A freight broker is an intermediary between the businesses that require shipping services and transportation carriers. A shipper has his own particular needs, and a transportation carrier has his own plan for routes and the kind of shipments the truckers deliver. Hence, a freight broker is a middleman between the two parties who ensures effective and quick deliveries to the required destination. Since the broker is a person who arranges transportation, they are also responsible for making negotiations with carriers and ensuring that the trucks arrive on time and use the most efficient route. In a manner, they provide consulting services to the shippers to help them optimize the best method for the shipments. So, now comes the question of why transport businesses need freight brokers? Every industry has unique needs for freight shipping and handling, and the same goes for the transport industry. In the transport industry, you require freight broker services to arrange trade and financial documentation, negotiate freight contracts, monitor the cargo and freight movements, manage transportation management, custom clearances, port inspections, and much more. You cannot do all of it without the help of the axon freight software system.Read More
So, how to be a freight broker? How much profits do they earn? Several questions would have triggered in your mind sooner or later about whether to choose freight brokerage as a business. Now, you know that the main objective of a freight broker is to work upon a negotiated rate between the shippers and the transporters. So, you must be able to build strong relationships between both the parties. So, if you have strong interpersonal and convincing skills, this is the right business for you. There are plenty of reasons why you should start your freight brokerage business as it is an industry that is safe and growing at the same time. Starting your own freight business is not so complicated, all you need is patience, persistence, and a good direction to make it in the freight industry and right tools like Etrucks Reporting App. The following are some of the steps that will guide you in thorough planning and launching your own freight brokerage business.
1) Industry Overview and In-Depth Research:
Taking a good overview of the current industrial practices will help you know the working of the business more aptly. You must be able to make the best out of the existing opportunities with strong critical and people skills. You can also enroll in a freight brokerage software training program to get a hold on the work of the broker, which will open many new doors for your business. Understand the type of audience you will be catering to and what kind of load you will be moving. Make sure to obtain a freight brokerage license and freight broker bond.
2) Choose the best legal entity for your business:
To make your freight business legal, you need to select the kind of legal entity best suited for your business. Most of the small business owners start their business as sole proprietorship or in partnerships. If you are thinking of working on a large scale, you can incorporate as a company. A company has many privileges, including tax benefits, corporate identity, raising share capital, and perpetual concession.
3) Select a Company name and register your business:
In order to register your business, you need to select a unique business name. Ensure whether the chosen name is already taken or not as no two companies can have similar names. The name should be unique and easily identifiable.
4) Develop a Business Plan:
Before starting any business, you need to develop an effective business plan. A business plan is necessary to meet the challenges that will come in your way. Moreover, it consists of future sales and profit projections that help you easily take the bank loans as a business plan improves your credit score. And further you can take help of Axon Accounting programs to manage your business financial tasks.
5) Find the right carriers:
Finding the right carriers is essential because you will have to deal with them regularly. Make sure they are professional, reliable, and trustworthy. You can find the carriers through various sources such as online directories, references, and market search.
6) Get your Broker Authority and a Freight Broker Bond:
Before you start operating your business, you need to get a freight broker software license by filling out an application form. There is usually an application processing fee, and the whole process can take up to 4 to 6 weeks. Apart from this, a freight broker needs to have a surety bond to guarantee that he will diligently follow all the rules and regulations. And, in case if he fails to do so, the bond covers the compensation and losses.
7) Comply with state requirements and set up your registered office:
You also need to make sure that you follow all the guidelines for establishing and building your business in the state where your registered office is located. The next thing is to have an office which could be at your home or some office space. Make sure you have some essential equipment ready for regular operations of your business, such as computers, printers, fax machines, and other such operational assets. Also, make a budget for recurring expenses such as rent, payroll, electricity, and internet fees.
8) Find shippers and set prices:
Look for the shippers that need your services. The best way to do it is by marketing your business. You need to invest some money in marketing and promotional activities so that they can easily find you. Provide some promotional offers to market your startup business at an initial stage. You can do it by using social media channels, building a website, or simply using traditional advertising methods like newspaper and radio advertisements, banners, and kiosks. Also, set up a price that is neither too high that people hesitate to avail your services and neither too low that you don’t get a profit margin.
9) Pool some startup capital, and you are ready to go
In order to run a business, you need an adequate amount of capital in hand. There are several sources of raising capital, such as your own reserves, bank loans or raising share capital. Understand the pros and cons of each source to find the best source of raising money for your business.
Once you are done with the above steps, you have successfully become a freight broker and ready to start your business.