Australia is facing a chronic shortage of Truck Drivers according to the Australian Industry Skills Transport and Logistics Skills Forecast for 2019, which revealed that over 80 per cent of employers reported a skills shortage in the last twelve months.
There’s a massive shortage in drivers.. But what does this mean for you?
It means that there’s a chance to enter a market where demand massively outweighs supply – a scenario that is lucrative for anyone that sees the opportunity!
Without truck drivers, our economy stops. So getting into the truck industry with your own business or as a driver is always going to be a high demand move.
We’ve come up with a 5 step checklist to help you hit the road and get started in the Australian Truck Industry.
1. CREATE A BUSINESS PLAN
A business plan can be as simple or as detailed as you wish, but having one is not something that you should compromise on. Your business plan will be your map to success in the Truck Industry and it will include things like the type of equipment you need, your truck specifications, whether you will be purchasing or leasing, who your drivers and your team will be, any licences required or insurances needed etc.
Mapping these things out in the start will allow you to effectively plan your business and put the right pieces together to make it successful.
Even if you are planning on becoming a driver for another company, it’s a good idea to have a plan for your career in place so you can work towards a goal.
2. CHOOSE A HIGHLY PROFITABLE MARKET TO SERVICE
One of the most important steps is to find and focus on a highly profitable niche to service within the Australian Truck industry. The niche or market you choose will form the basis for all your planning – what kind of equipment you need, your pricing, and the routes you can service in particular.
A general rule of thumb is that new owner operators should focus on markets that the large carriers avoid. In other words, consider hauling specialized loads.
There are many markets that you can focus on however you want to try and get started with markets that have less competition, consistent demand, and resistance to economic downturns. In other words, markets that service NEEDS rather than WANTS.
3. LEARN HOW TO PRICE YOUR SERVICES
Another important aspect to consider is your rates for transport and this can be a make or break for your business. Your rates need to be high enough to give you a nice profit and pay all your operating costs while also providing value to the end customer.
You need to know your rates before you start calling shippers and making sales. Remember, when you call shippers, you want to be competitive with what brokers charge them.
There is a simple way to do this:
Choose a freight lane
Go the load shift website
Find 5-10 loads heading in the same direction
Call the brokers and find out how much they pay
Get the average
Add 10% to 15% to get the price brokers charge shippers
Repeat the process for the opposite direction
This process will give you a solid baseline figure for a round trip which will help you determine your pricing.
4. Work out your operating costs
Revenue is one thing, but profit is what you can take to the bank. Understanding all your operating costs in detail can be the difference between running a successful company and running a company that’s burning cash day by day.
The first step is to work out your fixed costs. These are costs that stay the same regardless of how many km’s you drive. For example, your truck repayments, yearly insurance costs, licencing costs etc.
Once you have your fixed costs it’s time to work out your average variable costs which are directly related to how many km’s you drive. For example, fuel and and contractor payments if you have a contractor team will be variable costs. The more km’s driven the more you have to pay in fuel and contractor costs.
Use your fixed and variable costs to determine your “all-in-cost per km”. This figure is crucial for your Truck business. If you subtract your “all-in-cost per km” from your rates, you get your net profit – the amount of money in your pocket.
5. Treat Cash flow as a priority
Cash flow is everything in most businesses, but especially in the Truck Industry. There’s alot of operating costs such as fuel, truck repayments, repairs, insurance, licencing and the list goes on.
Sometimes shippers and brokers can take up to 45 days to pay your invoices, but your expenses are still due. This kind of situation can be detrimental to your business, especially in the start up phase.
One way around this problem is to use freight bill factoring. Factoring solves your cash flow problem by advancing up to 95% of the invoice, often the day you submit it. The remaining 5%, less a small fee, is rebated once your shipper pays. Many factoring companies provide fuel advances, cards, and other services as well.
The opportunity to make money in the Australia Truck Industry is the best it’s ever been and it’s only going to get better as online trade expands and the country grows in size.
If you are looking to buy a truck then contact us today to discuss your needs and do a deal directly with the boss!
Don’t waste your time with the big retailers that need to cover huge overheads, here at Trucks Direct you are dealing direct with the most competitive Truck Sales company in Australia.