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Is Buying a Small Trucking Business Still a Smart Strategy?

September 18, 2012 By Sozo Staff

With fewer contracts and comparatively higher costs, it’s often a struggle for small trucking businesses to compete with the biggest players in the transportation industry. Larger companies enjoy economies of scale that make it easier to cope with rising prices, market fluctuations, and – recently – the Federal Motor Carrier Safety Administration’s CSA (Compliance, Safety, and Accountability) scoring system.

For entrepreneurs thinking of entering the trucking business, the unlevel playing field can be quite discouraging. However, there’s still hope for owner-operators and companies with small fleets. With the right strategy, a strong business of any size can take advantage of the nation’s continued need for transportation.

Dealing with Regulations

Increased safety regulations are here to stay. Small businesses that take a proactive approach to compliance, rather than simply reacting to expensive violations, will be better able to compete. While small companies don’t have the large staffs and automated HR and IT departments of big businesses, they may be able to implement safety management software to monitor compliance. On the downside, upgrading technology involves large upfront costs. Over time, however, the right combination of software can help companies predict violations before they occur and better communicate with drivers and other employees, resulting in reduced long-run expenses.

Finding a Niche

When you’re a small company trying to provide the same services as a large company, you’re never going to be able to keep up. The most successful small trucking fleet owners have found a niche that big truck companies can’t, or won’t, fill. A niche can be a very specific area, a unique method of transportation, a particular commodity, or a specialized market. While large companies have the resources to provide many services adequately, only smaller companies have the ability to provide one service well.

Growing through Expansion

With the right market, specialization, and flexibility, it’s possible for a small trucking business to successfully survive – and even thrive – alongside larger rivals. For many business owners, however, operating a small fleet is just a stepping stone. Few trucking companies will ever reach the size of the top handful of carriers that earn most of the industry’s income. But by acquiring similarly-sized small companies over a period of time, entrepreneurs can enjoy strategic benefits such as cost savings, larger customer bases, and greater insulation against market and industry changes. Of course, managing a trucking company that is growing comes with new challenges, such as putting together larger management teams and adding more advanced technological systems.

Whether you’re interested in investing in a small trucking business, expanding an existing business, or taking your chips off the table by putting your current trucking business up for sale, an experienced truck business broker can help you make the most of your transaction.

Filed Under: Transportation

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