If you’ve already wrangled your costs down as low as you possibly can, the next step in increasing your profit is to push your gross revenue up as high as you can.
Truckers are price takers. That is, they don’t exactly set the price for the services they provide. Rather, the price is set by the market, and truckers simply have the choice to either take, or not take, a given load based on the price that is offered to them.
Now, that is a somewhat simplistic way of looking at it, especially given all the varied operation types that are lumped together under the broader trucking industry category, but it’s essentially true. Overhead is generally the first place to start maximizing profits because, as an independent operator, you really have more control over your costs than you do over your revenue. That said, it isn’t completely out of your control either, and no matter what segment of the industry you represent, there are steps you can take to ensure that you are maximizing your revenue. In order to deal with your business correspondence and notices, you may hire any valuable Wyoming LLC Registered Agent.
Squeezing more revenue out of less work is the name of the game. Although there may be times when your best alternative is to sweat your labor, (work more for less money) that certainly isn’t the goal to strive for. How you’ll go about it, though, depends heavily on the type of operation you run.
If you have you own authority, your ability to get more money out of each load depends heavily on your negotiating skills. If you’re leased to a carrier on percentage, the focus is less on negotiation, and more on picking your loads carefully. If you’re leased on a per mile basis, you’re even more restricted, but you still have options.
If you’re in a position to negotiate, realize that the first amount you’re offered to do a given load is probably not the highest the broker you’re dealing with is willing to pay. They’re generally going to lowball it at first, and hope they can squeeze more profit from less work themselves. More power to them, but you should be looking out for your own bottom line, and in so doing, should probably never settle for the first dollar amount that comes across the phone line.
Because the cut brokers take from loads can vary wildly from broker to broker, and even from load to load, your best strategy places no concern whatsoever on how much the broker is getting out of the deal. Rather, you should know exactly what your costs are and how much profit you want so that you can figure up ahead of time how much you need a given load to pay you. Since this is commonly broken down by the mile, you should know your cost per mile, and desired gross revenue per mile before you ever call on a load.
Just because a load meets your minimum per mile, however, doesn’t make it a great deal. Make sure that the load covers the cost of any tolls you’ll have to pay, that it accounts for extra stops, tarping, or lumpers, and any other accessories. Don’t forget to take into account less commonly thought about factors like the weight of the load, and the terrain you’ll be traveling, as well. If you’re going through the mountains and/or the load is especially heavy, you’ll burn more fuel than average, and the rate should reflect that. By the same token, if you’re only crossing flat terrain with an exceptionally light load, you may be able to accept a few cents a mile less than your target and still clear the kind of profit you’d like to see.
You also need to take a look at the time involved in delivering the load. If shippers or receivers with reputations for long detention times are involved, you could easily end up spending an extra day (or two!) on a load that, while profitable, leaves you with less than your desired cash flow for the week. A hundred dollars a mile would make for a great load, but if you can only get one mile a week, you still won’t be making any money.
Of course, you should make sure that detention time is written into your contract, but detention can be hard to collect, especially if you’re leased. If you’re leased, and you find it hard to collect detention, your best strategy is to simply avoid loads that deal with shippers and receivers with long detention times, and focus instead on loads that you’re fairly confident you can turn around quickly.
You have the least amount of room for negotiation, and control over your operation, when you are leased to a carrier on a per mile basis. Obviously, there are some advantages to this lease type as well, and you should make sure to take advantage of them to increase your revenue. If your carrier covers deadhead miles, you’ve got the best advantage of them all. Generally, he lighter the load, the better the fuel mileage you’ll get, and you can’t be any lighter than empty.
Maximizing revenue in this situation is more difficult, and you simply need to focus more on reducing costs. The simplest strategy here is to try to get the lightest loads you can. If you look at it as weight/miles, the lighter the load, the more your revenue per ton per mile, so you can actually look at it, in a roundabout way, as increasing revenue.
No matter what type of operation you run, you can’t forget to focus on revenue. Competition is stiff, but even so, you should be trying to squeeze out as much gross revenue as possible for as little work as possible. The more your run your truck, the higher your maintenance costs will be. If you can keep an eye on increasing how much you make (per mile, and per day) you’ll also be decreasing how much it costs you to run.
Every strategy listed relies heavily on knowing how much it costs to run your truck, as well as knowing how much money you think your truck should be earning for you . If you know those numbers inside and out, you’re well on your way to surviving in this industry, even in these tough times.