{"id":203748,"date":"2021-08-16T13:36:56","date_gmt":"2021-08-16T20:36:56","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=203748"},"modified":"2023-05-10T10:22:09","modified_gmt":"2023-05-10T17:22:09","slug":"how-to-make-a-trucking-business-profitable","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/how-to-make-a-trucking-business-profitable\/","title":{"rendered":"How to Make a Trucking Business Profitable"},"content":{"rendered":"

How can you make sure your trucking business is profitable? With the modern demands of transportation, small trucking companies are more valuable than ever. Across pandemics, recessions, and a digital revolution, trucking keeps everyday life moving and is predicted to keep growing in years to come.\u00a0<\/span><\/p>\n

Keeping your trucking business profitable is paramount to making sure your vital business thrives. At National Funding we want to make that happen. That\u2019s why we\u2019ve compiled a list of factors to consider to make sure your trucking business provides a solid return on your investments.\u00a0<\/span><\/p>\n

Managing Your Trucking Business Costs<\/span><\/h2>\n

For every business, income must be higher than expenses in order to make a profit. Trucking companies are no different but certainly face their own challenges. Overall, three main steps can help any trucking company get on top of basic finances. <\/span><\/p>\n

1. Determine Your Operating Costs<\/span><\/h3>\n

A trucking company will usually set a cost-per-mile as their means of pricing. This cost per mile must account for operating costs, wages, and room for growth in order to make the business profitable.\u00a0<\/span><\/p>\n

The cost per mile for your trucking company must take into account set costs (overhead) and variable costs (running costs). In order to determine these, it\u2019s important to have detailed records of monthly expenses. These records can be used to better understand how much goes into every mile of operation. Make sure to evaluate operating costs regularly using thorough records so that you will know what rates your business needs to bring in more money than goes out.\u00a0<\/span><\/p>\n

2. Set a Competitive Rate<\/span><\/h3>\n

With operating costs determined, the next vital step is to make sure rates are competitive. Though the more each mile costs, the more profit a business can theoretically make, setting prices high will send others away. Ensure that rates are competitive to draw in business.\u00a0<\/span><\/p>\n

Measuring Your Business Against Competitors<\/b><\/p>\n

Completing market research can be simpler than one might expect. Sometimes it\u2019s simply a matter of asking the price for comparable routes. Of course, the total cost will be slightly inflated for broker fees. In order to measure your rates against competitors\u2019, simply follow the steps below.<\/span><\/p>\n

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  1. Use a load board and select your freight lane<\/span><\/li>\n
  2. Select at least 10 comparable loads to measure against (only one direction)<\/span><\/li>\n
  3. Contact brokers for those loads to find their rates<\/span><\/li>\n
  4. Take the average of those prices and add 10% to 15%. This will tell you the price that brokers charge shippers.\u00a0<\/span><\/li>\n
  5. Repeat the process to find the cost for the backhaul.<\/span><\/li>\n<\/ol>\n

    Another consideration when setting competitive rates includes driver salary. Better drivers that can deliver on time and maintain a clean record due to safe practices are worth investing in. Salaries should be competitive as well to attract effective employees.\u00a0<\/span><\/p>\n

    Overall, cover necessary costs with enough to scale your business up, but be sure to keep an eye on the market in general. This will ensure your business attains new clients and maintains an ideal balance to keep profitability high for your trucking operations.<\/span><\/p>\n

    If your business is working towards competitive rates and salaries, you may need more flexibility with your funds. <\/span>Working capital loans<\/span> and other <\/span>small business loans<\/span><\/a> with National Funding allow you to shift business strategy with more flexibility, giving you the chance to become more profitable over time.\u00a0<\/span><\/p>\n

    3. Be Efficient with Fuel Costs<\/span><\/h3>\n

    Fuel literally keeps a trucking business running and is often the biggest expense owner-operators deal with. Trucking business owners can be sure to stay profitable by buying fuel by base price (before tax) rather than pump price (after-tax).<\/span><\/p>\n

    Members of IFTA (International Fuel Tax Agreement) pay specific taxes on fuel regardless of where it was purchased, so purchasing fuel with the lowest base price can save a huge amount of money for trucking companies, lowering cost-per-mile and allowing for competitive prices.\u00a0<\/span><\/p>\n

    Optimize Loaded Miles<\/span><\/h2>\n

    Well-booked freight is a great sign for trucking companies. It shows that business is booming. Competition can be fierce and trucking companies are effectively always in competition with one another, so it\u2019s critical to use necessary tactics to assure every mile is loaded and making money. <\/span><\/p>\n

    1. Support Specific Market Niches<\/span><\/h3>\n

    Larger trucking companies will be hard to beat for the largest and most straightforward loads. That\u2019s why it may be useful to look for jobs in specialized markets.\u00a0<\/span><\/p>\n

    Ideal markets can offer loads year-round and are recession-resistant. This means a haul that everyone needs all the time but may be more complicated to move. Niche markets like this can include fresh produce and meat or liquid loads from food to fuel.\u00a0<\/span><\/p>\n

    Specialized markets often means specialized equipment. National Funding\u2019s <\/span>equipment financing and leasing<\/span><\/a> can help you gain access to the trucks your business needs to take advantage of market opportunities that will keep your miles loaded<\/span><\/p>\n

    2. Maximize Truck Loads<\/span><\/h3>\n

    Loaded miles means growth, so it\u2019s critical to stay competitive and book freight so that your drivers can move effectively.\u00a0<\/span><\/p>\n

    Finding freight<\/a> to move can be tricky and a major obstacle to profitable trucking. Fortunately, there are ways to assure your drivers are working with loaded miles more often than not so that your business can boom.<\/span><\/p>\n