Discussion in 'Freight Broker Discussion' started by cashfarmer, May 5, 2012.

  1. cashfarmer

    cashfarmer New Member

    I am new to the forum but have been reading all the threads non-stop since I found this great place. My appreciation for all the thoughtful advice that is mutually shared here.

    Revenue - Expenses = Profit

    I read a lot of great discussions on managing the expense side of the business and I want to hear more about how trucking experts manage the revenue side of the equation.
  2. terrylamar

    terrylamar Well-Known Member

    You need to change your equation a little.

    Revenue - Expenses = Profit/Loss

    I am not an expert. I have had my own authority since July 21, 2011. I still learn better ways to do things every day. There are only several approaches to Revenue:

    High rate on many loads.
    High rate on few loads.
    Low rate on many loads.
    Low rat on few loads.

    Then a balance struck between the various options.

    If you charge a high rate for many loads, your earning potential is high, but you may price yourself out of the market and you will run yourself ragged.

    If you charge a high rate for a few loads, your earning potential is a little lower, depending on your rate, of course, you still may price yourself out of the market because you are trying to make the money you need on fewer loads, but you have time to yourself for relaxation or whatever it is you do.

    You may try to make the revenue you need by charging a lower rate, but by running many more loads. Again, you are running yourself into the dirt and making less money.

    Charging a lower rate and running fewer loads is a good way to go out of business quickly.

    You need to know your operating expenses. What it cost you to run one mile. When you know this number, you are able to make quick decissions when quoted a rate. You know if the rate offered is good or bad or indifferent. Then you apply the other factors. The lane you would run, is there a load waiting at the other end, weight, size, special equipment needed, time loading/unloading, weather, maintaince, do you need to be somewhere and on and on. The more information you have instianeously, at your fingertips, the better you are able to make a correct decission.

    How do you find loads? Expierince plays a big part. This is one of my most identifiable problems right now. There are load boards. Usually, loads board don't pay the best rate, but there are plenty of loads to keep you busy. Keeping busy is only part of what you want to do. You want to be paid to keep busy. In my opinion, load boards are a good place to start.

    While getting loads off load boards, you can look for direct customers also. Actually, you can do this before using load boards. Before you get your own authority you could have a number of customers lined up. Getting direct customers is luck of the draw and a lot of cold calling. You may talk to 100's of potential customers before you find one that will hire you. Doing all that leg work takes time and effort. Still, you could find the one or two customers making it worthwhile. Just be careful about noncompete clauses in your contracts.

    Then you have your competitors. This is where your expenses come in. It is beyond the scope of your question, so I won't get into how managing your expenses make you more competetive.

    Sorry this is so disjointed.
  3. SweetDaddy

    SweetDaddy Well-Known Member

    profit. aka revenue

    A Mutually Agreeable Contract = Profit - Overhead = Profit Margin

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