The trucking industry is massive in the United States, with different sectors involved in various areas of the industry. Trucks transport 70% of the goods in the country, which makes the industry a massive market share. With the essential nature of the industry, why do many trucking companies fail? The trucking industry is highly regulated and staying compliant is very important. Trucking companies need to obtain their motor carrier permits, MC Authority, USDOT Number, and many more. Failure to do so can lead to a hefty penalty which can affect the company’s revenue.
They also face many challenges every day, especially the newbies. These include bad weather conditions, accidents, truck breakdowns, and many more. While there are many benefits of starting a trucking company, you also stand a lot to lose. But knowing the reasons other trucking companies fail can help you prevent being one of them. Read on, as Global Multi Services take us through why trucking companies fail.
LACK OF RESOURCES
Resources are an essential part of every business, and it’s no difference in the trucking industry. A standardized trucking company must have good trucks, competent drivers, professional dispatchers with good management, and many more. Without these, meeting customer’s needs and operating with utmost efficiency can be strenuous. These can give the company a bad reputation and make them go out of business within the first few years.
POOR MANAGEMENT SKILLS
The trucking industry is different from other industries because most sales activities take place outside the business premises. Trucks haul freight from one place to another every day, and a lot of managerial effort is required to keep track of drivers. They need to ensure the drivers arrive on time and in perfect condition. Without good management skills, there might be loopholes in operation leading to customer dissatisfaction. Therefore, it is paramount to recruit employees base on qualifications and experience. That way, the company will have knowledgeable individuals who have a nodding acquaintance with business success.
POOR BUSINESS PLAN
While the idea of starting a business is exciting, rushing into it can be dangerous. It needs proper research and a definitive plan. Poor planning often led to business failure. Therefore, do your research and understand how the industry works. Know your target customers and partner with professionals to come up with a comprehensive plan. You need a firm foundation, great strategies, and techniques to operate efficiently.
FAILURE TO OBTAIN MOTOR CARRIER PERMIT
Starting a trucking company requires you to follow regulations given by the Federal Motor Carrier Safety Administration. These include obtaining your motor carrier permits, IRP Plate, IFTA license, MC Number, and many more. Every state also has its requirements depending on the type of freight, truck weight, and distance traveled by truck. Failure to stay in compliance can lead to license revoke, leading to business failure.
LOW PAYING FREIGHT
Running a trucking company is expensive, but your expenses should not exceed your revenue. Therefore, you need to keep track of your cash-flow statements and make quote adjustments accordingly to avoid losing. Make sure your income aligns with your business objectives to avoid business failure.