The trucking industry is as competitive as it is profitable. It attracts a lot of entrepreneurs who are all looking to take a share of the profit pie. However, success and high-profit margins are reserved for the detail-oriented business owners. If you can manage to keep daily operating costs low, attract high-value clients, and handle your cash flows in the right way, your business will be successful.
Here are four tips to increase the profitability of your trucking company:
1. Control Your Cash Flows
While you might want to get paid by shippers as fast as possible, the reality is that many shippers don’t offer quick-pays. This means that it’s quite common to have expenses that come before your revenue. Trucks need to be fuelled and repaired regularly. If your business were to run out of cash in between payments, you would have a hard time catering to clients’ orders, increasing the chances of losing your clients to the competition.
The trick is in how you handle your expenses. You need to commit to bookkeeping. Ensure that you record every penny that is used, and also work on forecasting your expenses in between payment dates. This approach will help you make the right decisions to keep your business going and avoid running out of cash. In case you face cash flow problems, you can always apply for a business loan to fund your operations until the cash arrives.
2. Lean Manage Your Daily Operations
Time and money are invaluable assets to the success of your business- you need to avoid wasting them. Focus on the nitty-gritty details of how you operate your business and identify any wasteful parts. For instance, your trucks might be wasting valuable time in traffic, whereas using longer routes during the rush hour would save time and fuel. This saved time could then be used to transport other items and bring more revenue to the business.
You could also be implementing wasteful business management practices. For instance, you might be using more than one business management tool to manage your business, whereas a single tool can be enough. Though financially consequential, some of these wasteful parts of the business might be tough to identify. Consider working with truck consultants who can help you identify any wasteful parts as well as offer valuable insights.
3. Pick and Retain the Right Staff Members
Every HR team agrees that it costs more to hire a new employee than to retain a current one. If your business keeps on experiencing high employee turnover rates, there is a chance that it won’t be as profitable as you would want. Each new hire brings in training costs and a slight reduction in productivity as the recruit tries to learn the ropes. This could affect your overall productivity.
Ensure that you pick the right staff members for any open positions you might have. For instance, work on hiring drivers with a clean driving and criminal record as this reduces the risk of employee turnover. Also, give employees a reason to keep working for your business. You can offer incentives like unmatched compensations and employment benefits.
Building a profitable trucking business is a step-by-step process. You need to make small changes to your daily operations to get to that financial sweet spot. Follow the above tips to give your business a competitive edge while remaining profitable.