So you have decided to either start or expand your trucking operation. Great decision but how can you get the finances to get started or expand? With the cost of trucks, trailers, payroll, licensing, filings, insurance, fleet fuel, maintenance, etc; what options are available to gain additional funding?
Let’s take a high level view of some possible options that are being used by the trucking industry today.
- Bank Loans
A common choice for those looking to acquire capital, banks normally will require you to have some skin in the game for them to contribute finances to your business. Many will ask to see either some form of capital as collateral or verified current operational balance sheets to see how viable the business is. Finding a good bank to form a strong relationship can help not only start and expand your business, but assist if ever needing capital for emergencies or unforeseen market factors.
- Equipment Lenders
Sometimes it may not make sense to all-out purchase new equipment so getting involved with an equipment lender can make things more financially manageable. Renting or financing can help operations generate revenue from their contracts immediately to help cover the cost of the additional trucks or equipment. A couple options could include just renting equipment or lease to own situations, depending on your current short and long term needs.
- Freight Bill Factoring Financing
When dealing with clients and payment terms with net 30 or 60, it can take time to collect all outstanding payments. Sometimes if you need to get liquid assets to utilize to enable expanded operations, working with a company that offers freight factoring can get you cash quickly. The freight factoring company essentially purchases your existing freight invoices and issues you an immediate payment for them. This can open up short term options for your business.
- Franchise Agreements
Some situations may require more trucks and operators to be added and one way is to franchise owner-operators under your brand. This relationship would allow your company to take on additional revenues by collecting a franchising fee from franchised owner-operators who would operate under your brand. You would allow them to service your contracts and take a percentage of their profits. This can be a great way if you have an abundance of work and not enough trucks to do it and not enough capital to expand on your own. I can keep clients happy and make you revenue as well so has some win-win potential.
These act as simplified scenarios on a few possible ways to finance your trucking endeavors. If there is any way we can help you protect and sustain your business by properly protecting and insuring you, please let us know! RSI Insurance Brokers has some unique business relationships that can help our clients take care of these issues.