Starting a new business is fraught with challenges. If you’re thinking of going into logistics, you’re onto a good industry. The transport business can be very lucrative. However, it is also hugely competitive. The dropout rate for new businesses is high. These tips will help you make sure your new transport business can stick out the competition.
Pick Your Niche
A vital step to becoming a successful transport business operator is to find the ideal niche in the market. Whether you’re a single truck operation or you own a small fleet, the niche you decide to enter has implications for your equipment requirements, rates, and routes that you will be able to service. If you’re starting a new business, it pays to zero-in on markets that are avoided or bypassed by larger carriers. In short, if you haul specialised loads, you’re going to avoid the biggest competition. Making good money is possible in a range of niches, so research the pros and cons of each. For example, animal products and fresh fruit and vegetables is a good bet because there isn’t much competition, supply is required regardless of the season, and it is one nice that is not especially ruffled by recessions.
Calculate Accurate Operating Costs
Knowing what you’ll have to shell out to start your operation and keep it running is essential to predicting whether or not you will make a profit in a given transport niche. First, work out your fixed costs. These expenses remain the same, no matter how many miles your vehicle clocks up. Think of things like insurance premiums, permits and your digital tachograph. Next, calculate the variable costs of running your transport business.
These expenses increase with your mileage. Fuel is an obvious example of a variable cost. The more you drive, the more you fuel you use. If you’re employing drivers in your fleet, their wages are dependent on the hours they spend on the road. Once you’ve scribbled down your fixed and variable costs, get your calculator out and do a few sums to work out what your average cost per mile is going to be. You will use this figure to decide how much to charge your customer to make a decent profit.
Photo by Kendall Henderson on Unsplash
Buy Smart When It Comes To Fuel
Fuel is undeniably the most significant cost for transport business owners. However, if you’re new to the business and haven’t yet learned the tricks of the trade, you’re unlikely to buy your fuel in a cost-effective way. You might expect that the lowest pump-price is going to give you the least expensive fuel, but you could throw away huge amounts of your hard-earned profit by taking this approach. Depending on what country you’re operating in, if you’re crossing national or state boundaries, you will encounter different taxes on fuel. It’s really important to take these taxes into account because they can change the overall impact of fuel on your budget.
If you’re looking into starting a new business, there will be challenges, no matter what industry you’re in. But in the transport business, there is a particularly high incidence of failed new business. This is often because people who understand transport vehicles aren’t necessarily skilled in business. These tips will help you get started and avoid some of the most common mistakes.