equipment you need. Just because one product is more expensive than the others, does not mean it is better. Find the right equipment for your needs and your budget. Having the right equipment for your business will set you up for success in the future.
Buying the equipment, rather than leasing it, will allow you to get your equipment faster and keep it longer. When you lease your equipment, you may have lower payments, but you’ll pay additional fees. When you purchase equipment, you’ll most likely have to put a down payment and make monthly payments until it is completely paid off—then it is yours.
There’s not correct answer when deciding to lease or buy, but the most important thing to note is that you choose the right equipment for your own needs.
Step 2: Bid With a Purpose
When bidding on jobs, don’t just bid on anything that comes your way—bid with a purpose. When bidding on jobs, your bid must be low enough to be competitive, but high enough to be profitable. The best way to achieve this is to know your rates.
Securing concrete numbers for your services will allow you to make the smartest bids. When making a bid, consider the expenses for the following:
- Truck Repairs
- Equipment Monthly Payments
- Cost of Labor
By securing the cost for these expenses, you will be able to bid smarter on jobs and earn your new freight business the most profits.
Step 3: Keep Your Best Customers
As you may already have experienced, many new freight businesses get their first customers from something called a load board. This is an online matching system that allows shippers and brokers to post loads, acting as a virtual job bulletin board.
This can be a great way to build a clientele in your starting days, but shouldn’t be your long-term strategy. Load boards can be very competitive, making your profits smaller and smaller.
A smarter way to build a clientele would be to use a load board as a short term strategy to get started. This can give you access to some working capital that will allow you to start making sales on the side and building connections to more and more shippers.
When you find a client that gives you a high profit job, be sure to treat them right and keep them as a client. This job could lead to many of the same in the future.
Step 4: Utilize Freight Invoice Factoring
Once you have started taking on jobs, it’s time to start utilizing freight invoice factoring. With freight invoice factoring, you will be able to get paid instantly for your work. This is accomplished by allowing a factoring company to purchase your outstanding invoices. They will advance you up to 96% of its total in just 24 hours or less with low rates.
Rather than waiting up to 30 or 60 days for your clients to fulfill their invoices, utilize freight invoice factoring to get paid for your work—practically overnight.