The trucking industry is a big one and promises a host of financial rewards for those who do well. But it’s also a competitive industry. There aren’t just a few big players in the trucking industry, as there are in the banking sector or the fast-food industry. Instead, the field is still wide open for new entrants and people wanting to set up their own logistics businesses, using their own capital.
But to be a success in the trucking business, you’re going to need a few factors on your side. Almost always, successful owner-operators are those who have a long history of experience in the industry and also have access to plenty of cash to start operations. Here are some of the things you need to know if you want to become a successful truck entrepreneur.
You’ll Need Good Credit
A lot of truckers who drive for a living dream of being their own boss and employing other people. But all too often, they have a poor credit rating. You might think that having a poor credit score is a problem because it means that it is hard to get credit. But with the growth of companies prepared to lend to truckers to buy their own trucking equipment even with low ratings, this isn’t the main issue. The main issue is the underlying behaviour of the owner-operator themselves. If they’ve got a habit of taking out loans and going into debt unnecessarily, then they’ll behave in a similar way when they run their own company.
Trucker entrepreneurs, therefore, need to look at themselves very closely in the mirror and ask whether their money management skills are up to the challenge. If not, they’ll go out of business very quickly.
Independent Operator Or Leased To A Carrier?
Being an independent truck operator has its perks. But if you do go down this route, instead of the leasing route, you’ll be responsible for things like insurance. Companies like CompleteMarkets have local insurance experts that will help you with your specific commercial auto insurance needs. Because the insurance market, especially for commercial companies, can be tricky to navigate, it’s worth seeking some professional advice.
Also, if you do decide to go down the independent route, you’ll need to be prepared for slow customer payment. Slow customer payment is a problem is every industry, but it’s particularly problematic in the trucking industry where payments are only made after the goods are delivered. This means that your business will have to incur the costs of providing the service before you’ll see any money in return.
You’ll Need A Mountain Of Cash
Gaining a foothold in the trucking market is similar to getting a foothold in the housing market: you have to build up a deposit first. Many aspiring owner-operators believe that they can just rent out a truck and then pay back the lease money with the cash they earn on the job. But unfortunately, nearly all truck lease agreements require a substantial down payment up front. Thus, unless you’ve got a mountain of cash, you’re not going anywhere.