Are you thinking about starting a new business? If you are, do you enjoy planning, excel at logistics, and have excellent interpersonal and presentation skills? Perhaps a career in freight brokerage would be a good fit.
A freight brokerage is a business that acts as an intermediary between a shipper who needs transportation services and a motor carrier who is legally permitted to perform such services. The broker’s job is to coordinate the logistics of a shipment transported by a freight carrier and ensure its location is constantly updated.
As the freight brokerage market was valued at $48 billion in 2021 and is projected to reach $90 billion by 2031, starting a freight brokerage company is definitely a top opportunity for anyone with the time and resources to dive into the industry and get some high-paying clients to generate respectable revenue streams.
This article will provide you with the essential tips to get your freight brokerage business up and going in no time.
Compose A Business Plan
When you know how everything works together, running your freight brokerage is a breeze. However, in order to get there, you should create a comprehensive strategy that factors in everything from the start-up costs of an office, software, and equipment, to your ultimate long-term objectives.
A well-thought-out freight brokerage business plan will highlight potential areas for improvement and provide a guide for reaching your goals. The ideal business plan should contain a description of your services, an analysis of the industry, a detailed analysis of your target group and your competition, as well as an elaborate financial plan.
Start A Company By Registering It
After you complete your business plan, it’s time to make it official. In that context, registering your business as a corporation or limited liability company is probably the most appropriate legal structure for your firm.
During the initial period, an LLP or a limited liability partnership may be the preferred option if you have a partner. As a single entrepreneur, a limited liability company (LLC) is a suitable choice since it provides an additional layer of protection between you and the firm. A lawsuit filed against the company itself cannot target your assets.
If the business is funded and will debut with several employees and multiple owners, a corporate structure is also acceptable. You can register your company with the office that issues business licenses in your area.
Explore The Industry Thoroughly
If you decide to pursue a profession as a freight broker you have to decide what kind of cargo you will transport. Are you aiming to accept almost anything, or are you more interested in concentrating your services?
If you limit your freight alternatives, you must be extra careful to locate carriers who can handle those specialty loads. If you wish to accept all types of loads, make sure you have a diverse variety of capacity alternatives and carriers to call on when capacity is limited and demand is high during peak shipping seasons.
There is no correct or incorrect method to diversify or specialize; you must just do what is best for you and your long-term brokerage ambitions.
Get Your General Liability And Contingent Cargo Insurance Policies
Even though these two types of insurance coverage are not officially demanded by the Federal Motor Carrier Safety Administration’s office, most prominent companies will not risk it by allowing a broker to operate on their behalf without having comprehensive general liability and contingent cargo insurance in place.
These two coverages will protect your future clients’ physical property and protect your company if something unexpected happens during the course of operating your new business.
Prepare Your HQ
Freight brokering is predominantly conducted over the phone and the internet. Prepare an area for work by installing a desk, a phone line, and a computer with a fast connection. Prepare your freight companies beforehand, make an extensive phone list and start dialing.
This is when your salesmanship comes into play. You should contact carriers and get prices for shipping costs whenever you have a client ready to send freight. Provide the client pricing that reflects your company’s internal markup. Assuming they agree, you can proceed forward with contracts and arrange shipment dates.
Seek ways to make repeat buyers into loyal patrons. Having a high percentage of repeat customers reduces the amount of time spent on sales and boosts shipping volume, which in turn boosts revenues.
Modernize Your Marketing
As more people become eligible to work as freight brokers, the level of competition is bound to increase, and those who succeed in the field know this. As this occurs, brokers need a plan to promote their services to clients.
Consider using new ways of communication to make your business recognizable on social media and advertise it heavily. Also, you can create a series of emails to send out to people who might be interested to work with your company, or network on Linkedin and meet new potential clients.
Work Only With High-Quality Carriers And Set Your Rates
Your freight broker reputation depends on your service quality. Find carriers that serve your specialty and customers. Ensure they’re trustworthy. For reliable partners, check their safety. You can network to find transportation companies. As a freight broker, this is a lifelong process.
Last but definitely not least, once you find carriers that are going to work for you, adjust your rates and set realistic ones that will help you to enter the market and lure your first clients. Also, you can consider having multiple pricing options for different clients, depending on their load of work and the payment structure you will be able to negotiate with them.
Final Thoughts
If you’re tenacious, persuasive, and enthusiastic about communication, the freight brokerage sector may be the perfect fit for you. Create a great business plan, spend some time exploring the industry, go heavy on your marketing, set your rates, and watch your company expand rapidly, for which you will be generously compensated.
