A trucking business is an ambitious project and it’s difficult to run without mistakes. If you’ve been in this business, and it’s not looking up, you must identify and avert those mistakes in your next course of action.
We’ve come up with eight key mistakes that might’ve been corroding the potential of your trucking business. Hence, you’ll be in a better position to handle and run your business, including resources, compliance, revenue, expansion, and more.
So, buckle up as we’re diving into those eight crucial mistakes which you must avoid to level up your trucking business with utmost efficiency.
Overlooking Compliance
Do you know what the best business entity for trucking is? Because that can impact the compliance requirements, which, if we’re being very honest, are things new business owners can easily overlook. But this is where they make a vital mistake.
Your company may not be certified by any international regulatory standard, but you must keep up with the minimum compliance requirements.
Some common requirements include drug & alcohol testing, carbon emission evaluation, hours of service (HOS), commercial driver’s license qualification, vehicle maintenance, etc.
Overlooking these requirements is not only against the law, but it’ll also cost you far more than what you wanted to save by ditching those maintenance and testing services.
Mishandling Cash Flow
Many startup trucking businesses make a grave mistake without actually realizing it— not balancing the cash outflow and inflow.
Generally, as the owner, you’ll have to make sure your operational and other relevant costs are paid off within 5-7 days to run the business smoothly. These expenses include vehicles (tractors, trailers, etc.), servicing, maintenance, insurance, wages, and many more.
On the flip side, it’s very unlikely that you’ll receive your cash inflow or the payments from your customers less than 30-60 days afterward. This may lead to a sudden halt in your operation while cramming you with unfinished deliveries and mounting debts.
So, we’ll advise you to maintain your inventory, cash flow, invoices, etc. efficiently with the help of a simplified accounting system to avoid any operational hindrance.
Oblivious of CPM (Cost Per Mile)
You might be thinking that calculating the CPM (cost per mile) is easy— just adding up the cost of fuel and driver’s payment and then deducting them from what you receive from the customer after delivery. Well, these aren’t the only expenses that should go into the calculation of the CPM.
There are things like insurance, IFTA, maintenance, tolls, salaries, gas, utilities, etc. which you must enlist as your expenses to calculate the CPM.
Being oblivious to the regular costs that are keeping your business alive leaves you with much lower revenues than what you’d expected at the beginning of the month or year.
Poor Communication
Many entrepreneurs still neglect this, but communication remains one of the staple business tools for any kind of business. So, whether your trucking business involves loading and unloading, refrigeration, flatbed, freight shipping, or whatever, poor communication will limit your potential for expansion.
Ask yourself these simple questions:
- Are you responding appropriately to your customers’ queries?
- Are you maintaining a comprehensive communication channel throughout the chain of command?
- Also, are you good at receiving new ideas from people around you like family, friends, partners, or customers?
- Can you approach significant people with the purpose to expand your business; people like investors, entrepreneurs, advertisement agencies, or people from the same industry?
If you answer most of these questions with a ‘no’ then you must work on this side of your business. Or at least hire someone efficient who can approach, communicate, and negotiate profitable deals on behalf of you and your business.
Missing Out on the Ownership
As they say, you can work out your favorite hobby to make it your ultimate profession. But what most people miss is that you must own the responsibilities once you’ve turned your passion into a business.
Many truck owners repeat the same mistake over and over again. They run their small to medium businesses as a personal thing while they should take it as a serious business.
What follows is a series of missed opportunities for wider clientele, lacking a better network, and reduced profits.
Procrastinating Profit & Loss Account
That profit and loss statement of your business might have an ‘annual’ tag on it. But it doesn’t necessarily mean that you have to do it only at the end of the year.
When starting out, you must keep track of every penny that goes out or in while operating on a daily basis. Most experienced truck owners, small or large, highly recommend keeping up with your expenses and incomes daily, weekly, monthly, and then annually.
In fact, regular tracking leads you to a transparent and complete annual profit and loss account. Hence, you’ll be able to budget and spend the funding effectively while tracking the profits flowing into the business.
Excessive Commodities Registration
Registering your trucking business for all types of commodities may seem visionary. But, let us tell you it’s actually a pothole that you’re creating for your business.
A major blow to your operational cost is insurance. If you register commodities that you’re not actually planning to haul and deliver any time soon, the insurance cost might go up depending on the commodity types you’ve registered for.
So, file for only the commodity types that you’re going to haul. Rather than the ones you might haul in the distant future.
Filing Errors
It is common for entrepreneurs to file faulty information about their companies. These faults may include filing the wrong type of business before actually forming your company type with the state.
Getting an EIN (Employer Identification Number) before the company is formed with the state may end up in rejection. Why?
Well, if you had applied to form a Corp. and acquired an EIN accordingly, there’s a possibility that your company might be registered as an LLC (Limited Liability Company). In that case, the EIN you’ve gained will be rejected while needing to be filed for an EIN again.
Final Summary
So, if you identify the eight common mistakes we’ve discussed above while starting a trucking business or even already running one, your operation will start looking up.
It’s true you won’t be able to be equipped with each and everything we’ve advised here at once; however, even starting on a few things with ample knowledge and dedication can start making the desired change.
Lastly, don’t take on too much. Instead, share ideas, jobs, and responsibilities with reliable and trustworthy people within your business entity to lift the pressure.
