How to become a Millionaire in the trucking business in just 2 years?
Does it sound too good to be true? Well, the good news is that it is true and very possible. The bad news is that no one says it will be easy. It’s well known that the higher the risk - the higher the reward. The trucking industry is a multi-billion-dollar industry that rewards very generously those who earn it.
So, a trucking company can turn into a tremendous success. And it can make you a Millionaire in just 2 years. Or, if mismanaged, it can become your worst nightmare. Why do some succeed while others fail? In this article you’ll find a few crucial secrets that make a great success in the trucking industry possible.
1) Learn the industry
First of all, you have to understand the business and what you are getting yourself into. The reason a lot of companies fail in the first few years of business is they simply don’t understand what they are doing. So, the best strategy is to study the business first. You have to start somewhere. Consult with people in the industry. Talk to as many experts you can. They could be your friends who work in the industry or professionals who service the trucking industry. People like: accountants, safety specialists, dispatchers or brokers.
The best advice you can get is from a successful trucking company owner. Well, if you know any struggling owners, talk to them too. They can share their experience warn you about potential pitfalls. Also, you can work for a trucking company. For example, you can get a position as a dispatcher or safety person pretty easily without any experience.
Of course, without any experience it won’t be a high paying job. But look at it as at an investment in your future success. Observe and learn operations, the more you learn the easier it will be for you to understand what it takes. You might also learn necessary tricks from successful companies. Trust me, even if you think it’s a long road to go, you will be better off in the long run. The knowledge and experience you gain will help you avoid a lot of mistakes that many new trucking companies make. Of course, you can learn it the hard way from your own mistakes. However some mistakes can be so crucial that they will determine the survival or failure of your business.
2) Stay strong for the first two years
Yes, the first two years are the hardest. The first two years in the trucking business are just a matter of survival. It’s kind of a test run of your decision-make ng, determination and patience. It’s extremely important to make good decisions in the first two years. They will set the foundation for your company in the long run. Once you decide you want to get into the business, you have to understand that you will have to do whatever it takes to make it work. Don’t plan on relaxing for the first two years—that I can guarantee. Be ready to work 24/7 and to be always available for anything that might come up. Some people call it paying your dues. Whatever you call it, do it right and the rewards will be many.
3) Choose your business model
The first critical decision you have to make is deciding on a business model for your company. Do you want to have owner-operators or company drivers or a combination of both? Do you want to haul a reefer cargo, dry van, flatbed, tanker or car haulers? Why is this important to decide? Each model has its own pluses and minuses. So, depending on your situation, you have to find what fits you best.
To be more specific, for example, if you want to have company drivers you will require a significant capital investment into trucks and trailers. However, this strategy has a lower barrier to entry into the business. It’s easier to find and hire company drivers than owner-operators. In order to hire owner-operators, you have to have some kind of reputation in the business in order to attract them. Otherwise, no one is interested in working for a brand new company. However, with company drivers you also bear higher risks. This business model is way more vulnerable to market fluctuations. If the market drops, you might be exposed to losses. Versus with owner-operators, they are the ones vulnerable to the risks, as you only charge them a commission. You don’t participate in any loss they may incur.
However, it is also true if the market goes up. In this case, whoever owns the truck will pick up the rewards of an upswing in the market. Thus, if the industry is booming, then your own fleet will pay off very quickly. While there is no way to ever predict market behavior, there are always ways to mitigate the exposure by making good, strategic decisions.
Another important decision is what type of cargo you chose to haul. While flatbed freight pays the most, it also requires the most experienced drivers. Thus it’s a pretty big challenge to find qualified drivers. Dry van requires the least skilled drivers, however it also pays the lowest. From our experience reefer freight is somewhat in the golden middle. It has a medium risk – benefit correlation.
4) Safety is first
This is a very important topic in the trucking business. What’s interesting is that many business owners overlook the importance of safety. Sometimes until it’s just too late. A lot of business owners are outliers who see safety rules and requirements in the trucking business as just a bureaucratic burden. They have heard something about it, but they pay little attention to no attention, hoping they can get away with it. And this is one of the things most of them learn the hard way. The secret is the transportation industry is heavily regulated by US DOT (US Department of Transportation). However, what’s even more important is that the rules do not simply exist, USDOT heavily enforces compliance of the rules.
Every trucking company has it’s own DOT score that reflects every single violation. All drivers randomly get inspected on the road. Once inspected, each inspection is given a score which reflects the company’s overall DOT rating. Most important to know is that there are only two types of inspection results: a clean inspection and a bad inspection. Every single little violation is reflected on the inspection report, which adds up towards an overall score. Thus, it’s very easy to ruin your safety score. Then what happens next follows. In about 6-12 month from the day you started your trucking company you will have to pass a mandatory safety audit. At the audit the inspector will look at every single violation and will determine if your company is approved to continue operations or not.
This is the first important milestone to pass. If you pass it successfully, it’s your first important achievement. However, for many companies the game is over at that point. The best advice is from the first day of your operations to pay intense attention to your safety compliance. Some of the rules are pretty complicated and require expertise. As a business owner, it’s not your job to deal with routine operational tasks, leave it to professionals to handle it for you. Your role is to lead, direct, and set up and achieve strategic goals.
5) Know your numbers
It’s hard to underestimate how common this problem is. Unlike public companies, private companies are only regulated by tax accounting and are not subject to any rules for financial reporting. For this reason a lot of small business owners overlook the importance of proper financial analysis. Without the ability to get a snapshot of the financial status of their company, they are at a serious disadvantage. Consequently, many don’t even understand their own numbers. A lot of them confuse cash flow with real earnings or business losses. The earlier you understand your financial picture, the better off you are. Making decisions without complete understanding of your company’s financial situation at any given time is like shooting in the dark. Many things happen which prompt the business owner to made quick decisions. Without a good knowledge of the numbers, there is a very good chance mistakes will be made.