Why Most Owner-Operators Fail in the Trucking Business?
According to the data shown by recent statistics and surveys, the rate of owner-operators (particularly the new setups) failure has increased by 185% over the last two years and turned into an alarming situation. In 2021 only, around 3500 owner-operators and fleet owners shut down their business operations. Although trucking and logistics is a potentially profitable industry, staying in the competition while fighting failure is a constant challenge most owner-operators face. The trucking businesses that tackle this challenge more efficiently are more likely to stay in the race for success.
Why do most owner-operators fail in the trucking industry?
Here’s the summary of some major reasons and challenges for the failure of most owner-operators and fleet owners who start their trucking business.
Poor Business Management
A trucking business comes with lots of responsibilities that owner-operators or fleet owners have to take care of in order to run the business smoothly. But these responsibilities are so many that a single person cannot handle them. For example, if you’re the single owner of your trucking business, you can’t manage dispatching, accounting, safety, sales, marketing, and, more importantly, freight delivery all on your own. When you try to handle all these responsibilities by yourself, it can turn into a disastrous situation, poor business management, and eventually, failure.
How to Overcome this Problem
Instead of managing everything by yourself, you need to get professional support for the jobs you don’t have the energy, time, or skill to complete. For example, if you’re proficient in driving and completing on-the-road deliveries, you can’t take care of the dispatching simultaneously. So, you should hire the truck dispatching services of a dedicated dispatcher or dispatching company.
Inability to find consistent top-paying loads to haul
The most important thing you need to run your trucking business successfully is top-paying loads to haul through which you can earn a maximum per mile to maintain a steady cash flow in your business. The cost of running a trucking business is quite a bit more than most owner-operators anticipate. Running a truck can cost you around $1.70 per mile, and if you don’t earn more than that, your business can go into debt and eventually fail. Some new truckers don’t have an idea about the market rate they should charge, and most end up hauling cheap freight. Undercharging or hauling cheap loads can directly impact your cash flow and bring your business down in a matter of weeks.
How to Overcome this Problem
A dedicated dispatcher is the best person who can help you not only get consistent, top-paying loads through broker negotiations but also keep you updated with the current market rates. With the help of a professional truck dispatcher, you can find high-value freight jobs and make the most out of every mile you drive.
Financial Issues
Starting a trucking business requires a large amount of capital as you must buy trucking equipment, hire drivers, build an office, get the license and complete all other formalities related to compliance with authorities. If you have insufficient capital (money), you can’t run your business smoothly and may end up with failure.
How to Overcome this Problem
There’re many banks and lenders that offer low-interest loans for new and existing trucking businesses. You can take out trucking loans on easy terms and conditions to build solid capital to finance your business.
Compliance Failure
One of the most critical steps to running your trucking business successfully is compliance with DOT (Department of Transportation) and other authorities. You must ensure that you’re running your business according to the rules and regulations of DOT, which includes having the correct credentials for drivers, keeping your trucking insurance up to date, having up-to-date licenses, and following freight regulations. It’s too often that trucking business fails because their business doesn’t ensure compliance with the DOT department.
How to Overcome this Problem
Regardless of the reasons, follow the rules and regulations to avoid costly fines or even being shut down by the DOT if you’re found out of compliance. A dedicated dispatcher can help you regarding insurance and compliance-related matters. Use their services to run your business successfully.
Payment Problems
If you don’t get paid immediately for the loads you haul, it can reduce your available cash flow and eventually run you into debt. Owner-Operators or fleet owners often must have to develop appropriate strategies to get paid as soon as possible in order to maintain a steady cash flow in their business.
How to Overcome this Problem
Partnering with a well-known factoring company can help you get paid immediately after you make a shipment delivery. In factoring, you submit your invoices to your factoring company, which deposits the payments into your account after due verification. Once the factoring company pays you for the loads you haul, it’s their responsibility to collect the payments from the shippers or consignees. Factoring is meant to simplify your payment process. The factoring company only charges a fraction of your invoice as their service fee to get you paid within 24-48 hours.
Driver Shortage
Drivers are considered the soul of a trucking business because they do the most important duty – making on-time and safe deliveries. Currently, there’re thousands of driver jobs that are being vacant due to driver shortage and causing many trucking businesses to shut down. According to research, trucking companies need to hire more than 60000 drivers, but they can’t. This factor considerably widens the gap between the supply and the demand for trucking services.
How to Overcome this Problem
Hiring the service of a professional driver recruiter can help you find dedicated and talented truck drivers for your company. You must offer attractive pay packages, service protection, and home time to the truck drivers to keep them with you.
A dedicated dispatcher is the solution to the most problems owner-operators and fleet owners face!
A dedicated dispatcher can take care of all the back-end office operations and administrative tasks, so you focus solely on the thing you love – making on-time and safe over-the-road deliveries. Truck dispatching services always keep your fleet loaded with lucrative loads so you can earn a higher rate per mile. A Dedicated Dispatcher can help you with:
- Paperwork Handling
- Billing and Invoicing
- Broker Negotiations
- Load booking
- Load Scheduling
- Driver Support
- Factoring Services
- Trucking Insurance
- Broker Credit Check
- Compliance with DOT and other federal and state regulatory authorities