When you want to invest in a freight company, it needs to be done in the right way for it to be successful. These days, freight brokering can refer to both traditional and digital services. New services are popping up on a daily basis because investors know there is money to be made.
Technology and market opportunities are two of the main reasons why investing in a freight company is popular these days. There are currently only a few barriers to get past when investing in a company such as this and the capital needed to get started is small in comparison to other investment opportunities. Because of this, investing in freight companies is a very attractive idea for entrepreneurs looking to get started.
Below are some of the top critical tips to consider for successfully investing in a freight company.
1. Begin with Low-Cost TMS
It can be tempting to want to purchase a costly transportation management system with all the “bells and whistles” from the start. However, most startups don’t need all of that extra functionality to begin their operation with. More often than not, an affordable cloud-based management system will suffice until the company picks up speed. Later on, when business picks up and money starts rolling in, upgrades can then be made to your TMS system.
2. Accounting System
One of the more overlooked systems is an accounting system. It is important to find a system that meets your current needs including accounts receivable, payroll and accounts payable. Similar to the TMS system, your first accounting software system does not need to be top-of-the-line to start with.
3. How Can You Sustain the Company?
Another tip for successfully investing in a freight company is figuring out how you will sustain the company. Each transaction will bring in revenue. However, it should be remembered that each transaction doesn’t turn into cash for other business costs overnight. In some cases, a transaction doesn’t turn to cash for weeks or more. It is important to plan ahead for expenditures.
4. Obtain an MC Number
Any investor or broker looking to get started needs to obtain an MC number using the Unified Registration System. This number is what identifies carriers who are legally regulated for hire for interstate commerce. This number makes you look less risky to carriers looking to hire your company.
5. Obtain Proper Insurance
No business should run without proper licensing and insurance. When it comes to investing in a freight company, it is essential to have basic coverages including general liability, property, auto liability, errors, omissions and contingent cargo coverage.
6. Find A Niche
Investing in a freight company as a broker is an awesome opportunity. However, to be successful takes finding a niche to specialize in. You don’t want to just accept any type of freight. Creating a niche is the best way to build trust in the industry. For example, if you choose to handle refrigerated freights, then carriers who specialize in those kinds of loads will be able to identify easily with your company.
Simply matching trucks to loads is not the best way to make your company stand out. You need to work on developing a detailed strategy for capacity sourcing. Doing this will turn your company into a trusted source for shippers and carriers. Providing valuable management services is not only about price.
These are just some of the ways to successfully invest in a freight company. It’s essential to remember that a business should be tailored around people, not money. Organizations can only be as strong and successful as the people that make up the organization. The freight arena is a close-knit community.
Stories about companies who mistreat their workers and customers can get around quick and kill a company before it has a chance to thrive. To avoid this happening, it is essential to remember that your employees, shippers and carriers all want to be treated fairly and with respect. Recruit hardworking people and retain those workers that take their jobs seriously. Offer incentives to those who prove their worth in the organization.