When starting a trucking company it is important to consider all of the initial and ongoing expenses that will be involved. There are two main types of expenses: fixed and variable. Fixed expenses are always the same and are paid regularly. Variable expenses are subject to change and can arise at different times.
For a trucking company, some fixed costs include mortgage on the truck, insurance coverages, licenses, permits, accounting services. In order to be profitable, trucking companies have to offset these fixed expenses by getting their trucks on the road and hauling loads. Sometime it can be advantageous to let your trucks sit idle for few days in order to wait for a more profitable load, but too many days of inaction will hurt any business from piling up fixed costs. Figure the daily fixed expenses of running your trucking business to find out how long you can let your trucks sit before it is no longer profitable.
Variable costs cover a variety of expenses and there will always be unforeseen costs that trucking companies should try their best to be ready for. Some variable costs include fuel, tires, maintenance, meals, and lodging. These costs can change depending on the condition and fuel efficiency of your truck as well as the distance being traveled and the price of diesel. Since variable costs can be difficult to predict, every trucking company should make sure to have an ample cash flow business doesn’t come to a stop when costs start to pile up. Fuel is generally the largest variable expense for trucking companies and since diesel is always subject to price fluctuations, trucking companies should be prepared for a sudden rise in operating costs. A sudden maintenance issue can also cause a spike in expenses, so be sure to keep your trucks in good shape and have extra money on hand in case one needs emergency repairs.
In order to ensure that your trucking company can continue to thrive even when expenses start to add up, factor freight bills and receive immediate working capital. By submitting freight bills for factoring, trucking companies boost their cash flow and have the money on hand to fund both their fixed and variable expenses. Don’t let unforeseen costs sideline your trucks and keep you from making money. Factor freight bills and get the cash you need!
Learn more about starting a trucking business.