You’ve probably been doing a lot of research on the topic of starting your own small business lately and somehow decided that you want to dip your feet in the water of becoming a freight broker. It can’t be too difficult. You can write your hours. No boss is telling you when to clock in and out or what to do. Aside from all that, you don’t have to leave the house if you want to. Sounds great, right?What do you need to be a freight broker? To become a freight broker and be successful as one, you will need to accomplish the following tasks:
- Build a dream board.
- Develop a business plan.
- Get a business lawyer to register your business
- Attain your USDOT number and your freight broker authority.
- Get carrier insurance and freight broker bond
- Have your finances in order.
- Create a leads list to contact potential customers.
- Build and develop relationships with shippers and carriers.
- Determine your financial goals.
Being a freight broker can be an extremely lucrative career if you put in the work and follow all the necessary steps. In this guide, we are going to tell you everything you need to know to become a freight broker. We are also going to tell you what you need to do to start and run a successful business. It won’t be the easiest thing, but you have this guide to help you. If you want to succeed, put in the work.
How do You Become a Freight Broker, and Become Successful at it?
As with any business, there are a few steps that need you will need to take to become a freight broker.
- First, you are going to have to choose a company name and get your business registered for tax purposes.
- After that, you will need to develop a business plan and find the right carriers for your business.
- You will also need to apply for a USDOT number since you are working in the transportation industry and get your freight broker authority.
- You also need a freight broker bond, cargo insurance, and general liability insurance policy to protect your business in case something goes wrong and get a business attorney.
In addition, you need to keep in mind the associated expenses with a start up as well. You can easily be looking at seven to ten thousand dollars to get started, and that is before putting a business attorney on retainer.
Getting all these things in order can be a bit hectic and feel like a full-time job in itself when trying to get off the ground as a freight broker.
Step One: Build a Dream Board To Keep Your Goals in Front of You
The great thing about the first step in becoming a freight broker is that this step applies to any would-be entrepreneur. It doesn’t matter if you are looking to open a small bakery or develop a business with the potential to make millions–this step is essential.
When it comes to starting a business, you need to be all in to make it work and produce the results that you want. It is not going to get to the level or create the income that you want or need if you only kind of want to do it. You need to use a dream board to motivate you to get you off your couch and into the grind mindset.
If you don’t know what a dream board is, it is a board that you post up all the things that you want or need to happen in your life. We want you to think about what brought you here to this resource to learn more about becoming a freight broker.
- Why do you want to be a freight broker?
- Are you tired and frustrated with certain things in your life?
- Do you need something to change?
That is what you need to think about when you are putting together your dream board. It doesn’t even matter if all you want is a new, flashy car. If you want it, put it on the dream board. They are used by many sales professionals to stay focused on their goals.
There are many resources available that can help you create one. We like this video by Jack Canfield, one of the most successful success coaches.
Step Two: Create a Solid Business Plan for Your Freight Broker Business
Every business requires a business plan to attain the goals that you have been set forth for the business. Your endeavor as a freight broker is no different. It does not matter if you need additional capital or not to get your freight broker business up and running.
What is the Purpose of a Business Plan?
If you want your freight broker business to generate revenue and attain stability, you want a business plan. The purpose of a business plan is to provide you with a blueprint of how to build your business. When working in the logistics industry, we can tell you, from experience, that things change on nearly a daily basis. That said, you need to have a plan.
A business plan is different from a dream board. Think of a dream board as your goals and the business plan on how you will accomplish them.
The Three Parts of a Business Plan
There are multiple sections that you need to incorporate into your business plan. It is not enough to say that you want to make a lot of money. To get the most out of the business plan that you are putting together to ensure the health and success of your freight broker business, it needs to include these three main parts:
- The Cover Sheet: The cover sheet includes the name of the business, the names of the people who own the business, and the address and phone number of the business. It is important because it functions as an introduction to the business and shows your seriousness towards the venture. If you need capital, this is what is going to hold the attention of a potential lender.
- The Statement of Purpose: This is the main body of the business plan and is where you are going to describe the services that your freight broker company provides, who it is provided to, and why. With this area, other sections will include your market research, competition, financial information, and marketing plan to get the business generating revenue.
- Supporting Documentation: The supporting documents that you will need to include in your business plan are any leasing information for the business, legal documents, your resume, letters of reference, your cost of living, and projected operating costs. This is going to provide you with a better number in terms of revenue necessary for your freight broker business.
If you want to succeed as a freight broker and be prepared for any hurdles, you may come across a business plan is necessary. View this resource on business plans to learn more about what you need to do to structure and create one properly.
Step Three: Keeping Your Freight Broker Business Protected With a Business Attorney
As the owner of a freight broker business, it is safe to say that you are going to work hard for everything that you have. Sometimes, however, things happen, and situations arise that can hurt your business. Clients fail to pay, loads get dropped, and damages happen. No freight broker wants to leave his business vulnerable. How is hiring a business attorney going to help protect your business?
To answer that, let’s look at some common challenges, new and established business owners face.
- Establishing a business– This is going to be choosing the proper entity for your business and filing the necessary paperwork with the Indiana Department of Revenue and the IRS. Whether it is an LLC, S- Corp, or sole proprietorship is important. Choosing the wrong entity, not filing the necessary information, or attaining proper licenses can have serious consequences later.
- Putting together contracts- This is essential in protecting your business. Liability waivers, service agreements, Non-Disclosure agreements, and contractor agreements all play a vital role in protecting your business from lawsuits. You also want these contracts to keep former employees leaving you to become direct competition. Business attorneys are there to help with drafting the necessary forms for your business.
- Dealing with claims and disputes- Everything doesn’t always go as it should in business. No matter how good a business owner’s intentions may be, they can still come across a situation with a client, vendor, or employee that requires litigation. Business attorneys are there to advocate and resolve issues on behalf of your business.
- Risk Management and Compliance– Business attorneys can advise their clients on potential compliance issues. They will also assist with putting measures into place to minimize risk to the business.
Getting Started as a Freight Broker: Consulting With Business Attorneys
When it comes to your freight broker business, you should begin speaking with a business attorney as soon as possible. The same applies even if you haven’t started your business yet. The reason for this is that when it comes to your business, making a mistake can be costly, easily adding up to tens of thousands of dollars.
As a business owner, a business attorney is going to be an invaluable resource in maintaining your business and keeping it in compliance. They are also going to be essential in keeping your costs low by resolving legal issues on your behalf. Otherwise, you will be going it alone against other attorneys or regulators who have done this many times.
Getting Started as a Freight Broker: How to Find a Reputable Business Attorney
When looking for a business attorney, there are two things you need to consider: need and cost. While a business attorney is going to be beneficial in keeping business costs down, you need to know what you are going to need from that attorney. Your need is going to affect the cost. Do you need to form an LLC? Expect a forecasted hourly rate.
What about something more complicated? You might be looking at a retainer plus an hourly rate. It just depends. To get the best idea, consult with multiple attorneys to see what they offer. The Roll of Attorneys is a great place to find business attorneys.
Step Four: Getting Your USDOT Number and Freight Broker Authority
There are a lot of regulations and stipulations involved in working in the transportation industry. Due to this, one of the requirements of running a logistics company, even if you aren’t going to be transporting anything, is having a USDOT Number. As a freight broker, you will also need a freight broker authority.
Getting Started as a Freight Broker: Getting a USDOT Number
Getting a USDOT number is not a very difficult process. It’s straight to the point when looking to get your USDOT number you are going to have to follow these steps:
- Have all the necessary information together. When you are applying for your USDOT number, you will need to make sure that you know how your company is operating, the operating classification, the classification of cargo, the status of drivers, and the number of CDL drivers. All of this may not apply, however.
- Download or E-file the proper USDOT application form to file and submit. There are three main forms of USDOT applications. Depending on your business, you may be filing a different one. Make sure you follow all instructions and fill out the necessary application properly.
- After completing, file your USDOT Registration. When you have fully and properly completed your application, it is time to send it in. You can choose to mail it or submit online. If being mailed, send your application to FMCSA Attention: USDOT Number Application 1200 New Jersey Avenue SE Washington, DC 20590. Submitting the USDOT Registration is free.
To learn more about the USDOT Registration and to get started on submitting your application, visit this resource to get the ball rolling.
Getting Started as a Freight Broker: Getting Your Freight Broker Authority
Whether an individual chooses to be self-employed or decides to work with a company as a freight broker, you are going to need to have a freight broker authority/license to do business with carriers and shippers. To get your freight broker authority, you are going to need a USDOT number first, and at least three-hundred dollars for your application fee.
Once you have your USDOT number, you will need to use that same number and complete the OP-1 application to get what is called an MC (Motor Carrier) number and broker license with the FMCSA (Federal Motor Carrier Safety Administration.) The form accounts for the thee-hundred dollars you will need.
To get started on getting your freight broker authority after completing your USDOT application and receiving your USDOT number, visit the FMCSA’s website to get started on your application.
Step Five: Get Carrier Insurance and a Freight Broker Bond for Your Business
As a freight broker, it is important to make sure that you have the proper insurance and bond to protect you and your business in the case that something goes wrong. You also must move fast as well after receiving acceptance of your application as a freight broker to get this taken care of, so the earlier, the better.
FMCSA requires proof of at least $75,000 in bond insurance for freight brokers. The purpose of having a bond is to ensure that carriers are still able to be paid if a freight broker cannot pay them because of not receiving payment or various other reasons.
After you receive public notice that you are starting your business, you have 90 days to show them proof of your bond. They also require that you renew this every year.
Carrier insurance is also important. Even though the freight broker is not transporting the loads themselves on the routes that they broker, they can still be held liable for issues such as drop loads, cargo theft, and damage. This insurance is required to ensure that the load can still be paid for in the event things don’t go as planned.
Finding the right insurance policy that meets the needs of your freight broker business can be stressful and confusing. One company that specializes in this is known as Freight-Tec. They offer insurance and additional resources to freight brokers and others in the logistics industry to help keep them focused on business instead of paperwork. Check them out here.
Step Six: Get Your Finances in Order
We just explained earlier how you would need to establish your business, get it registered, get insured, and hire a business attorney. These things are essential to starting your career and business as a freight broker. But it is important to have your finances together before launching your freight broking career.
Why? Two words–working capital. You need to have a certain amount of money set aside to not only take care of the inherent expenses but also keep you afloat while building your book of business to replace that money as you acquire clientele.
Think about what you normally spend money on and how much you have set aside to get your freight broker business started. Do you have enough tucked away at the bank to cover the costs of establishing the business legally? Are you able to afford the insurance costs and freight broker bond? Do you have at least two to five thousand dollars set aside to cover the business attorney’s retainer fee?
If you said no to any of these questions, you have a problem that you need to address, and you may even need to start cutting back on the things you don’t need. Figure out what you are paying for that is not essential to your growth and development as a freight broker. If you’re serious about getting started and have a solid business plan put together, investigate SBA loans to cover your working capital as well.
Step Seven: Get Your Freight Broker Leads Together
One important part of being a freight broker is having leads to contact to sell them your services. Without leads, your business is not going to get far. You will have licenses, bonds, lawyers, but no customers, accounts, or income. You will still be dreaming about becoming a freight broker if you don’t have anyone to sell your services to.
For those of you who are new to the freight broker business and the concept of lead generation, we can tell you from experience that lead generation, itself, is a full-time job. Unless you are willing to do the research and learn more about your prospects, don’t expect to have meaningful conversations with them.
When growing a sales business of any kind, including freight brokerage, leads are going to be the lifeblood of your business. The more leads and contacts you have, the less time you will need to be engaged in cold calling.
Call and introduce yourself to the shippers and let them know that you are a freight broker. Before calling, research the company and its product to ensure that you can provide a plan and solution to helping them get their product distributed in a timely manner, meeting or exceeding their expectations.
Calling twenty businesses even with an autodialer can take up to two hours, so keep this in mind. Get in the mindset of investing time to speak with prospects.
Step Eight: Develop Relationships With Shippers and Carriers
When it comes to being a freight broker, the only way you are going to build your book of business is by building trust and relationships with the shippers and carriers that you intend to provide services for on their behalf. So, you know, building relationships and trust with shippers and carriers take time. It is not going to happen in a couple of hours a week.
As a freight broker, you’re an entrepreneur, and you have already invested the necessary funds into getting the business started. If you are in this situation, you need to go full throttle and put in a full-time effort into cultivating relationships with the shippers you want to service and the carriers you want to run transports for you. It will be hard, but it takes time.
Find common ground. When speaking to a potential client, it is important to find common ground with them. This can be accomplished through story-telling. Say they had an issue with another freight broker in the past, and you remember some frustrations you had on the side of working for the shipper directly. Tell that story. They will be more at ease talking to you about their needs.
Building relationships also affords you another benefit. It will provide you with more selling and buying power in your negotiations with shippers and carriers. If the shipper likes you, they may be willing to pay a little more for your services. If a carrier likes you, they may accept a rate that is lower to help your business out a bit too. Don’t underestimate the power of a good working relationship.
Go out and network. There are a lot of trade events that happen in any given month that provide you with the opportunity to shake hands and rub shoulders with some companies that could become clients later. It doesn’t matter if it a networking event or job fair. Bring business cards, copies of your capabilities statement, and a good attitude. You never know who you will meet.
Step Nine: Figure Out Your Financial Goals
Another thing that is going to be extremely important as a freight broker is determining the amount of money that your business needs to make for you to acquire the quality of life that motivates all of us to get into running a business.
If you are looking to make a six-figure salary, live in a big house, and have a car that grabs all your neighbors’ attention, you need to make sure that you have the entrepreneur mindset. It is not going to happen if you only want to do a little of the work and don’t put the necessary time into it. If that is what you think, you are in the wrong place, and you can keep dreaming.
It is also important to keep your goals realistic and attainable. If you haven’t left your job yet, you need to begin taking the necessary steps so that you can focus on the financial goals that you have set forth for your business and personal life.
Remember that dream board we told you about earlier? This dream board is a good representation of your financial goals since it has all your wants and needs on it. To make it even better, do some research, and attach price tags to everything that you are wanting or needing to make that goal even more attainable. Don’t be afraid to reassess as you reach goals, and your situation changes either.
Being a freight broker can be one of the lowest-paying easiest career choices out there or end up being one of the most lucrative high paying endeavors if you want it to be. That’s the life and nature of sales. If you are new to the entire world of logistics and freight broking, we urge you to spend some time working with a freight broker agency to learn more about the job you wish to do.
However, if you wish to dream and plan on building a personal empire and long-term wealth through pursuing a life and career as a freight broker, you need to be prepared to put in the necessary time and effort to make it happen. Get your paperwork in order, create a plan, establish a timeline, acquire leads, close sales, and prepared to work endlessly, at least in the beginning.
We hope that this information has been useful to you and provided you with what you were looking for to get you going successfully as a freight broker. It is a fact that almost no business can grow and survive without giving it your all when first starting. Good luck and work hard!