Starting broker biz in Nov
- Thread starter plymouth
- Start date
terrylamar
Well-Known Member
I would be interested in your heavy equipment, depending on the size, within the state of Texas. I don't have any advise, I'm not a broker.
catalinaflyer
Well-Known Member
First bit of advise I can give, have lot's of cash. If you start waiting to pay your trucks till you get paid you'll wind up with a very bad reputation on the internet and have a tough if not impossible time finding trucks.
Your talking about doing some specialized stuff and I can tell you that getting payment from the customer can and will take 60 days or more and unless your already very well established you won't have a chance in hell of getting a factoring company to fund your receivables. So if you do a measly $5,000 a week gross, your going to be out about $40,000.00 before the first check arrives from the customer. And let me tell you, your not going to survive on $5,000 a week gross, you'll be lucky to net $250 when all is said and done.
Then there's the whole fuel advance thing, you don't have to give advances but you'll be carving out about 2/3rds of your available carriers by not offering it.
Then there's the liability issue, and I'm speaking from experience, you will have claims that you will get stuck with no matter how many different ways your cover your ass. Insurance companies do not pay for driver stupidity. I had a truck pick up a load of specialty cheese in Green Bay, WI and take it to Stockton, CA. The driver set the unit on 50 start/stop then 12 hours before his appointment he set it down to 40 continuos where it was supposed to be the whole time. Well there was $150,000 worth of specialty cheeses in the trialer and 5 recorders. The customer opened the doors, grabbed the first recorder and Bam so the checked the second at which point they refused the load. The shipper had us bring it back to Green Bay where they checked the other 3 hidden recorders all with the exact same results. Now the owner of the truck claimed mecahnical failure but he had a new carrier unit so the insurance company (his insurance) plugged into it and got all the data at which point they denied the $80,000+ claim. Well the shipper didn't care who paid the bill but I was the carrier of record since the load was tendered to me and I had to cough up the claim. I didn't make that much brokering in 2 years but now I'm on the hook for the $80k. I had inquired several times with my insurance company concerning a blanket policy to cover such things as this and the annual cost (which has to be paid up front in one lump sum) was more than I was making total. I checked with at least a dozen companies about this insurance and it's expensive no matter who you call. In the end I filed a suit against the carrier and won the case but his trucks and trailers are/were financed to the hilt, he was incorporated so I couldn't touch him personally and the final result, I have a judgement in my favor but he closed the doors and went back to Russia and let the trucks and trailers go back to the finance company.
So my best advise, find an established brokerage company and become an agent for them so they can pay the carriers, cover advances and have the ability to handle claims. Going at it on your own is a great plan but unless you happen to have a couple million dollars sitting in the bank already it's going to be an extremely tough row to hoe.
Your talking about doing some specialized stuff and I can tell you that getting payment from the customer can and will take 60 days or more and unless your already very well established you won't have a chance in hell of getting a factoring company to fund your receivables. So if you do a measly $5,000 a week gross, your going to be out about $40,000.00 before the first check arrives from the customer. And let me tell you, your not going to survive on $5,000 a week gross, you'll be lucky to net $250 when all is said and done.
Then there's the whole fuel advance thing, you don't have to give advances but you'll be carving out about 2/3rds of your available carriers by not offering it.
Then there's the liability issue, and I'm speaking from experience, you will have claims that you will get stuck with no matter how many different ways your cover your ass. Insurance companies do not pay for driver stupidity. I had a truck pick up a load of specialty cheese in Green Bay, WI and take it to Stockton, CA. The driver set the unit on 50 start/stop then 12 hours before his appointment he set it down to 40 continuos where it was supposed to be the whole time. Well there was $150,000 worth of specialty cheeses in the trialer and 5 recorders. The customer opened the doors, grabbed the first recorder and Bam so the checked the second at which point they refused the load. The shipper had us bring it back to Green Bay where they checked the other 3 hidden recorders all with the exact same results. Now the owner of the truck claimed mecahnical failure but he had a new carrier unit so the insurance company (his insurance) plugged into it and got all the data at which point they denied the $80,000+ claim. Well the shipper didn't care who paid the bill but I was the carrier of record since the load was tendered to me and I had to cough up the claim. I didn't make that much brokering in 2 years but now I'm on the hook for the $80k. I had inquired several times with my insurance company concerning a blanket policy to cover such things as this and the annual cost (which has to be paid up front in one lump sum) was more than I was making total. I checked with at least a dozen companies about this insurance and it's expensive no matter who you call. In the end I filed a suit against the carrier and won the case but his trucks and trailers are/were financed to the hilt, he was incorporated so I couldn't touch him personally and the final result, I have a judgement in my favor but he closed the doors and went back to Russia and let the trucks and trailers go back to the finance company.
So my best advise, find an established brokerage company and become an agent for them so they can pay the carriers, cover advances and have the ability to handle claims. Going at it on your own is a great plan but unless you happen to have a couple million dollars sitting in the bank already it's going to be an extremely tough row to hoe.
Thank You so much for your reply. I do agree how fast you can get into debt. I am keeping my regular job moving very few cars, trucks ect a month and going to start to build a client base. I do not expect to take a dime out of this company for several years. I know what my cost are and what i will need to pay the transporter. I am using a certain few carriers that I know from transporting cars my self. The only thing I don't know is how to handle damages through the insurance co or handle them my self, I do know from experience there will be damages.
also I will need time to find clients this will be a very slow process hoping to be full time at it in 5 years but I am not going to rush it. I am hoping to gain a reputation as a fast paying honest broker. The carriers I know will not be asking for fuel advances they never have in the 12 to 15 years they have been doing this. I won't take cheap freight i will pay my insurance and over head out of my own pocket before i do that.
I am trying to find a good software program that will work for a single broker and work with quick book do you gave any recommendations ??
Again thank you for responding any more info would be great
Thanks
Tim
terrylamar
Well-Known Member
Make sure you will be able to get your $100,000 bond. I don't really keep up with this, but I hear that a significant number of broker will not be able to get the higher bond, therefore putting them out of business.
catalinaflyer
Well-Known Member
As for software, I use Edonna but to be honest, I wouldn't waste a penny on specialized software to start off with, you can do everything you need with a spreadsheet. When you get to handling multiple loads a day then I would start looking for industry specific software. I use Edonna only because when we started in 1998 there wasn't much available that didn't run on AS400 and we weren't in the market for an expensive computer system. It's old and very outdated by todays standards but it works.
The only other advise I can give, watch your arse with claims, the insurance companys for the carriers themselves will deny every claim and the customer won't care, you will be on the hook to them for the claim regardless of the insurance company.
Hopefully your "full time" job will understand your need to be connected 24/7 because the carrier doesn't care that your at work, when there's a problem they will have to be able to get hold of you right away. Most loads will not have a problem but those 10% that do will take up 90% of your time.
TruckingGuy
New Member
How are you handling the increase in the bond Requirement?
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