Running a trucking company can be rewarding, but it is not for everyone. People come into this industry with unrealistic expectations to be successful in months. Forgetting there are certain precautions and practices you need to adhere to attain success.
According to reports, more than 500 trucking companies went under in 2019. This trend is said to be caused by unfavorable conditions for new companies in the trucking industry. But the failure of established firms has pointed to other causes.
Trucking companies face risks day in and day out, especially if they are new to the landscape of operation. But these are avoidable with proper planning and having the right help in your corner. Therefore, knowing the common reasons other trucking companies fail can help you prevent being one of them.
In this blog, Global Multi Services gives you a hand-up on the industry by covering why trucking companies continue to fail.
LACK OF PLANNING
Starting a business is rewarding and life-changing. However, a proper business plan is imperative to its success. Every trucking company needs a firm foundation to build strategies and techniques to operate efficiently. Running a trucking business is the same as running other businesses. But the industry has many state and federal regulations with a unique client base.
Failing to factor them into your business plan may haunt your business later. Therefore, you need thorough research and a plan to build a good foundation. Having a business plan also helps you brace for any possible contingencies. Hence, take time to create your business blueprint and, if possible, involve a corporate attorney. Understand your client base, know the market, and calculate weight surcharges.
Sales activities take place outside the business premises for trucking companies. Therefore, a managerial effort is required to keep track of all the drivers on the road. They also ensure the freight arrives on time and in perfect condition. So, employ a management team to keep track of money flow, bills, operations, and more.
Managers are one of the most important aspects of a business operation, and unskilled managers scare off good employees, making them leave. Therefore, your management team must have qualifications and experience. That way, you will be surrounded by a knowledgeable team with a nodding acquaintance with business success.
CASH FLOW PROBLEM
Starting a trucking business without considering your cash flow is one of the biggest mistakes business owners make. The cash-flow issue is a combination of many factors. These include low-paying freight, high costs of operations, too many unpaid invoices, etc. Also, clients often take up to two months to pay their invoices, and the trucking company has to cover the costs with its money. To ensure business operations go on, the company needs to foot utility bills, pay employees, build inventory, pay suppliers, get more clients, and cover tax expenses. So, lay out strategies to manage your cash flow with the help of a business management service.
Staying compliant is paramount for trucking companies operating across the United States. The Federal Motor Carrier Safety Administration encourages safe driving and ensures they follow the required regulations. These include obtaining permits, licenses, DOT Compliance, maintenance, etc. Also, every state has its requirements depending on freight, truck weight, and the distance traveled. Failure to adhere to these regulations can lead to fines, penalties, license revocation, or shutdown.
TO SUM IT UP
The trucking industry is competitive, and you can only be successful with a comprehensive business plan while identifying and exploiting available market gaps. Do thorough research and avoid unnecessary mistakes. Stick to your plans and learn from your predecessors to be successful.