Trucking businesses are one of America’s backbone industries. Without trucking, there would be no groceries in the refrigerator, no electronics in the stores, and no houses to live in. All the things we purchase and use are made possible by trucking companies, who move the raw materials and finished goods all around the country each and every day. However, not all trucking companies are successful. In fact, most are very small and go out of business in under 3 years. If you’re a small trucking company, the following tips should help you become more successful.
1 Reduce your factoring. Nearly all small trucking companies factor their invoices, which means they use a finance company to lend them money against their receivables. This is a VERY expensive way to operate. Most trucking companies operate at 10% margin or less, and most factoring rates are 3% or more. This leaves the very little profit for the business. If you must factor to get started or grow, just make sure it’s a temporary solution. Have a plan to reduce the number of invoices factored or the time you use a factoring company.
2 Outsource your payroll. Unless you have over 25 employees, it is often better to outsource your payroll to a payroll service than to do it yourself. A payroll service is going to make sure all your tax payments are calculated properly and made on time. And if they don’t, they are responsible for the penalties. The fees for payroll services are so low you can’t do it cheaper in-house. This is a no-brainer.
3 Use fuel cards. A fuel card account will streamline the billing, offer discounts, and allow you to spot fraudulent activities. It’s a lot easier to analyze monthly billing statements from the fuel card company than to enter receipts into a spreadsheet in order to find out which driver is misusing their fuel purchases.
4 Use owner operators. While there are good arguments on both sides of the argument, there are more positives than negatives for smaller companies to use owner operators. They don’t require payroll taxes, they are responsible for their own maintenance, and since their pay is usually a percentage of the load amount, you guarantee yourself a set margin and your business insure against losses. Additionally, it is easier to ramp up or cut back as business fluctuates.