The trucking industry hauls nearly 75% of the goods consumed in the United States. Everything from groceries to dollar store items makes its way to shelves on trucks.
COVID-19 hit the industry hard but the fast economic recovery put the trucking industry under the spotlight. Fears of supply chain issues and empty shelves are a major concern as we hit the holiday season.
If you have a trucking company, you know what a stressful time this is under normal circumstances. There are business pressures to continue to grow and take advantage of the economic recovery.
How can you grow your trucking business and make it profitable? Keep reading to learn eight tips that will help you streamline and grow your business.
1. Look For Loss-Leaders
Do you use loss-leader pricing in your business? It’s how UPS gets market share and attracts customers. The company offers some services at a deep discount.
They know that they’re going to lose money on those services, but they also know that a certain percentage of customers will stay and buy more. If you use this business model, you’re probably losing money.
There are leaks in your business. Your job is to figure out where they’re coming from.
Check your revenue per day and take a hard look at your budget. Also check metrics like the average length of a haul, percentage of empty miles, and maintenance cost per mile.
Once you start tracking these things, you’ll be able to identify areas in the business that you can adjust to improve profitability.
2. Check Your Legal Structure
Your legal structure could cost you money and be a major risk to your business. This is usually an issue for owner-operator trucking companies. Many are sole proprietors that work as independent contractors.
As you expand your trucking business, you also expand your personal liability. You’re held responsible for spills and accidents that your drivers caused.
Change your business structure to an LLC because you’ll be taxed the same and you have limited personal liability.
There are cases where it makes sense to file taxes as an S-corp. This is something you should speak to a business attorney or tax professional about.
3. Invest in Technology
Do you know if your team is as efficient as it can be? It’s possible that you have drivers that take too many breaks or take the wrong routes.
Investing in a GPS system for your trucks can help you get accurate analytics and make your systems more efficient.
One of the things costing money could be that you lose too much time with truck breakdowns and maintenance. Invest in diagnostic laptops and Jaltest Diagnostic Software.
You’ll be able to diagnose issues immediately and fix them. That reduces the amount of time a truck is out of commission, meaning they’re making money for your business.
Technology also helps you with bookkeeping, financial reporting, and fleet management. Make these investments and your trucking business will be more efficient.
4. Open New Markets
One area of growth for your trucking company is to expand into more markets. A local or regional company can go national. You could expand into new industries.
If you do expand into new markets, make sure your paperwork and licensing get updated. To haul goods between states, you need Authority from the Department of Transportation and Federal Motor Carrier Association.
You’ll then need to take care of the requirements of the International Fuel Tax Association, IRS Heavy Highway Vehicle Use Tax, and International Registration Plan.
5. Expand Your Trucking Fleet
Do you find that you’re losing out on jobs because you don’t have the capacity to handle them? This is the ideal time to purchase more trucks.
Check your credit score first because you’ll need to obtain financing. You’ll also have to decide if it’s best to lease a truck or get a loan to buy it.
You can also take advantage of Section 179, which is a section of the tax code that lets you write off the entire expense of the truck instead of depreciating the cost over several years.
6. Hire More Drivers
Hiring truck drivers isn’t that easy. Right now, there’s a shortage of 80,000 drivers. It’s expected to increase to 1 million over the next 10 years.
Classify your workers properly. They have to be either independent contractors or employees. Misclassifying workers is something that can hurt your business.
Tax agencies look at businesses closely. If they find that you misclassify employees, you’ll see big fines.
7. Start Small
Business owners that make too many changes too quickly are rarely successful. Take your time to implement changes.
Focus on one area of the business, such as maintenance cost per mile. Work to lower that cost as much as you can.
Once it’s at an acceptable level, take another area of the business. You might want to lower the number of empty miles. Work on that until you’re ready to move on to the next thing.
Over time, these small changes add up to more revenue and profits for your business.
8. Expand Your Network
Do you rely on the same people to call you for business? Expand your business to include brokered loads from other carriers.
This can increase your revenue more than working with self-brokered loads.
Grow Your Trucking Company Today
It doesn’t take much to streamline and grow your trucking company. Look at areas where you’re losing money and opportunities, invest in technology, and expand into new markets.
It seems so simple, but it’s difficult to execute well. That’s why you want to start making small changes to your business. You’ll see small improvements over time, and you’ll be more profitable.
Do you need more help growing your business? Click on the Business tab at the top to get more business advice.