2 Essential Steps to Organizing a Successful Trucking Business You’ve made the leap from company driver to owner/operator. You’ve leased a truck and raised the money to hire an office manager and a small administrative staff.  Unfortunately, simply setting up a strong business structure is not enough to organize your finances for your trucking company.  There are two more things that you must do: you must work in conjunction with a factoring company and you must actively promote your business. Taking care of these two issues will be necessary even if you raised more than enough startup capital to run your business. You should keep this money in your business bank account to manage any financial emergencies or to fund your future growth plans. It’s not a good idea to begin tapping into it to run your daily business operations. Let’s take a closer look at both these potential problems to see how to overcome them with the right strategies. How to Overcome Cash Flow Problems A good truck factoring company will help you solve one of the biggest problems new trucking businesses face—negative cash flow. Here is a quick explanation of cash flow: Cash flow is money moving in and out of your business.  When you have positive cash flow, you are earning more money than you are spending.  When you have balanced cash flow, you are bringing in about the same money that you are spending.  While, of course, positive cash flow is an optimum position, balanced cash flow is sustainable.  But your business will be in trouble when you are spending more money than you are bringing in. In trucking, negative cash flow is the norm rather than the exception.  This is because customers expect you to give them 30 to 60 days credit before they have to pay their bills.  If you refuse because it would jeopardize your business’s cash flow, they will simply go to another business who will honor their request. Essentially, then, you will have to pay for everything up front one or two months before you receive any money for your efforts. In other words, your business is in financial trouble as soon as you open your doors. The solution is to work with a financial firm that will advance you the money you need to get the job done. Fortunately, the whole process of freight invoice factoring is simple and straightforward: First, deliver your load. Second, send the invoice to the factoring company, as well as some proof that you delivered the load, like a rate sheet or a bill of lading. This can be as simple as faxing them the paperwork. Third, after verifying that you did the work to the client’s satisfaction, that the job was completed, the factor will send you an immediate cash advance. This will be about 98% of the money. The only reason why you might not receive cash on the same day via a check, wire, or ACH is that you did not send the invoice at a set time, which is usually by the afternoon.  The whole thing is fair. It’s not a loan. You don’t have to pay a debt. Rates are reasonable, only 1%. And, you’re not obligated to sign any long-term contracts. Once you receive your money, it’s a done deal, at least from your point of view. The factor will take care of everything else. They will invoice the customer when the bill is due. If there are problems with the customer not paying, then they will manage the collections. How to Overcome Problems Due to Insufficient Work At first blush, it might seem absurd to talk about insufficient work when it comes to the business of hauling freight. After all, there is always a steady demand for small freight haulers and good customers pay well.  Problems arise when you market your business in the wrong way.  Two common mistakes are relying on loadboards and brokers to get all your business. When you rely on loadboards, you will get one-time gigs that underpay for delivery.  When you rely on brokers, you will get erratic work. Sometimes there will be plenty. Sometimes little to no work. The solution is to get your own customers, finding reliable companies that pay well and on time and that provide a consistent stream of work. You will find these by advertising in the Yellow Pages. In closing, starting your own trucking business can be profitable if you use factoring and if you do your own marketing.
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2 Essential Steps to Organizing a Successful Trucking Business You’ve made the leap from company driver to owner/operator. You’ve leased a truck and raised the money to hire an office manager and a small administrative staff.  Unfortunately, simply setting up a strong business structure is not enough to organize your finances for your trucking company.  There are two more things that you must do: you must work in conjunction with a factoring company and you must actively promote your business. Taking care of these two issues will be necessary even if you raised more than enough startup capital to run your business. You should keep this money in your business bank account to manage any financial emergencies or to fund your future growth plans. It’s not a good idea to begin tapping into it to run your daily business operations. Let’s take a closer look at both these potential problems to see how to overcome them with the right strategies. How to Overcome Cash Flow Problems A good truck factoring company will help you solve one of the biggest problems new trucking businesses face—negative cash flow. Here is a quick explanation of cash flow: Cash flow is money moving in and out of your business.  When you have positive cash flow, you are earning more money than you are spending.  When you have balanced cash flow, you are bringing in about the same money that you are spending.  While, of course, positive cash flow is an optimum position, balanced cash flow is sustainable.  But your business will be in trouble when you are spending more money than you are bringing in. In trucking, negative cash flow is the norm rather than the exception.  This is because customers expect you to give them 30 to 60 days credit before they have to pay their bills.  If you refuse because it would jeopardize your business’s cash flow, they will simply go to another business who will honor their request. Essentially, then, you will have to pay for everything up front one or two months before you receive any money for your efforts. In other words, your business is in financial trouble as soon as you open your doors. The solution is to work with a financial firm that will advance you the money you need to get the job done. Fortunately, the whole process of freight invoice factoring is simple and straightforward: First, deliver your load. Second, send the invoice to the factoring company, as well as some proof that you delivered the load, like a rate sheet or a bill of lading. This can be as simple as faxing them the paperwork. Third, after verifying that you did the work to the client’s satisfaction, that the job was completed, the factor will send you an immediate cash advance. This will be about 98% of the money. The only reason why you might not receive cash on the same day via a check, wire, or ACH is that you did not send the invoice at a set time, which is usually by the afternoon.  The whole thing is fair. It’s not a loan. You don’t have to pay a debt. Rates are reasonable, only 1%. And, you’re not obligated to sign any long-term contracts. Once you receive your money, it’s a done deal, at least from your point of view. The factor will take care of everything else. They will invoice the customer when the bill is due. If there are problems with the customer not paying, then they will manage the collections. How to Overcome Problems Due to Insufficient Work At first blush, it might seem absurd to talk about insufficient work when it comes to the business of hauling freight. After all, there is always a steady demand for small freight haulers and good customers pay well.  Problems arise when you market your business in the wrong way.  Two common mistakes are relying on loadboards and brokers to get all your business. When you rely on loadboards, you will get one-time gigs that underpay for delivery.  When you rely on brokers, you will get erratic work. Sometimes there will be plenty. Sometimes little to no work. The solution is to get your own customers, finding reliable companies that pay well and on time and that provide a consistent stream of work. You will find these by advertising in the Yellow Pages. In closing, starting your own trucking business can be profitable if you use factoring and if you do your own marketing.
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