You need a new perspective when you get your own authority
By Timothy D. Brady
As an independent trucker driving down the highway with your name on the side of the truck, you get to make all the decisions. No more dispatchers. No safety director telling you how to fill out your logs. Freedom to pick and choose what loads you’ll take. Total independence. Real freedom of the road! Just call any company that sets up hauling authority and, with a few thousand dollars, in a couple of weeks you’re in business.
Stop! Set those brakes. In fact, you’d better chock the wheels. You need a reality check.
As a motor carrier owner, yes, you get to make many of the decisions. You also take on 100 percent of the responsibility and liability. Just walk into any trucking company and visit all the departments in the operation. Ask each department head what his responsibilities are, and once you’ve compiled each list from each area you’ll have a good idea of your new job description.
There’s more to running a trucking company, even if it’s just one truck with one driver and one owner and all the same person — you. Let’s say you’ve set up all your departments, organized their filing systems, and set all your policies in place. If you think all you need to do next is buy or lease a tractor and trailer, obtain your MC number, purchase the proper levels of insurance, find a couple of freight brokers and start hauling freight, you’ll be scratching your head and wondering why your company isn’t successful.
The most important item you need before becoming a motor carrier owner, before obtaining your authority, before purchasing your insurance, before talking to a single broker or shipper, is a plan for how you’re going to be successful. According to the Small Business Administration (SBA), 90 percent of those who go into business today without a business plan will be out of business within one to two years. In trucking, that number is even higher.
Again, according to the SBA, individuals who complete a comprehensive business plan have a 60 percent chance of success — far better odds on which to place your bet. Creating a business plan is more than a labor of love. It takes both time and effort to complete it. But you make mistakes on paper instead of making them on the road, where they’ll cost you real money.
The most important decision you need to make is about your specialty. What niche are you going to fill? If you’re planning to haul general freight through brokers in all 48 states, you’re doomed to failure. You can’t compete with the large truckload haulers on price. You’ve got to provide a service they are not willing to do, or you have to provide service to a customer the large carriers aren’t interested in, or have hand-picked customers and a specific region in which to operate.
Successful trucking companies don’t just happen, they’re planned. So do you have a plan?
Trucking by Department
Rates and Tariffs: develops profitable hauling rates through analyzing your company costs, and projecting cost increases. Your sales staff needs these figures too.
Sales: locates potential shippers, convinces them yours is the best trucking company for their needs, and negotiates a hauling contract that’s profitable for you and beneficial to the shipper/receiver.
Safety and Insurance: makes sure your company complies with state and federal DOTs and FMCSA regulations. Sets up and maintains your safety filing system in order to pass a DOT Safety Audit. Monitors the correct levels of insurance for your type of operation and constantly reviews this coverage. Other responsibilities include fuel tax reports, vehicle registration, Federal Highway Use Tax (FHUT) filing and payment, accident reports, log book compliance and scheduling annual safety meetings.
Operations: organizes loads into a practical, workable load plan using route planning, lane density and load density principles.
Banking and Finance: works with a bank, commercial lender or factoring company to maintain cash flow while you’re waiting for shippers to pay. Your company still has fuel, maintenance, repairs and office expenses, and drivers won’t stay if they’re not paid on a consistent and regular basis.
Marketing and Customer Service: tells potential shippers what you do and how well you do it, maintains profitable relationships with your current customer base, and works from a marketing plan. Also has a customer service department to deal with problems your shippers and receivers have concerning delivery of their load and a customer service policy anticipating such problems and offering solutions.
Accounts Receivable: invoices customers and tracks when and if shippers paid you. Also handles collections if they don’t pay.