Specialization can be both a blessing and a curse for business owners. On the one hand, having a niche helps a trucking business stand out from the competition and appeal strongly to a certain market segment. On the other hand, having a narrow focus can be limiting and costly, at least initially. Here are some notable pros and cons to buying a specialized truck business for sale.
If you specialize in transporting oil and gas, new oil and gas customers may be more likely to trust your expertise than a general trucking business. Your specialization is, in a sense, a form of advertisement for your truck company. As you build up a reputation in your field, it will be much more difficult for competitors to enter the market. Specialized companies often enjoy a large market share from the get-go.
Lower long-run investment costs
It can be costly to invest in specialty equipment, but, once you have your supplies, upkeep and reinvestment costs may be lowered. If all your trucks are refrigerated, for instance, you may be able to work out a deal with a supplier of parts for cold storage trucks. Because all drivers in your fleet are operating similar vehicles, training costs may be minimized. Additionally, it’s easier to stay abreast of changing rules and regulations in a single industry.
Well-run specialty companies tend to build lasting relationships with clients. These relationships can help insulate an established trucking company from fluctuations in the market.
Initial costs may be higher
Specialty equipment doesn’t come cheap and often requires unique safety education or operative training. But, while starting a specialty business from scratch may be expensive in the short run, investing in an already successful trucking business for sale can provide a more affordable way to enter a lucrative niche transportation market.
As with any investment, it’s rarely a good idea to put all your eggs in one basket. Specialized trucking businesses tend to have more highly concentrated customer bases. If one large client makes up 30 percent of your cash flow, what would you do if they went out of business? If you meet the needs of a specific industry, how resistant is that industry to economic changes? Entrepreneurs looking at investing in a niche freight brokerage business for sale may want to brainstorm ways to lower risks.
More difficult to sell
There comes a time when every business owner has to get out, whether it’s for retirement, health reasons, or simply a change of pace. When you own a specialty company, you will naturally appeal to fewer buyers. Selling a trucking company may take longer if the company is specialized. That said, by targeting a buyer interested in your type of specialty business, you may be able to command a higher price.