Of course, the first thing you have to do is get an authority, or what some refer to as an MC number. It’s a broker authority. It makes you legal when it comes to being a broker, to move freight from point A to point B.
Of course we also had to get what is referred to as a BMC 85 Surety Bond. And with a surety bond comes credit checks and things of that nature to see what risk you pose.
It’s one of those things that has to be checked out when you’re making financial decisions for a business. The business owner has to be checked out to see how credit worthy you are.
So, you have a surety bond. We have a $75,000 surety bond which is required for a freight broker business.
And, of course, setting up an EIN (employee identification number) for the business, Alliance Logistics.
Then, one of the steps we took is create a business plan outline. I call it a business plan outline because we look at our business plan once it’s completed as a guide. A guide that helps guide and direct us to where it is that we want to go. I think the key thing is to identify where you are and then of course identify where it is you want to go.
Then, lay a plan out to achieve what it is that you want to achieve. And, that’s where we are as far as our business plan is. We have an outline and we’re starting to write out the plan as we go.
Now, after eight months in the business, we can see where we want to go and we’re devising a plan to get to where we want to go.
It’s absolutely an amazing time. It is so much fun building a freight broker business. Of course, I would imagine that’s true of any business you’re passionate about.
But I have to tell you this is so much fun, I look forward to getting out of bed in the morning. At 3 AM, as a matter of fact, to get started on my day because it’s such a wonderful opportunity that I look at that lies ahead every day and I’m so in a rush—like a child at Christmas waiting on toys.
I’m in a rush to see what challenge do I have for the next day. What challenges are out there that I can overcome today. I look at it like you have smaller problems now. And, as we get better and earn our way to bigger problems. Of course, we’ll learn the right to earn bigger problems.
As we keep going down the road, the bigger the problem the greater the achievement when you solve the problem. But also the greater the revenue as well.
So that’s it for developing the business plan outline.
Also, one of the early stages one of the things we have to do was pick a factoring company. Now, factoring companies are a very unique business.
The factoring company allows for you to have your accounts receivable financed without you needing to have a line of credit. So you can, of course, pay your truck drivers who are a very—if not the most important piece of the entire puzzle.To pay them on time.
This business is about integrity. Doing what you say you’re going to do all the time.
Factoring companies are a great way to finance your business. But at the same time, you also have to be very involved with the factoring process.
If they tell you their paperwork is in by 2 and it arrive at 5 PM on the same day on a quick pay. If you relay that to your customer, of course your customer expects to get paid. Your truck driver expects to get paid at 5 PM.
Just say for instance, the factoring didn’t pay on time, that day. Well, your word said that you would pay the truck driver at 5:00. So always be mindful of that and have a game plan just in case the factoring company does not pay on time. And, it’s happened to us on several occasions. And, we’ve always been able to pay because we have money allocated for that kind of situation. Because for us, it’s always about doing what we say we’re going to do. Especially when it comes to anything we say we’re going to do from a business standpoint or life standpoint. We always try to do what we say we’re going to do.
The next thing we’re going to talk about is a phone service. We have a VoIP, or voice over IP phone service. I’ll be honest with you, we’ll probably have to get another service that provides a better service. You know, we just have clarity issues, hesitation issues, stall issues with the voice.
And in this business when you’re talking to customers you only have a short period of time to say what you need to say. You need to communicate clearly, precisely, and effectively Something they can hear you.
Ask questions when it comes to the company you are going to select. At the same time be mindful of costs, when you’re going to have a phone service here that you conduct business from, that’s a bill. And of course, you have your cell phone that you may conduct business on and that’s a bill.
So we try to be mindful, of course, always be aware of overhead so if you see a need to decrease overhead. Sometimes you have to increase your overhead, but you must be aware of what your overhead is always and control that number.
You don’t make profit until overhead is accounted for.
Ok, so! After your phone service, you choose a load board. Now, a load board is where you’re going to post your loads. You’ll get a load from the shipper, you’ll go out to an Internet Truck Stop like DAT or Express Load Board, whatever load board you choose. Me, I use, Internet Truck Stop and DAT. Alliance Logistics, we use those two load boards. You can take a look at them and decide what’s best for you.
I wouldn’t necessarily say that this one is better than the other. It’s just a matter of opinion, and a matter of experience to see what you think is best. A load board is used to simply post your load so that truckers, or trucking companies can see your load and give you a call and negotiate pricing to move the load.
The next thing we’re going to talk about is a transportation management system.
That’s the next thing we put in place. Basically, this system will track your load from quote to invoice. From the time you give a quote from the shipper to what is the cost of this load to the time you invoice them. Of course that covers quote, the rate con, that you’ll send out to the driver when you’ve agreed to a price with him, then to invoice.
There are also other places where you can post your loads to your load boards automatically as well. From the time you quote it to the time your invoice it and get paid on it.
So you have to decide what system is good for you. Load Pilot is the system we use, it’s a very organized system, we really enjoy using that system. Because it’s very organized and it keeps your loads organized. It keeps everything so you can see it and report on it as needed. But there are many others out there that you may look at and say it’s the best for you at this time based on your needs.
So, I would tell you to do your due diligence where those are concerned and make a decision that’s best for you.
Next, I want to talk about briefly, is overhead.
Our overhead is at or less than $1,000 a month. And, I think that is one of the key components in establishing a profitable, successful business is to keep overhead down. And, we are allowed to keep our overhead at under $1,000 with of course, being able to come into a business, choose a few systems you’re going to need, not anything that is going to cost an enormous amount.
Something that is going to help you manage your business. And, I would say, “keep it under $1,000.” It’s very doable. We have all of the systems in place that we need now. I’m sure we’ll identify other things that we’ll need at some point. But, the key thing we’ve learned is to keep the overhead is manageable. Because once your outgoing exceeds your income, your upkeep is your downfall.
So, be mindful of the overhead piece.
The last thing I want to discuss is developing relationships.
This is such an important piece to the success to a freight broker. It’s all about developing relationships with the customers, the truckers and the shippers. And, with truckers and shippers, it’s about doing what you say you’re going to do.
I explain on the truck driver side, paying on time, doing what you say you’re going to do and it’s the same on the shipper side. If you for instance get a load for the shipper and you’ve given the shipper a price to move the load and “oh by the way, you underbid this load drastically!” It was a drastic overbid, it was a mistake.
So, now you have a load and you can do one of two things. You can call the shipper and tell them you can’t move the load which is going to damage the relationship or you can move the load. Why? Because you said that you can move the load at that particular price. We don’t subscribe to putting our word out and telling the shipper that we can move a load and then say “Oh! We miscalculated” and go back to the shipper and ask for more money and tell them we can not move it.
No, we simply move the load, it we have to absorb cost in that then so-be-it. But once we give our word, there is a rate quote sign between the shipper and I, and Alliance Logistics is responsible for moving that load.
That’s a responsibility we take. That’s the bottom line.