As nearly half a million businesses get started every month, not many of them will be a successful freight broker business. If you want to get involved in the freight industry, becoming a broker is a smart way to make a big impact.
You’ll be part of a growing industry while you also have the flexibility to move into whatever niche that you find most interesting.
Here are four things to remember when it comes to starting your fright business.
1. Flex Your Accounting Muscle
When it comes time to start a business, most business owners will start off thinking about the most exciting aspects of the business. They’ll be coming up with names, buying URLs, and drawing up logos before they start thinking about the boring stuff like their accounting system.
However, in the world of freight brokering, your accounting system is one of the driving forces behind your day to day functions. If you choose a system that has a strong payroll program that’s integrated with your scheduling and invoicing, you’ll be much better off than playing catch up.
If you leave accounting to be one of the last things you think about, you won’t end up setting yourself up to succeed.
Your accounts payable and receivables staff will ensure that your ledger is always balanced and your clients are receiving their freight on time. When you have strong accountability built into your system, your customers will be pleased and you’ll be able to balance your pay sheets easily.
Find a digital solution that offers a cloud-based option so that your staff can work remotely and you can check in when you’re off-site.
2. Have a Sustainability Plan
The first thing you have to ensure when you start getting clients for your freight company is to have prices that make sense for your loads. Every single transaction you make should have some kind of margin that benefits you. When you look at your spreadsheets, it should be clear that there is profit coming in.
However, you won’t be getting cash in your pocket based on each transaction. You’ll have to make a plan for that turnaround time that it takes for your shippers to pay. Carriers will expect to be paid within about two weeks, but it could take months for shippers to send you what you’re owed.
As your company expands, you’ll see yourself consuming more and more capital.
IF you haven’t set up a financing program with your accounts receivable department, you won’t be able to keep everyone happy. Traditional banks will offer you lending options like this but most banks don’t know what to do with a freight broker.
Find a lending institution or a firm that understands the financing that you need and can provide you with some working capital. Otherwise, you’ll have a lot of unhappy clients and customers who you’re having to bug more often than you should.
3. Get Insured
One of the things that you absolutely can’t overlook as a freight broker is your insurance. You’ll need several types of insurance when you’re starting your business, so be sure you’re covered on every base imaginable. And make sure you’re never relying on your personal liability insurance for your business.
First, you need to have property and general liability insurance for your company. This will cover you if your freight gets damaged or if a driver damages something or someone while they’re on your site.
You also want to be covered in case something falls on a staff member’s foot or if someone has a slip and fall in your parking lot or in your office.
You should also have workers’ compensation in case anyone gets hurt on the job.
You should also get vicarious auto liability and umbrella insurance. With all the miles your staff could be traveling, they will need some insurance to cover in case of accidents. On top of that, get some contingent cargo insurance so that anything that you’re transporting is covered and you’re not liable for it.
Find a broker who specializes in commercial work or, better yet, understands the industry.
4. You Need a Niche
While there are lots of companies that are able to broker freight and handle the kind of work that you do, you need to differentiate yourself from the pack. Will you be handling just any freight that comes your way or do you prefer a certain type?
If you’re currently working in another industry, you probably have some insight as to what kind of freight they need.
You can make a successful transition from fine art if you understand what it takes to pack and ship expensive paintings or fragile sculptures. For people who’ve worked in the food and beverage industry, they might understand refrigeration or how to handle liquids properly.
If you want to accept any kind of load, you need to have a lot of different kinds of trucks. If you have a flatbed hauler, you’ll only be able to carry a certain type of product or equipment.
Consider a dry van for products that are a little more sensitive. IF you can get a good price on a refrigerated truck, beware of buying one used. HAve an expert look it over before you hand over the cash so you don’t get left with a busted truck and a load of quickly expiring frozen goods.
Being a Freight Broker Is Exciting and Lucrative
If you’re interested in becoming a freight broker, you’ll find there are a lot of directions to go in the industry. Between moving freight across international lines and working domestically, you’ll get to learn about commercial trade while also participating in it.
If you want to understand more about how a broker gets paid, check out our guide.