Truck business in the USA: where to start, what to do and where to go
Greetings! Business enthusiast Timur Mirzaev is with you again. In all of my previous columns for ForumDaily, we talked about business in general. Now I decided to bring some specifics into this conversation. If you are interested in my experience and knowledge, as well as advice on the topic of business and self-development - welcome to my instagram! There is a lot of useful information.
Due to the fact that I have been engaged in cargo transportation for more than 7 years and, one might say, ate a dog on this, I decided to share useful information for those who are interested in entrepreneurship in this industry.
Why I believe I can give advice
I am by no means claiming that my knowledge is perfect and beyond doubt. I have only spent over 10 hours developing in this area, and this, as smart business books say, is the very milestone when your experience turns into the category of expertise.
Over the years, I have gone from a dispatcher to the owner of several companies in this area and have been able to create a so-called network between businesses, customers and employees.
All this became possible thanks to daily work, self-development, communication with people from completely different fields of activity, problem solving and, of course, crisis situations.
What does the model of any truck company look like?
The work of any trucking company is based on one or more of the models described below.
1. The truck company enters into a contract for the provision of dispatching services with a driver who has his own truck (owner-operator).
The contract says: we find cargo for the driver - he delivers it - we issue an invoice to the client - the client pays for it - the driver receives money for the cargo (minus our dispatch commission).
This is the most standard model used by a trucking company.
2. A truck company enters into a contract with a truck rental company.
Then the scheme is repeated: the driver gets behind the wheel of a rented truck and covers all the costs associated with its operation himself, and also pays a commission to the truck company for dispatching services. This driver is no longer an owner-operator, but a leased owner.
This scheme allows the company to hire more drivers, increasing its income.
3. The truck company buys its trucks, puts the drivers on them and pays their salaries.
In this case, the driver's income does not depend on the value of the cargo minus the dispatch commission, but on the number of miles that he traveled. With this scheme, payment at a fixed rate is possible.
In this case, the driver (he is already called the company driver) does not choose the route, does not choose the cargo and generally has a limited right to vote, unlike the owner-operator and leased owner. For the company, this is, of course, the most profitable option. The income from the cargo is higher, but the maintenance of the trucks is also the headache of the company, not the driver.
By combining all these schemes of working with drivers, you can significantly increase your income.
Thus, the competition between truck companies is not for cargo (there are so many of them on the US market that there is enough for everyone), but for the number of trucks in the company's arsenal. The more there are, the more the company transports goods and, accordingly, earns. But a driver is needed to operate each of the trucks, so staff is the main value of the company.
The hiring department is the backbone of the trucking company's financial success
One of the key roles is played by the hiring and search department of drivers, because the number of drivers is equal to the amount of profit.
We call potential drivers “leads”. And a very important practice is to maintain a database of these leads due to the fact that the outflow and inflow of drivers in the trucking business is very high (due to the high competition in the industry). The driver can come and go in a month or even next week, if somewhere better conditions are promised. This has already become the norm. Companies are forced to put up with this state of affairs.
This is where the database comes in. You can call a departed driver in a month, and he may already be ready to return, but pride or other factors do not allow himself to initiate (and what are we? We are not proud, we will call back more than once if the driver is worthy).
If possible, you should use CRM (customer relationship management), where you can clearly specify the sorting criteria: age, state of residence, experience, etc.
You may be interested in: top New York news, stories of our immigrants and helpful tips about life in the Big Apple - read it all on ForumDaily New York
Moreover, the contact info of each driver costs money. One of the tools that clearly demonstrates this fact is the lottery among truck drivers. A competition is announced, for example, for 10 thousand dollars, and in order to take part, you must leave your contact information. When a contact base of 10 people is collected, this amount is raffled off between them. It goes to the winner, while all contacts of participants, potential drivers, remain in your database. Moreover, when you start calling them, it will already be a “warm” call, because they found out about you when they took part in the lottery.
Metrics in the logistics business: what it is and how to use it
A metric in organizational management is a numerical indicator of quality, process / production efficiency. In my opinion, metrics are an integral part of any business, which is called a must have.
The more various metrics are used in the company, the better you control the situation and understand what is happening inside the company and with the business as a whole.
Every leader should have these indicators in front of his eyes on a daily basis. With metrics, a business owner can visually see how his company and team fared yesterday.
In one of our companies, I tested about 100 metrics at the same time.
We record absolutely everything and deeply analyze the indicators once a week. Moreover, each of the metrics is automated and works independently.
In the case of a trucking company, examples of important metrics are:
- how many drivers are on the road / on vacation;
- how many drivers hired / left;
- how much cargo is done;
- how much;
- what are the fuel costs;
- whether there were accidents or fines;
- were there any breakdowns.
The list is endless - it all depends on what will help you see the full picture of the company's work.
Each of the departments maintains its own metrics - cargo transportation security department, accounting department, dispatcher, etc. All without exception.
Every day they record the specified indicators in Excel. My task is to check them and notice in time if something is not going on a given course.
However, it is not easy to introduce metrics - they need to be monitored. We have weekly meetings at which we with the team discuss the current situation with metrics and make decisions based on this data.
If you do not track the process using metrics, then you can lose both time and money. We don't just need to take our employees' word for it, metrics allow us to track the state of the business in real time for any given parameter.
This system allows a business not only to successfully stay afloat, but to understand exactly whether it is developing in the right direction and at what speed.
More interesting information about business and life in the USA can be found in my Instagram by hashtags:
- # team_pro_business - here I write about business ideas, startups and doing business in general;
- #time_habits - here I talk about my good habits that help me stay effective in life and business;
- #team_hobby - under this hashtag, I publish what helps me stay in shape and restore energy reserves;
- #team_development - well, here I share useful books / films / podcasts and other resources for self-development;
- #time_personal - under this hashtag, look for a story about my move to the USA, the beginning of my business journey and the launch of my first offline business.
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