The trucking industry is lucrative, but it’s also highly competitive. Many entrepreneurs try to start a trucking business but end up failing within the first few years. Running this type of business is more than just driving a truck; you have to be a skillful businessperson as well. Aside from taking out a trucking loan, here are three tips to help you start a successful trucking business:
1. Create a Marketing Plan
As mentioned, the trucking industry can be very competitive. Without a strong marketing plan, your customers won’t be able to find your business among the vast pool of competitors. If you want to attract more customers to your business, you’ll need to develop a strategic marketing plan.
There are different ways you can reach your target market without having to spend much. An effective marketing strategy doesn’t have to be expensive. Here are a few tips to help you get started:
- Make use of social media to reach out and communicate with your clients and prospects.
- Create an email list of your target customers and implement an ongoing email campaign.
- Create a fully functional, mobile-friendly website.
2. Choose the Right Market Niche
Choosing the right niche is one of the most important factors in running your trucking business. The market you choose affects the rates you charge, the freight lanes you service, along with the type of truck and equipment you will need to buy.
As a business owner, you will want to focus on minimizing the competition when starting your business. This means you need to choose markets that larger companies usually avoid, such as hauling specialized goods.
You can also focus on other types of niches, such as building supplies haulage, dump trucks, towing service, and more. However, hauling meat and fresh produce are one of the most profitable niches in the trucking industry. It has lesser competition, it’s resistant to recessions, and you have business year round.
3. Steer Clear of Cash Flow Problems
Trucking businesses are capital-intensive. Business owners need to buy fuel, pay for insurance, truck repairs, on-going maintenance, and of course, payroll. Delayed payments from clients also can be a problem. Shippers and brokers usually pay their invoices after 15, 30, and even 45 days. This huge gap in payments is a major cause of cash flow shortages among trucking business owners, and can be very detrimental to a new business owner.
There are many loan options for a small business, but freight factoring for trucking companies is one of the most common solutions. Freight factoring remedies your cash flow problems by advancing up to 90% of the value of your invoices, usually within 24 hours of submission. Once your clients fully repay the remaining 10% balance, factoring companies will send you the money minus a small fee.
4. Apply for a Trucking Loan
If you’re looking to start a trucking business, it’s important to have a stable cash flow. A trucking loan will help you bridge cash flow gaps and pay for unexpected business expenses. Our finance experts at, SMB Compass will be happy to answer all of your questions and help guide you step by step.