Courtesy of OTR Capital
The transportation industry is an increasingly competitive market. Regardless of how long you’ve been in trucking or how long you’ve owned your own fleet, you should always focus your core business strategies on sustainable growth.
How do you ensure that you stay ahead of the competition and adapt to changes across the industry? In this article we are going to cover five items that will support the growth of your trucking business:
- Organize your finances;
- Establish your growth plan;
- Protect your company and drivers;
- Network within the trucking community; and
- Make sure you have access to continuous cash flow.
Organize your finances.
The freight market is highly volatile, with massive swings in linehaul rates throughout the year due to changes in demand, fuel prices and more. It’s time to create a growth plan that accounts for all industry conditions, and for that you will need to know your bottom line.
On a per-mile basis, what are you spending on insurance? What about maintenance? Before you decide to finance that new truck or hire on another driver, are you still profitable if linehaul rates drop 5% to 10%?
Don’t hesitate to ask the experts these questions. It’s helpful to have a firm grasp of this either way.
OTR Capital recommends that you consult with companies that specialize in transportation to help with your finances. Our partners at the Owner-Operator Independent Drivers Association (OOIDA) have created a great tool for tracking your expenses as a truck driver. Click here to access OOIDA’s online tool.
Establish your growth plan.
Operating and scaling a successful fleet is highly dependent on a firm infrastructure to support your growth. That means more than just adding new trucks and hiring drivers. Successful fleets account for the dispatch, maintenance, payroll, and compliance oversights needed to sustain each unit in operation.
Before you purchase that next truck and begin growing, a few things to keep in mind are:
- Will my insurance policy allow for mid-term expansion? How will this affect my renewal?
- If a driver quits, how easily can I replace him?
- If freight rates slump, can we afford the expenses associated with the additional unit?
- Do I have the dispatch support necessary to keep the truck moving and the driver happy?
- Can we handle the additional weekly driver pay?
- Who is responsible for making sure the truck is compliant? Who handles maintenance?
Whether you’re planning to add one tractor to your fleet or 10, having answers to these questions can make or break you in the long term.
Protect your company and drivers.
It’s difficult to keep up with the ever-evolving rules and regulations surrounding the trucking industry. Did you know that one accident or failed audit can put you out of business if you aren’t properly protected? Working with an insurance agency and safety/compliance teams that you can trust are major safeguards to protect you and your fleet.
Working with a transportation focused insurance brokerage, such as Marquee Insurance Group, will make sure that regardless of the size of your fleet, you have the proper coverages in place to protect your business.
In addition, the Federal Motor Carrier Safety Administration (FMCSA) has published a free safety planner tool on their site make sure that you have an easy-to-use guide on all thing’s compliance. Click here to check it out.
Network within the trucking community.
As with any business, it’s vital to have a team in place that you can count on. The same goes with partners. Establishing the right partnerships can also help accelerate sustainable growth with the necessary resources for your business.
Quality relationships with industry leaders on the freight, insurance, factoring, and fuel sides of the business, can also help form a foundation for success.
Whether you work with OTR Capital for factoring or not, we highly recommend that you check out some of our incredible partners for any of your fleet’s needs.
A few other educational tools across the industry tools include:
- Online community;
- Transportation webinars and YouTube channels (OTRtv);
- OOIDA; and
- DAT Resources.
Make sure you have access to continuous cash flow.
To run a successful operation, most fleet owners know when, and if, their outstanding invoices will turn into realized cashflow. Managing your open accounts receivable can be a difficult and time-intensive task.
One of the most common cash flow solutions is invoice factoring. Factoring your transportation invoices, particularly when you plan to grow, serves two valuable roles as your operation expands. Your business will benefit not only from regular cashflow, but also from a customer risk perspective. As you expand, factoring provides a less expensive alternative to hiring accounts receivable and accounting teams. At scale, factoring assists with keeping costs down and revenue up.
Fleets that utilize factoring correctly have been able to grow faster and more reliably while keeping a lean in-house team. Although factoring is not the only cash flow solution available in the transportation space, it is the most used and integrated service available.
In trucking, being prepared for the road ahead is half the battle. Ask the tough questions now to start establishing your growth plan and set yourself up for success in the trucking industry. OTR Capital helps new ventures and existing ventures alike fuel their growth with access to the cash flow needed to focus on their business. Get access to the right partnerships in the trucking industry and join a family of truck drivers today that want to take charge of their business when you factor with OTR.