How to Make Money in Logistics as a Freight Broker
If you have interest in becoming a freight broker, it is paramount that you roll your sleeves, get out of your comfort zone and learn how to make money.
So, what do we understand by freight brokerage regarding Logistics and Shipping?
This business involves a broker (Mediator) between the team shipping the goods and the owner operators of the vehicles (Trucks) used to transport the goods.
The right broker will have a material impact on the entire supply chain, and with a legitimate one, customers will get their goods safe and save them some money.
But many people make mistakes because of the perception that this is a straightforward business, and so long as they have a license, they are good to go. This is the beginning of the downfall of freight brokers. It is, therefore, important to learn the loopholes that make their money get into bad hands or fail to grow to avoid them.
- Lack of a Solid Business Plan
Every business, however easy it may look, needs to have a solid business plan whether you are operating it solely or it is a registered company. A good business plan helps the broker establish future goals- for instance, signing contracts with legitimate shipping companies who will create a business the whole year round.
These are some marketing strategies that a freight broker should implement to ensure that they remain relevant in the industry regarding pricing and faithfulness when onboarding new customers.
- Ignoring Marketing Needs
Every year, new freight brokers get into the market. Being fully licensed gives them a competitive advantage, and if your brokerage business is ignoring such, they will take up new customers, which would have earned you money. Therefore, if you intend to make money with your existing and new clients, remain relevant through advertising and making your customers aware that you are available at their service.
- Lack of Planning for the Brokerage Expenditure (Capital Expenditure)
The costs involved in the freight brokerage business are not as much as that of transport and logistics companies. For instance, if one wants to start a transport business, they require a truck either for hire or purchase. However, a freight broker’s capital expenditure is minimal, but you will be required to incur some costs to make you attract potential clients while building confidence with the existing clients. These costs include the following;
- Renting an office,
- Buying office equipment for support,
- Hiring an administrative assistant to have your office organized.
Failure to take these initial steps will render you irrelevant in the industry, and you will not make money.
- Failure to Understand the Licensing Requirements
When you enter the brokerage business, it is a federal regulation requirement that requires one to have a broker license, however much you are experienced in freight brokerage business. One is also required to post a freight broker bond or trust to be allowed to operate legally.
If you do not understand such critical areas, the chances of failing in the freight brokerage and the transport and shipping industry can hit you hard.
- Charging Inappropriately
Sometimes being in business calls for understanding the rates being charged by your peers. You may find new freight brokers charging too low, but they end up making losses and giving up. On the other hand, setting high rates will keep customers away from your business. Study the freight industry and work according to industry trends to make money.
- Poor Communication
Every business requires constant communication with the customers and the prospects as well. With the high competition in the freight brokerage business, a broker cannot miss this critical aspect. Use all the channels available to ensure that your customers get first-hand communications such as emails, and returning calls, use social media platforms such as Facebook or Twitter and see to it that the customers feel appreciated.
Listen to their feedback and close on the weak areas to retain your customers and make money.
- Brokers Failing to Upgrade their Education
Every industry demands that business people remain updated with the training needs as technology changes. Lack of training largely impacts a business. Therefore, besides going for personal development training, a freight broker should rank high their education needs and understand their customers’ needs so that they remain relevant as per the current industry trends.
- Lack of Time Management
Time management is essential when it comes to the freight brokerage business. This helps one to create time for new business connections, stay focused on business management, and know the areas to outsource duties to ensure that customers are sufficiently attended to at any given time. Failing to manage time will mean losing money in the brokerage business.
- Failure to Use Technology Tools
If we critically look, more so when COVID-19 struck the entire world, nearly all businesses reverted to technology. This has continued even after the end of the pandemic because the technology tools are designed to help manage business trends, enhance communication, create great avenues for marketing, and many more.
Hence, having these traits on board is important if you want to remain relevant in the freight brokerage industry.
- Lack of Interest in Marketing Opportunities
Marketing is the footstool of all businesses, and without this essential trait, chances are that you will lose business while others are making a lot of money. But marketing comes along with networking. For instance, meeting experienced freight brokers and understanding what they have done to thrive in the industry. In such a case, a good broker can pick the good traits and shed off the pain points that could be affecting their business. Always research for such opportunities, whether they are held online or they are land-based. They will help you move your brokerage business to the next level and make good money.
In a freight brokerage business, one thing demands making money; Patience. Some of the brokers in the industry have been there for a long time, but the essence of longevity has made them become who they are today. As such, practice this trait if you want a successful freight brokerage business.