Is your trucking business struggling to find its wheels?
In a country that largely relies on trucks for cargo transportation, you’d expect every trucking company to be successful. However, while there are slightly over 1 million trucking companies, failure isn’t uncommon.
You’ve certainly invested quite a bit of money into the business and you don’t want to see it all go up in smoke. The good news is there are measures you can take to remedy the situation, but it all begins by understanding why things aren’t going well in the first place.
Read on for expert insight.
1. Inadequate Business Planning
A business plan is critical to the success of any type of business. With a trucking business, though, the stakes are higher. There are many moving parts, which calls for the need for a detailed plan.
Unfortunately, not all trucking company owners take their time to draw up a plan before opening up. It’s easy to see why.
In theory, being a successful trucker looks smooth and straightforward. Purchase a couple of trucks, hire drivers, find shippers, and boom, profits are piling up.
Well, in practice, there’s a world of difference. Getting a steady stream of clients, for instance, can be difficult for new businesses. So, if you didn’t plan for low revenue generation in the early days, how are you going to pay salaries or truck leases?
Adequate planning goes beyond writing up a business plan. It also involves forecasting how the business’s short-term, medium-term, and long-term future is going to look, and designing strategies to counter any negative deviations from the plan.
2. Poor Cash Flow Management
82 percent of the businesses that fail ran into some kind of financial trouble. More often than not, it’s poor cash flow.
Your trucking company has lots of expenses that must be met, and with failure to pay, things will grind to a halt. Where does this money come from? Revenues, of course.
Problems start to arise when the company’s expenses dig too much into the revenues. Sometimes the expenses can be higher. These are signs of poor cash flow management.
You have a responsibility to keep your company’s expenses as low as possible, especially during the first few years of operation. Even if you’ve hit the ground running quickly and signed up several clients, that’s no excuse to increase your spending on things like moving into a fancier corporate office or hiring more support staff.
When finances are shaky, consider doing more truck leases instead of cash purchases.
Leasing enables you to make smaller payments to the truck dealers every month, leaving you with adequate working capital you can use to fund your operations. Buying might be the cost-friendlier option, but it takes up huge chunks of your capital, potentially leaving the company vulnerable when revenues slump.
And, always ensure you have enough working capital at hand, instead of entirely relying on revenues to fund your operations. This puts the company in a better position to respond to disruptive events like COVID-19. If your trucks are grounded today (maybe because of a manufacturer recall), will you have ready money to keep the company going?
3. Underutilization of Technology
Is your trucking company using the latest technologies in its operations?
Technology isn’t just about installing new computers and having fast internet in the office. There are technology solutions that are custom-made for truckers, and you should leverage their power.
For example, you certainly already have a website for your trucking company, but does it have an effective built-in load board? Is it capable of generating freight quotes?
If it’s lacking on that end, or you’re not sure, contact specialists like EZ Freight Broker Trucking Websites. They’ll audit the site and determine the new features it needs.
Fleet management software is a must-have. Driver scorecard systems are also becoming increasingly popular.
Keep in mind that technology evolves rapidly. Keep an eye on the latest solutions and don’t hesitate to adopt a newer technology that will make your operations more efficient.
4. Bad Practices for Hiring Truck Drivers
Although self-driving trucks are on the horizon, truck drivers are still the lifeblood of trucking companies. Without them, your trucks aren’t going anywhere.
However, truck drivers aren’t created equal. While others are competent professionals who will get the job done, others are downright undependable and can cause your business to fail.
Don’t hire anyone just because they have the required commercial driver’s license and some years of experience. Evaluate the personal attributes and soft skills. Will they be a good culture fit in your workplace?
If you slack on the recruitment of truck drivers, you’ll likely end up with drivers who sleep on the job. You know how that ends.
5. Poor Client Satisfaction
In any business, satisfaction is key to retaining existing clients and attracting new ones. As such, one reason your trucking company is struggling could be it’s not meeting client expectations.
If deliveries are taking longer than promised to arrive, for instance, clients aren’t going to be happy. It doesn’t matter whether the truck developed a mechanical problem along the way or your driver fell ill. Clients want their cargo delivered on time.
To satisfy your clients, do the basics well. Make prompt deliveries, ensure cargo arrives undamaged, and keep an open line of communication.
Beyond that, offer extras that really reel in the client. For example, provide a seamless digital platform where clients can get quotes and book their freight from anywhere.
Reignite Your Trucking Business
The trucking industry is a cornerstone of the American economy. You made a smart move to start a trucking business, no doubt, but you’ve to work hard for your success.
It’s not out of the ordinary for such a business to hit a rough patch from time to time. But, understanding what’s causing the decline is key to successfully driving the company out of the slump.
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