Your bottom line is the difference between your gross income and your operating expenses. To raise it, you have to change one side of the equation (or both).
But trucking is expensive and you can only cut your expenses so far. You still have to pay for fuel, repairs and taxes, after all.
So that leaves the other side — earning more revenue for your trucking company.
Improving your top end revenue can help you invest in better equipment, add more trucks and continue to grow your business. This guide will show you 6 ways owner operators can improve their gross revenue.
Cost per mile is your ticket to profitability. While it does fluctuate, you need to have a pretty good idea of your CPM on every load.
Your goal is to earn a profit, which means you need to charge more than your cost per mile on every load.
Brokers are also trying to maximize their profits, but they do it by lowering their expenses — and load rates are big expenses.
Keep that in mind when you’re considering a truckload from a broker. The base rate is usually not the highest possible rate they’ll pay for it. You can negotiate the freight rate with the broker to make sure you’re earning as much as possible on each load.
Keep an eye on the load board’s load-to-truck ratio. Periods with a lot of available loads and few trucks to haul them give you more power to negotiate better terms.
If you make negotiating rates a regular practice, you’ll see a significant boost your gross revenue over time.
Further Reading: Starting out with an owner-operator trucking business
Securing new endorsements on your CDL can help you stand out and give you access to more specialized loads. Since there are fewer drivers with these endorsements on the road, they’ll usually come with better freight rates.
Using these endorsements does come with extra costs, though. You may have to pay for the endorsement test, along with specialized equipment to be able to handle the loads.
Further reading: Owner-operator expenses: Fixed costs vs variable costs
Hazardous materials are any kind of material that can cause harm to either people or the environment, including
To get an (H) endorsement on your CDL you’ll need to pass a written test, complete a TSA Threat Assessment Application and submit your fingerprints with your CDL and a citizenship document to an endorsement application center.
Getting a Tank (N) endorsement for your CDL allows you to operate vehicles with either permanent or temporary tanks for hauling liquid or gaseous materials.
To add an (N) endorsement to your CDL you’ll need to pass the tanker knowledge test.
The (X) endorsement permits you to haul loads with hazardous materials in a tanker. It’s a combination endorsements that also covers regular H and N loads.
You’ll need to pass a combined knowledge test and complete the TSA Threat Assessment application to earn an (X) endorsement on your CDL.
Hauling multiple trailers allow you to transport larger loads per trip, making it a valuable way to increase your company’s revenue. You’ll need a Doubles/Triples (T) endorsement on your CDL to legally haul these larger loads.
Earning a (T) requires passing a knowledge test.
If you’re not having much luck negotiating better rates for dry van loads, you can try getting into different lines. Some options to consider are:
Many of these lines require a CDL endorsement, which will help cut out competition and potentially raise rates. Data from DAT shows that the national average dry van rate in October 2020 was $2.41 per mile while the average reefer rate is $2.59. If you drive 5,000 miles in a month, making the switch could grow your top end revenue by $900 each month.
You’ll have to invest in a new trailer or equipment to get into these lines, so weigh those costs and your potential ROI before making the switch.
Lowering your fees will help you find more loads that exceed your costs per mile and boost your top end revenue.
If you find loads through brokers or load boards, you can either negotiate the fees or look for different options that take a smaller portion of your rate.
Leasing onto a company gives you the opportunity to discuss commissions and perks before signing a contract.
If you’re comparing companies to sign on with, make sure you’re considering everything they offer.
A company that takes higher commissions but subsidizes your insurance or fuel may be a better choice than one that takes a low commission without the same benefits. Even though your top line revenue is higher than with the second option, your bottom line will be stronger with the first since your expenses are lower.
If you want to get rid of broker fees and company commissions completely, you can operate under your own authority. Your potential for growing your revenue will be higher since you can negotiate directly with your customers, build strong relationships and only take on the best routes and rates.
But operating under your own authority means you lose the security of leasing onto a company and the convenience of having brokers bring loads to you. You’re also completely responsible for your insurance, maintenance, taxes, fees and other expenses that come with running a trucking company.
If you choose to go this route, you need to make sure you have enough business lined up to keep your truck on the road at rates that still turn a profit.
If you can become more efficient both on and off the road, you can boost your revenue by taking on more loads without dramatically increasing your road hours. Here are a few ideas to consider:
Using a trucking management software like Rigbooks can help organize your trucking business and keep you informed and on the road. You can input your receipts, track your miles and see important figures like costs per mile, profit per mile and average miles. Having all of your information in one place will make your business more efficient, allowing you to focus your energy on finding more loads at better rates.
FMCSA record retention best practices or how long you need keep driver vehicle inspection reports, testing and more.
Quarterly tax advice for owner-operators and trucking companies, including the most common mistakes to avoid like losing track of income.
How to calculate a fuel surcharge whether you book your own load or are leased on to a company that does it for you.
If you’ve been leased onto a company or working as a company driver for a while, you’ve probably considered stepping out and getting your own authority. Before you take the leap, you should weigh the upsides and the downsides.
We’ll walk through the pros and cons of QuickBooks in this article so you will have a better idea if it makes sense to use it for your trucking business. Then you can decide if you want to use QuickBooks, or if something made specific for trucking makes more sense.