One way to better your finances is to start a business, perhaps a specialist freight service if that’s up your alley. This can be highly lucrative because transporting goods is big business. This attractive business prospect contributes billions to the economy every year.
Still, while the money is good, the business also has its downsides. Unless you find a way to manage these formidable challenges, your business will not be able to live up to its promise. Two primary challenges you’ll face are money management and finding fresh leads. Let’s take a look at the nature of these challenges and possible solutions.
Money Management Challenges
The first challenge is negative cash flow problems arising from offering customers 30- to 60-day credit. The second challenge is accurate cost structuring.
- Extensive customer credit.
Although an apparent solution to the problem of negative cash flow is to refuse to offer customers a month or two to pay off their freight bills, it is not a practical idea. Rather than acquiesce to your terms, a customer is more likely to do business with another company that does offer them generous credit terms.
Negative cash flow is a big problem because you will not be able to pay for your overhead if it takes a long time for you to get paid for your work. One elegant solution is to sell your invoices to a company like TBS Factoring. By selling your account receivables to a factoring company at a discount, your business will be able to meet its current cash needs. Plus, you get rid of the headache of running down past due accounts.
- Inaccurate, unreliable quotations.
Due to uncertainties about some costs that your business will incur, such as fuel, it will be frustrating to come up with accurate, reliable quotes. It can be difficult for your business to estimate a realistic cost structure especially if you will often have to work with clients who have complicated contracts and rates.
In fact, many times, you’ll need to consult with a lawyer to understand the complexities of contract law. These challenges are not due to the client deliberately obfuscating the contract with legalese but due to the fact that the industry itself has not found a way to simplify cost structuring.
Lead Generation Challenges
Besides financial complexities, your second biggest challenge is getting fresh leads. If you don’t develop an effective lead generation process, then you will go through feast-or-famine cycles. Sometimes, there will be more work than you can handle. At other time, you may not have any work at all.
While getting too much work can be handled by either turning away work or increasing your businesses capacity to take on more work by subcontracting jobs, it’s harder to cope with not having enough work to pay the bills.
Here, then, are 2 tips for keeping your lead generation pipeline full.
- Market daily.
Many freight companies rely on load boards to discover truck loads and freight when they are short of clients. While these may help your business out in a pinch, this is not a good, long-term solution.
First, you will not be paid what you’re worth because the competition makes this type of bidding a race to the bottom.
Second, you will not be treated well by clients. Besides penny-pinching about your rates, customers will add insult to injury by carping on any delays in shipment or other delivery problems.
Third, most people who will hire you will only offer one-time gigs.
A better long-term solution is to market every single day.
Although at times, this may seem unnecessary because you may have your hands full with projects, you must still make it a daily habit to market your business. A time will come when you will lose customers or promised gigs will fail to materialize.
The way to prevent a gap in your income is to set a daily quota on finding new business leads and contacting them. Aim for at least 3 new contacts a day, although 5 new contacts, if you can manage it, would be even better.
- Market effectively.
Effective marketing includes researching your prospect before making a cold call, building a relationship with your contact, and refusing to be dissuaded by frequent rejection. Stay focused on filling out your cold calling quota and follow through on any promising opportunities.
In closing, remember to keep your chin up through the tough times. Refuse to get discouraged when things are not going your way, when your bills aren’t getting paid, when nobody is hiring, or when your lead generation efforts appear futile. If you stay the course, you can build a six or seven figure business.