A trucking company can prove to be a lucrative business to start. Regardless of whether it is across the street or across the country, all goods need to travel from where they were made to where they will be sold. Moreover, you could help relocate small businesses or residential customers between different areas. For any entrepreneur looking to start a trucking company, there are risks that you need to overcome. These risks come from many different directions in trucking. The industry is high risk, high reward and single bad move could spell disaster. Here are the risks of running you own trucking company.
Equipment Underutilization
One risk that could destroy your new company is underutilization of equipment. Demand for trucking services isn’t steady over the course of the year. There are times when every truck needs to be moving to keep up with demand. At other times, whole sections of the industry are without demand. As a new company, failure to find steady contracts could leave you with an idle fleet of trucks. You’ll have no money coming to pay for wages and maintenance. There are brokers who can help your company find new contracts. However, the best way to protect yourself from these down periods is to plan for them.
Maintenance Costs
With the high overhead associated with drivers and trucks, your company can risk losing any funds to grow. It’s important to come up with an accurate cost per mile number for each of your trucks. This number should factor in everything from gas and repairs to wages and expenses. Then, use these numbers to come up with a budget that lets you both cover your overhead and invest money in growing the business. You may have to think ahead and plan how to offset rising gas prices. Without such a plan, your company could slowly drain its cash reserve and buffer without anyone noticing. Then it’s only a matter of time before a crisis wrecks the company.
Following Regulations
Regulations and governmental red tape can improve safety at the expense of your ability to turn a profit. More and more the government is instituting new regulations to make sure truck drivers do their jobs safely. These regulations impose maximum driving hours and new safety guidelines. They are then backed up by electronic monitoring and required paperwork. While these new steps have improved safety, the red tape and restrictions create extra expenses and limit actions drivers can take. It is important to be familiar with all these regulations and take care to put together company practices that enforce and prepare for them.
Driver Recruitment
A major risk for every trucking company is a lack of skilled operators. This is an industry-wide problem. As the current generation of drivers ages into retirement, new drivers are not coming in in enough numbers to replace them. This shortage drives up wages and hinders company functionality. Even when there are drivers, many of them are not trained an acceptable level.
Keeping all drivers safe is also another complex endeavor. According to Hand Law, “Certain industries are at a much greater risk of potential injury than others. When you’re lifting, loading, and driving for long periods of time, the working conditions must be stellar to avoid a potentially crippling accident.” Potential drivers are more and more concerned with health issues associated with the job. They also want to remain closer to home and avoid the solitary life of the long-distance trucker. These issues, mixed with higher wages in other jobs, could leave your company horribly understaffed.
Management Distraction
In a trucking company, management is always at risk of becoming distracted by operational problems. With so much costly equipment and so many staff to look after, management for a trucking company will always be operations heavy. It is important to make sure that this does not become a distraction. You and your managers should prepare to work on both operations and the business side. Such planning ahead will save the business side of the company from being ignored into to the ruination of the company.
Starting your trucking will involve many risks. There is a risk your fleet will be underutilized. Maintenance and operating costs can swallow money needed to expand your business. Regulations make it difficult for you to make a profit. You may have difficulty recruiting drivers for your trucking company. Operations issues will take up too much of your management’s time. These risks can be avoided, but you must be vigilant to overcome them.
