Cargo transportation is an ambitious project, and it is difficult to do without mistakes. If you’ve been in this business and it’s not going up, you need to identify and prevent those mistakes in your next course of action.
We have identified eight key mistakes that could undermine the potential of your trucking business. Consequently, you will be in a better position to manage and run your business, including resources, compliance, revenue, expansion and more.
So buckle up as we dive into the top eight mistakes you need to avoid to get the most out of your trucking business.
Do you know that best shipping company is an? Because it can affect compliance, which, to be honest, new business owners can easily overlook. But this is where they make a serious mistake.
Your company may not be certified by any international regulatory standard, but you must meet the minimum compliance requirements.
Some general requirements include drug and alcohol testing, carbon emissions assessment, hours of operation (HOS), commercial driver’s license qualifications, vehicle maintenance, etc.
Not only is it against the law to ignore these requirements, but it will also cost you far more than you would like to save by forgoing these maintenance and testing services.
Improper handling of cash flow
Many trucking start-ups make a big mistake without even realizing it, by not balancing cash inflows and outflows.
As a general rule, as an owner, you need to make sure that your operating and other related expenses are paid back within 5-7 days in order for the business to run smoothly. These costs include vehicles (tractors, trailers, etc.), maintenance, maintenance, insurance, wages, and more.
On the other hand, it is very unlikely that you will receive cash flow or payments from your clients in less than 30-60 days after that. This can lead to a sudden stop in your work, burdening you with unfinished deliveries and mounting debts.
So, we will advise you to effectively manage your stocks, cash flow, accounts, etc. with a simplified accounting system to avoid any operational hindrances.
Ignoring CPM (cost per mile)
You might think that calculating CPM (cost per mile) is easy – just add up the cost of fuel and the driver’s fee, and then subtract them from what you get from the customer after delivery. Well, those aren’t the only costs that should be factored into your CPM calculation.
There are things like insurance, IFTA, maintenance, tolls, wages, gas, utilities, etc. that you must add to your expenses to calculate CPM.
By ignoring the recurring expenses that keep your business going, you end up with far lower returns than you expected at the start of the month or year.
Many entrepreneurs still neglect it, but communication remains one of the main business tools for any business. So, whether your trucking business involves loading and unloading, refrigeration, flatbed hauling, freight hauling, or anything else, poor connectivity will limit your potential for expansion.
Ask yourself these simple questions:
- Are you responding correctly to your customers’ requests?
- Do you maintain a comprehensive communication channel throughout the chain of command?
- Also, are you good at getting new ideas from people around you, such as family, friends, partners, or clients?
- Can you reach out to significant people to expand your business; people like investors, entrepreneurs, advertising agencies or people from the same industry?
If you answer “no” to most of these questions, then you should be working on this side of your business. Or, at the very least, hire someone efficient who can approach, chat, and negotiate great deals on behalf of you and your business.
Loss of ownership
As they say, your favorite hobby can be turned into a profession. But what most people overlook is that you have to take charge once you’ve turned your passion into a business.
Many truck owners make the same mistake over and over again. They run their small and medium business like a private matter when they should treat it like a serious business.
What follows is a series of missed opportunities for a wider clientele, lack of a better network, and declining profits.
Postponing the income statement
This income statement for your business might be labeled “annual”. But that doesn’t necessarily mean you should only do it at the end of the year.
When you start out, you have to keep track of every penny that goes in or out during your daily work. Most seasoned truck owners, small or large, strongly recommend keeping track of your expenses and income daily, weekly, monthly, and then yearly.
In fact, regular tracking results in a transparent and complete annual income statement. Consequently, you will be able to budget and spend effectively by tracking the profits flowing into the business.
Registration of excess goods
Registering your trucking business for all kinds of goods may seem like a far-sighted move. But let us tell you that this is actually a pothole that you create for your business.
A serious blow to your operating costs is insurance. If you are registering items that you do not actually plan to ship and deliver in the near future, the cost of insurance may increase depending on the types of items you have registered for.
So, register only the types of goods that you are going to transport. Not the ones you could pull out in the distant future.
Entrepreneurs often submit false information about their companies. These mistakes may include registering the wrong type of business before your company is actually formed in the state.
Obtaining an EIN (Employer Identification Number) before the company is incorporated by the government may result in a refusal. Why?
Well, if you have applied to form a corporation and obtained the appropriate EIN, chances are that your company may be registered as an LLC (Limited Liability Company). In this case, the EIN you received will be rejected and you will need to reapply for an EIN.
So, if you identify the eight common mistakes we discussed above when starting a trucking business or even already running one, your operations will start to improve.
It’s true that you won’t be able to be equipped with everything we’ve suggested here; however, even starting with a few things with sufficient knowledge and dedication, one can begin to make the desired changes.
Finally, don’t take on too much. Instead, share ideas, jobs, and responsibilities with reliable and trustworthy people in your business structure to take the pressure off.