Can an average person become a multi-millionaire? The answer is quite simple as there are many easy ways to get rich. Of course, you can win a lottery or find a million dollars just behind your nose, but do you want to work hard as the most people do?
The first thing you should keep in mind is that every business is good if it is built right. So, let’s figure out what truck investing is and how to turn it into a lucrative business.
What Is Passive Income?
Passive income or “residual income” is earnings derived from a limited partnership, rental property or the other enterprise, in which you make the upfront financial or “sweat equity” investment and then wait for the money roll in. You are not actively involved in it. Before making your final decision, you should also know that in comparison with active investment, the passive one could be taxed. However, the IRS (Internal Revenue Service) also treats it differently. Some analysts consider portfolio income is passive income that is why interests, as well as dividends, are passive too.
Passive Income vs. Active Income
Passive income is opposite to active income. The critical difference between active and passive income is that when choosing the last one, you can make money while you sleep. If you select the active income, you will not be able to earn money if you have not a constant income.
How It Really Works?
Those now better known for us as a successful people in this industry were not afraid to try once and today they really have a big income. There is one scheme for this business: you have a track and you hire a driver who will do all the work while you will just do all the calculation and find people who will be interested in your offer to transport their goods or products for a long distance.
It’s a really one of the best ways to invest for passive income and in this article, we will answer all the questions you need to know.
What Can We Expect from this Business?
It is said that if you are looking for a passive income, then tracking is ok. It is not an easy way to earn money but if you are smart enough, you can get a really big income. On the other hand, this is a very outdated business tendency with low return, high risk, and depreciation.
Although this business can be enormously profitable, it can also be one of the most competitive industries out there and you could easily be undercut by competitors. To avoid such situations you need simply follow the local rules of the road and behave yourself as a real expert in your field. By the way, it will be good for you if you are really the one who knows his business well. It is known that only those with some experience in the trucking industry are able to own their own truck driving company.
How to Start Your Business?
So, you are ready for those major changes in your life. To begin with, you have to decide whether you want to lease or purchase a truck. There are evident pros and cons to both of them. But, keep in mind, before you start the purchasing prosses you should know exactly how much business you can handle and afford in each week, month, or even a year, depending to how important it is to you.
Should You Start a Trucking Company?
It would be the best decision for those who already have a previous or at least some experience in the trucking industry endeavor. Owning a truck driving company is a serious decision that requires planning, preparation, strategy, and expertise. Even if you meet all these requirements, you should ask some questions yourself before you start thinking about a trucking company:
- Is your trailer as well as all the necessary equipment ultimately/mostly paid off?
- Do you already have a list of future potential customers lined up?
- Have you already formed a staff of employees?
- Have you already prepared a business plan?
- Have you already calculated the income, expenses, and the cost of doing truck business?
- Do you have enough to start a business?
If the answer to all the questions as mentioned above is “yes,” then you are mostly ready to start opening your own trucking company. If not, then you have to go through a long way to go yet.
What Is Better: Purchasing or Leasing?
Purchasing has its immense amount of advantages as well as disadvantages.
Pros: Really good is that you can pay off the truck by only making payments every month. Moreover, there is no need for the down payment and if you want you can make modifications to the trucks.
Cons: The reasons why purchasing is a bad idea for you is that all the time you are paying down the cost of the truck, it is technically not yours until all the payments have been made. And the loan payments have a tendency to be bought higher than the lease payment.
When we talk about leasing the situation is completely different because we all understand that the leasing track won’t be yours whatever you do.
- When we compare leasing to the purchasing the one advantage we have to say is that there are much lower monthly payments and a minimal down payment.
- You should understand that there is a big risk that at the end of your lease, there will be equity or ownership to apply as a down payment for the next truck and it is not good for your business unless you do a lease to your own program.
What truck is better for the beginner a new or an old one?
It is said that old (used) one has more benefits as the price could be low enough so that you could buy two used trucks for the same price as the new one. It’s great for those who want to set their own business up without anything at the beginning.
How to Make a Successful Trucking Company?
The trucking business is trendy today; therefore, it is highly competitive. Many truckers are struggling to start their own small trucking business and end up with fail. The reason for this problem is a lack of experience. Running and building an active trucking business involves more than only knowing how to drive a truck or how to choose a route. So, how to become a successful owner of the trucking company?
Here we have gathered the best and the most effective tricks and tips that are necessary to follow to get the desired result out of your truck investing:
- Support the right market niche – it is one of the most essential and essential steps you should start with. The market niche you choose determines the type of equipment you need to buy, the rates you will charge and the type of freight lines you will be able to service. You should focus on those types of a niche market that large carriers avoid. Consider hauling specialized loads. Because the range of competitors desiring to pull the “easier” loads is broad, you should think about specialized type/niche of the market. Fortunately, there is a wide range to choose from. As hauling fresh vegetables or fruits and meat in reefers is a great option to choose from. Moreover, it has a wide range of advantages: less competition, year-round work, and, what is more important, it is recessions-resistant.
- Charge the right rate – as an owner of a truck driving business. You have to set the correct price per mile for hauling your clients’ loads. The charge rate should be high enough to provide you with the desired income and cover all your operation costs (setting charge rate should be done before you start calling shippers and making sales). Remember that you should stay competitive with what brokers charge the shippers whom you are going to call.
- Determine operating costs – it is highly essential to know your operating costs in details. It will help you to get a clear understanding of how much you will be able to earn as well as how much you need to spend on each haul. Firstly, determine your fixed costs (insurance, permits, truck payments, etc.) Now, determine variable costs (e.g., fuel that is necessary to reach the required distance, as the longer the distance is the more fuel you need). Now, consider both variable and fixed costs to determine the full cost per mile. This step is highly important as if you calculate the full cost per one mile from your rates (step #2) you will be able, to sum up, your profit – the amount of money you keep.
- Fuel buying strategy – for all the owner-operators fuel is one of the most significant expenses. One of the biggest problems of both new and experienced truck business owner-operators is buying fuel incorrectly. They make a huge mistake when they think that finding the lowest price fuel provide them with the cheapest fuel. This is wrong, and hundreds of truck business owners make a huge mistake as well as lose hundreds of dollars on it. The question point is taxes. Regular drivers pay the charges in the state where they buy the fuel. Truck drivers face with IFTA. Truckers have to pay for the fuel they used as they drive through states and no matter where that fuel was bought. Therefore your goal should be to purchase fuel at the cheapest base price (base price=fuel price – tax).
- The best way is to work with shippers directly – and only in case, you have an empty truck you can choose load boards and brokers. Why? Because they are too expensive, as brokers have 10-20% of the total load price. It is quite fair as it is their income. However, to provide yourself with a better income and cut down extra expenses, you need to minimize using brokers’ and load boards’ services. Instead of this, consider developing a list of direct shippers. If you do everything right, you will be provided with the list of shippers that will always keep you busy. Charge them a price that is competitive to brokers’ price, and turn everything for you instead.
- The back office is of particular importance – especially if you are starting to add leased drivers to your services. Here you can choose one of the suggested options: run the business out of the cab of your truck or outsource your back office to a dispatcher. If you want to choose the first option, then you will need an Internet connection, a printer and a laptop. The latter option is more expensive, as it depends on the dispatcher you would like to hire as well as on its professionalism and experience. Therefore, interview him before hiring to avoid unnecessary problems that can lead to your business loss.
- Prevent cash flow issues – it might be tough to do, as trucking is a cash flow business. You are always paying for insurance, fuel, and the other truck payments. In case you do not receive quick-pays, then brokers can pay the invoice in 15-45 days. It can lead to severe problems in your business. Therefore, you can consider freight bill factoring – it can advance your invoice up to 95% mostly on the same day of your submission.
How to Make It Profitable?
There are a few tips for future trucking company’s owner to take into consideration. Due to them tracking business is going to be more beneficial in all the aspects.
There is the list of them:
- enough money to buy reliable trucks;
- professional drivers with long driving experience;
- insurance for all the cargo you are transporting;
- qualified maintenance;
- sufficient capital to help you stay in business even when there are some problems with it.
Keep in mind, that even when you have a good track and all the insurances, do not forget that you work with the people who are one of the most important branches of all this system. Because of that, you should take care of who you hire and their mental health.
To Become a Truck Driver Consider Truck Driver Training
If you want to become a professional truck driver, you have to go through a specialized truck driver training from a reputable, reliable, and professional truck driving school. One of the most common and preferred choices for students is paying an all-inclusive fee to the truck driving school they are attending. As the name implies, all-inclusive means all the projected costs from the very first day up to graduation. Another kind of truck driving schools does not offer an all-inclusive system. Instead, a student has to pay only for the necessities that are proceeding with their curriculum. Both cases are good, especially if a student applies for an experienced truck driving school and knows what to expect from getting their education.
Local Trucking vs. Over the Road Jobs
For those truck drivers who get used for long road job, local trucking might seem a great as well as tempting and easy occupation. Everything depends on your perspective. It is a well-known fact that long-term jobs require a lot of time away from home. The positive side is that they are better paid than short-distance jobs that guarantee that you will spend every night at home, not on the road. However, if you choose a local trucking job, you should concrete whether the company requires you to spend weekends at work or not. If so, then you will have to wake up very early for work. It means that you will not spend the weekend with family or friends. However, you will be able to say “goodnight” and “sweet dreams” to your toddler and hug him or her before sleep. To sum up, the types mentioned above of truck driving, you should think about your position to make the right decision.
Truck Drivers as Small Business Owners
Nowadays, truck investing has become a significantly popular occupation among a wide range of business owners. Truck drivers who want to become small business owners should first decide whether they are ready for the long, demanding, and difficult commitment that is waiting for them. To start a small trucking business, truck drivers should:
- Decide how their business will operate;
- Follow the basic steps that are necessary to start the truck business;
- Follow with all the required tucking-related permits;
- Comply with all the trucking-related business licenses as well as all the required forms;
- Invest money in all the necessary and required equipment to get the truck business started;
- Build a client base that is necessary to obtain transportation;
- Get all the essential business insurance requirements;
- Go straight ahead to achieve your business goals.
If you think that you can handle all that and that do want to start a small business, then you need to start doing something to achieve your goal.
If you tend to keep all your money under the mattress or in the can of beans it won’t bring you any income. So, you just need to be ready to risk and your investments will soon work for you and, of course, bring you desirable profits.