91.3% of all carriers operate 6 or fewer trucks. Larger fleets have the capacity to outpace, outperform, out-buy and out-hire smaller competition. Growth is a natural progression for a healthy business to improve profit margins, provide higher earnings and compete on a level playing field. The greatest opportunities for trucking companies to grow are rooted in a downturn within the industry. As competition increases, unprofitable operations are weeded out causing capacity to exit the market. For trucking companies that survive, opportunity for growth becomes abundant as volume begins to return and more trucks are needed to fill the gap. To grow, you have to be as smart, or smarter than competition, work hard and adhere to the 9 steps to success. 9 Steps to Success in Trucking Running a trucking company in today’s market is becoming more expensive, more complex and more regulated as time progresses. The industry is in the early stages of unprecedented change with autonomous trucks, tech innovations and emerging fuel alternatives leading the transformation. Those who adapt to the changing landscape and focus on the principles of success will be the ones who grow and prosper. Adhere to these 9 steps to success to guide the growth of your trucking company: Have a Business Plan Know Your Cost-Per-Mile Know Your Profit and Loss or Each Haul Use the Right Fuel Buying Strategy Avoid Cash Flow Problems Work with the Best Customers Know How to Improve Profit Margins Run an Efficient Back Office Recruit and Retain Quality Drivers Plan to Succeed with the Right Trucking Business Plan For any business to succeed it must operate with a plan. A business plan functions as a road map for how to structure, run and grow a business. The main purpose of a business plan is to answer two key questions. What does this business hope to accomplish? How are we going to accomplish it? A key component of any growth plan is to maintain profitability. This may seem too obvious to mention, but a surprising number of trucking companies run operations without knowing if they are making profit or taking a loss on loads. According to research, nearly 50% of all small businesses fail within 5 years. One of the biggest reasons for this staggering statistic is that businesses fail to become profitable. Trucking is a capital intense industry with constantly rising costs and fluctuating freight rates. In this highly competitive environment, the temptation is to accept any load that keeps your trucks moving. This strategy needs to be governed by costs. Knowing your cost-per-mile; it is one of the most important performance indicators and foundational metrics for setting a freight rate and choosing loads to ensure your trucking business is profitable. With the possible exception of driver wages, fuel is the largest operating cost for your trucking company. Representing 30% to 35% of your running costs, it is an expense well worth managing closely. Integrating fuel efficient technologies and monitoring driver habits are cost saving strategies that need to be considered but additional strategies to lower the cost of fuel should also to be investigated. An easy cost reduction tactic is to use fleet fuel cards with discount pricing and terms to improve cash flow. Among the common reasons for a business to fail is a lack of available working capital. Keep a close eye on cash flow and financial trends. Is there enough money to pay bills on time and still have some left over for you to take home? If not, it's time to generate additional revenue by driving more loaded miles, reduce expenses, or find funding options such as freight factoring to increase cash flow. It's generally a good idea to investigate some combination of all of the above. Improve Revenue and Cash Flow To improve your company profit margins, each truck needs to operate at maximum efficiency, costs have to be controlled and revenue needs to be maximized. Establish a revenue target that your equipment needs to hit every day. Monitor performance and make adjustments to stay on track and hit benchmarks. Failure to do so will result in poor month end and year end performances. The best solution to maintain positive cash flow is to service a base of credit worthy customers that pay in a timely fashion. To attract and retain the best customers, create a work environment that focuses on service excellence and provides a positive customer experience. Brokers and online load boards provide the least profitable freight. Create direct relationships with shippers to develop a stable customer base with the most profitable loads. Servicing customers, running operations and generating revenue is the front end of the business. Accounts receivable management and credit analysis are major duties of the back end of the business that have a direct influence on your bottom line. Collecting invoice payments and reducing days sales outstanding to improve cash flow is the primary role of the back office accounts receivable team. To best position your company for growth, your back office needs to perform the additional roles of dispute resolution, customer relations and credit analysis. For many trucking companies, outsourcing the back office to a 3rd party service is the preferred option. Having trained and experienced industry specialists working on your company's behalf will streamline processes, increase efficiencies and leave you free to run your trucking business. Recruit and Retain Truck Drivers Finally, to maximize utilization, maintain efficiency and represent your company as ambassadors in the field, you need experienced quality drivers. Establish a pro driver environment within your company by initiating driver incentive and appreciation programs. The advantage of being a small, growing fleet is the ability to build a close relationship with your drivers to increase driver satisfaction and minimize turnover. A Guide to Trucking Company Success Growth is a natural progression for a healthy business, but it takes planning, implementation of good work practices and the ability to perform efficiently across a wide range of disciplines to succeed. To help you along your path to grow and prosper, Accutrac Capital has produced a guide outlining 9 steps to success. “How to Grow a Success Trucking Company” is a document packed with interactive links to helpful resources. Download the guide for free to access tools, profit calculators, checklists and more that will help your trucking business operation succeed.