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Starting A Trucking Logistics Business In Any Economy
The Business Plan Is Your Road Map
Creating a business plan is the first step in any business venture. While the sound of this may turn you off it is a very important step and does not have to be very lengthy in nature. Keeping things simple is the order of the day when start a trucking business. I believe that having a written plan that is two to four pages in length will do more for you because you will actually implement and review the plan more often.
The business plan will essentially help you develop a checklist that you can use to help ensure your business is successful and profitable. Your plan will also help you identify your strengths, weaknesses, as well as identify opportunities and threats. I will provide you a brief overview of the business plan as we move along but there are numerous resources on the internet and by various authors if you would like more details.
Your Trusted Advisors
It is very important for you to assemble a team of trusted advisor's. This team could include your attorney, your CPA, your financial advisor, and your insurance agent because truck insurance is very important. All of these advisors will help you bring your vision of starting a trucking business together.
Your attorney will help you establish the legal entity you will use to operate your trucking business. Your CPA will more than likely consult with your attorney in this process to make certain you have the correct type of entity established for tax purposes as well as legal protection. Speaking of protection, your insurance agent will help you select the type of commercial coverage you need to run your trucking business as an owner operator.
You will want to consult your financial advisor who can help you establish the correct type of investment and retirement plan that meets your needs. You need to have a serious in depth discussion with your financial advisor if you have an old 401k or IRA. You may be able to use these retirement assets to help finance your new business. You need to proceed with caution if you choose this route to finance your business because there are specific steps that are required to be followed under IRS rules.
Financing Your Trucking Business
A logistics business like trucking requires a large capital investment in equipment. This can be a show stopper for some would be owner / operators. Financing can be a hurdle in some cases depending on the state of the economy and credit markets. Don’t let the first no you hear from a potential lender stop you. At the same time you also don’t want to be paying such high interest that your business is not profitable.
Working capital is also an important consideration because you will always be hauling transporting loads today and getting paid one week to one month down the road. You need to have a cushion of working capital to draw on for this reason.
Marketing plan, “You ask”?
A marketing plan is essentially how you sell your services that you have available. Do you have existing contacts that will allow you to get signed contracts? Are you going to use the services of a broker to get loads? The marketing plan section will help you narrow your focus because each of the above mentioned items requires a different strategy / approach.
If you have existing contacts you will be approach them to promote your services so it is probably a good idea to have a simple but professional looking brochure. A brochure will explain the services you provide and communicate the benefits of doing business with you. Do you have more modern equipment such as GPS tracking that allows your customers to know where you are at all times? Or is your equipment more fuel efficient translating into cost savings for your potential customers. A professional brochure would explain how your different and the benefits of doing business with you. Landing a long term contract can go a long way in helping the financing end of the business also.
If you are going to use brokers to get loads then you may not need a professional brochure but it may help. In any case, the person doing business with you needs to know that you are a reliable business person and will deliver on time and on budget.
The Business Of The Business
It is relatively easy for most people to start a business. It is much more difficult to run the business as a business for most. This is easily solved through developing systems. A system can be something as simple as a portable file folder for you to keep track of expenses and receipts while on the road. It can also be as complex as a computerized accounting system that resides in your office or your bookkeeper’s office if you choose to hire a book keeper. If you hire a book keeper be sure to have them communicate with your CPA when setting up the book keeping system.
A system of regular maintenance on your rig will also ensure that it remains reliable and in good condition for the long run.
Just In Time
Just-In-Time systems ( JIT ) of our modern economy coupled with communications technology advancements have created an array of opportunities in the transportation and logistics industry. For those owner operators that have superior systems in place and run a good business, the opportunities are bountiful.