Every year, many ambitious people get into the trucking business, but many also quit after the business fails to meet their expectations. Usually, they don’t take full responsibility for their failures, believing that everyone else is the reason for their misfortune. The truth is a little more complicated. You need to know how to run a business, meet a wide number of challenges head-on, and make many smart decisions along the way.
As a semi-truck owner/operator, here are four common challenges that you may have to face:
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Invoice Factoring
It’s customary in the trucking business to offer customers 30 to 60 days of credit. This means that you have to pay to deliver freight out of your own pocket, and then wait a month or two for your invoice to be paid. As a result, your money will be going out faster than it’s coming in, a situation called “negative cash flow.”
There are two drawbacks to getting a bank loan to cover your overheads: first, it takes time to get approval; second, the high interest you have to pay for the money will reduce your profits. A better solution is to use a TBS factoring service to buy your invoices. They will pay you in cash for your invoices. When the invoice becomes due, they’ll collect the payment from the customer.
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Time Management.
Although time management is important in all businesses, it’s especially critical in the trucking business because you will lose customers if you don’t deliver freight on time, or, worse still, don’t finish a route because of other deliveries that you had to make.
When it comes to managing your business, general time management techniques are useful, like separating your personal interests from your business priorities, creating realistic schedules, staying focused, taking relaxing breaks, delegating, and using collaboration software. When it comes to deliveries, you’ll have to plan your routes ahead of time, try to avoid heavy traffic, and load and unload as early as possible to give yourself leeway if there are any unexpected delays. There are also providers like TBS DOT compliance services that can help you create a plan for time management especially for mandatory rest periods.
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Finding Loads to Carry.
When you start your business, a quick way to get your first customers is through trucking load boards. However, it’s important to think of this as a short-term strategy.
Although it’s a convenient way of getting work, there are three limitations to job boards.
- · Competitive bidding means you’ll probably work for far below the going rate just to make some money. In other words, it’s a race to the bottom.
- · Most customers on these boards need your services for a single job. Unless you’re exceptionally lucky, you’re unlikely to get long-term opportunities.
- · The quantity of work available ebbs and flows; a sort of feast-or-famine situation.
Long term, you should do your own marketing to get a steady stream of clients who pay well and who offer ongoing work.
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Financial Risks
After you’ve resolved the problem of negative cash flow, another thing that you have to figure out is how to manage your financial risks of personal injury, damage to your rig, and litigation due to an accident.
- Personal Injury: You will have to drive days and nights, over all sorts of roads, and through all kind of weather conditions. Since you’re on the road so much, work long hours, and may not get enough sleep between deliveries, you are at a far higher risk of personal injury than most other drivers. While you could get injured because of an accident, you could also have personal health problems because of your stressful work. In addition, besides driving, you may have to assist with helping with loading and unloading work.
- Damage to Your Rig: Since you’re on the road so much, you could have an accident. In addition, your rig could even be damaged by another truck while it is parked, or buy a hurricane, tornado, flood, or another natural disaster.
- Litigation: If you’re an at-fault driver, you could be sued for an accident.
Taking all this into consideration, you should research the best rig insurance carrier and invest in the best coverage you can afford.
Done right, the trucking business can be immensely lucrative. If you’re attracted to the idea of starting a trucking business, it’s probably because you’ve heard how lucrative it can be. While this is true, it’s only profitable if you go about managing your business in the right way. Your chances of running a successful business will increase when you create positive cash flow, manage time well, get long-term contracts, and get the best insurance coverage.
