Many factors can influence a trucking company’s profit margins and what expenses they can afford on a daily basis. There are certain factors to consider, especially what truckers can control.
You can’t control the weather, the whims of a client, or a supply chain disruption — but you can manage your maintenance practices, recruiting methods, and cost management strategies. Still, it may seem like challenges outweigh advantages, and in times like these, how do trucking businesses make money?
Trucking Company’s Profit Margins
Learn about effective strategies for improving trucking business profits and gaining control over your company’s bottom line. You can boost revenue with the right approach while enhancing your drivers’ work conditions and ensuring your clients are satisfied.
Invest in Preventative Maintenance
One of the best ways to mitigate expenses and predict costs is to invest in preventative maintenance for your fleet. Repairs and replacements are a common source of unexpected costs. It is especially true when a truck’s stranded on the side of the road. According to Fleet Equipment Magazine, the cost of such a repair is $407 on average, which represents an increase of 24% from prior years. Multiply this cost by the number of trucks in your fleet. Then, consider how frequently you have to perform impromptu repairs — and it’s clear how quickly the costs add up. Preventative maintenance such as monitoring fluids, checking tires, and replacing filters can go a long way in preventing unnecessary breakdowns, thus minimizing costs.
Improve Your Recruiting Methods
Another high cost for trucking companies is continuously recruiting, hiring, and training new drivers. The high departure and turnover rate impacting the industry enhances this. Despite this issue, some dedicated drivers want to put their skills to use, and they want to find a long-term employer just as much as you want to see long-term employees. Finding these candidates is a critical component of minimizing your company’s expenses. Thus, you may need to renovate your recruitment strategies. Rather than casting a too-wide net, you should focus on seeking out experienced truckers who bring professionalism and commitment to the table.
Monitor Your Cost Per Mile (CPM)
Cost per mile is one of the most important metrics for tracking your corporate expenses, but it’s a frequently overlooked number. This figure is imperative if you want to gain an accurate overview of just how much you spend in general operating costs. You can calculate it by assessing your fixed costs — costs such as commericial truck insurance premiums, staff wages, permits, and license — and adding these expenses to variables such as gas, maintenance, and unexpected repairs. Then find the total number of miles your fleet drives and divide the costs by this number. Determining your cumulative CPM is a great way to understand your company’s financial standing — and work to improve it.
Pursue New Contracts and New Clients
A trucking company’s profit margins can fluctuate, and based on their marketing strategy. Many trucking companies adopt a passive marketing strategy and wait for clients to find them. It’s true that eventually, new clients will seek out your services. However, it would help if you actively pursued new contracts and clients. You might have to hire new staff or expand your fleet to accommodate more business, but this is an excellent problem to have. You can start by looking for additional loads on load boards. It can introduce you to new partners who could eventually become long-term clients. You may also be able to scope out new business by looking at broker networks that connect truckers with high-paying transport opportunities.
Invest in Customer Satisfaction
The only figure more critical than your trucking company’s revenue is your company’s customer satisfaction rate. Do you have relationships with repeat clients who continuously hire your drivers — or are you reliant upon a steady stream of new customers who may or may not come back? If the latter sounds more familiar, there’s a good chance you need to work on your customer satisfaction skills. How happy your clients are directly correlated to how profitable your business is. You can boost both by actively seeking feedback from customers, asking what you can do better, and offering to resolve issues before they can escalate.
Explore All Sources for Funding
Even if you follow all of these tips, it’s possible to run into financial difficulties. The trucking industry can be a volatile business, but you can see big profits when you invest in your company. To weather a period of slow revenue, you should explore all funding sources. You might need to apply for a company credit card or seek a loan from a family member or friend. These options often aren’t ideal, but an extra boost of funding might give you the padding you need to overcome obstacles.
Invoice Your Clients Promptly
Finally, you must invoice your clients as soon as possible. Your truck insurance provider won’t wait for payment, so why should you? You have expenses to cover and drivers to pay. Don’t allow clients to interrupt your revenue by waiting to pay. If you encounter a client who doesn’t pay promptly, it’s essential to handle the situation with patience. Rather than reacting with anger, you should extend understanding and provide them with various options to submit payment.
About Western Truck Insurance Services
Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes. Contact us today at (800) 937-8785 to learn more!