With fuel, labor, insurance, equipment, and other operating costs at all-time highs, it’s never been more important to have a strategy for diversifying your income, so you can maintain or grow your business. Creating multiple revenue streams in your trucking business also reduces the risks associated with market volatility, economic downturns and regulatory changes – forces that are largely beyond your control as a trucking business owner.
When it comes to how to diversify income as a trucking company, there are several strategies you can use. Expanding trucking service offerings and doing business in new markets are two of the most effective ways to bring in new income, but they can also potentially increase profit margins.
In this blog, we take a deep dive into new ways to earn money as a trucking business owner, and why this can help steady your business between the highs and lows.
How truck companies are diversifying their income
When all of your revenue depends on a single source of income, you risk losing traction if that single source gets interrupted. Relying on a single revenue stream makes your cash flow vulnerable as well. If your business depends on a single customer or lane, and you lose that customer or lane unexpectedly, you may be unable to pay yourself, your drivers and/or your operating expenses.
There are several benefits and opportunities for trucking companies to add in new income. Some of the best – and quickest – ways are to offer services related to what you do everyday.
If, for example, you expand your trucking service offerings to include truck maintenance and repairs, you can meet multiple needs for a customer or find news ones. This gives you an edge over your competitors. Offering other services may allow you to capitalize on abrupt market changes in a way that wouldn’t be possible if you rely on a single revenue stream.
Diversifying your income as a carrier can protect your business from seasonal fluctuations in demand as well as industry-wide downturns. The multiple income streams also have the potential to help you boost your overall profit because some may have higher profit margins.
When building a plan for your trucking business, it’s important to keep in mind the factors that impact profits in the transportation industry. Driver performance, fuel efficiency, preventative maintenance, trip planning, toll bypass programs, supply costs (windshield fluid, straps and other supplies), insurance premiums and coverage, and regulatory compliance can all impact your fleet’s profit margins.
How to Diversify Income as a Trucking Company: Four Best Practices
Now that we’ve established the importance and value of diversifying your income as a carrier, let’s explore some of the most effective ways to do so.
Expand Trucking Service Offerings
One of the most effective strategies for diversifying income for carriers is to expand trucking service offerings. Other options are expanding your services to include used equipment sales, consulting, freight broker or dispatch services. Offering specialized freight services such as reefer, heavy haul, oversized, flatbed, hazmat, intermodal and power only trucking services also can help diversify your revenue streams.
Expand Trucking Markets
Another effective way of diversifying income for carriers is to expand into new markets. Do you run in the same lanes over and over or stick to certain geographic areas? Being open to traveling to a new part of the country can insulate you from regional market fluctuations and help you maintain cash flow within your business.
Diversify Customer Base
New markets don’t necessarily have to be geographic. You can also break into new industries, such as the healthcare industry, which requires specialized transportation services. Diversifying your customer base reduces the risk associated with being dependent on one industry or customer for a significant portion of your revenue.
Mix and Match Seasonal Work
If you’ve worked in the trucking industry for any length of time, you know that many customers’ needs for your services may be cyclical or seasonal. Imagine that you have a customer who ships farm equipment only during the spring and summer months. If you don’t have seasonal winter jobs lined up, your revenue will take a hit during the winter months. Consider mixing and matching seasonal work as a way to diversify your revenue.
To keep your business stable throughout the year, look at your business with fresh eyes. If there are some avenues still yet to be explored, do some research and see how heavy a lift it would be to pursue. There’s no time like the present to make plans to grow your income.
To learn how you can keep your cashflow stable in the process, discover how consolidating your financial needs with us can help.