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Published: 03 January 2014

Key reasons why trucking businesses may fail

“Price is what you pay. Value is what you get.” - Warren Buffett

Building a succesful business is not easy, especially in the ultra-competative world of trucking. We are taking a look at reasons why a trucking company may fail so that you can avoid these pitfalls.



Lack of Planning
You have planned your business, you have your objective, vision, and mission but in the end, it is still not working out. You definitely have forgotten the word "research". Your research may not be sufficient to blend with your planning. Or your proposal is too thin. Another issue is that our references can be counted with fingers. Lack of planning will only save you money in the short term.

Poor Management
Miserable employees, a big ego, low productivity, resistance to change, and a one-way communication style are often signs of bad management skills. A strong team is what makes the business grow. In the trucking business, you need to have a smooth and firm management because this is one rough industry.

Low Cash-Flow
It is a combination of several factors such as not having enough customers or business, low-paying freight, high costs of operations, too many unpaid invoices and over-investment in capacity. Or allowing customers too much credit, overtrading and many more. Predictable changes in seasonal demand create cash flow problems too, but because they are expected, a business should be able to handle them.

No Collection Strategy
In the trucking business, you need to have a continuous strategy to remain profitable in the long term. Do not just settle down with an old or the same strategy all the time. Always inject some new and fresh ideas into the business. Mark down every update in the market to matche the needs well.

Low paying freights
This happens when you have no knowledge of market rates. Always check your profit/loss statements, cash-flow or income/expense statements to review whether your business is profitable. Make sure all of your investments are in balance and you are satisfied with the numbers that you get.

More key reason for business failures in our upcoming issue of Asian Trucker Magazine.

References

Jeremy C Bradley (Demand Media)

Jim Riley (tutor2u)