The logistics industry is a temperamental one. Gas prices can change significantly overnight. Customers can take weeks or even months to pay their invoices. A vehicle breakdown can set a business back by thousands of dollars.
When you factor in these aspects, it’s essential you avoid low profit margins when operating a trucking business. Just a single issue cropping up could place your company into a vulnerable position, one that might be difficult to escape.
The good news is that, before that becomes a possibility, there are numerous tactics you can utilize to improve those profit margins – and your trucking business as a whole. Here are four steps to consider.
Running a trucking business involves a lot of tasks and responsibilities on a day-to-day basis. Fortunately, technology can step in and offer a helping hand. It can help with everything from staying organized to managing your finances.
There are also transportation-centric technology solutions available. With the right custom fleet management solutions in place, for instance, you can gain benefits such as telematics, route planning, and dynamic dispatch, commercial video recording, and GPS tracking.
With the right combination of technology, you can significantly improve efficiency, save time, and achieve greater accuracy.
It’s an obvious point, yes, but a lot of new business owners take for granted the need to properly manage their finances. Without this approach, you can quickly run into trouble and fail to complete your business objectives.
Linking to the previous step, accounting software is a solid starting point. Yet, it’s also vital you continually monitor your financial position, understand day-to-day costs, and see which expenses you can trim down if possible.
Gaining new clients is always the aim for any service-based business. However, there’s also a lot of value in building strong, lasting relationships with your current clients. By doing this, you should receive steady work without needing to hunt for new projects to keep cash flowing in.
To forge fruitful relationships with your clients, going above and beyond with customer service is essential. The big transport organizations will typically beat you in terms of price and shipment times, but this is one area where you can gain the upper hand. After all, you have fewer clients to deal with, which means you can dedicate a lot more time to each one.
Ensure you or an employee is always available to answer their questions and inquiries. Keep them updated on any potential changes to their order. Provide special discounts when possible. The more you put into service, the better the chance they’ll pay a little extra to stick with your business.
There’s a notorious issue with running a freight business: customers often won’t pay their bills straight away. This delay can be particularly damaging for a small trucking business, as the lack of cash flow could cause problems in paying drivers and keeping your trucks on the road.
Fortunately, there is a solution with invoice factoring. This is a form of financing where you generally receive up to 95% of the invoice value from a lender. The cash is provided immediately, which means you don’t have to wait weeks or months for payment.