Is starting a brokerage worth it ... at my age?

[Nawk]

It also depends where you want to reside.

The spot market is unreliable, lacks steady income, has peaks and valleys but has better margins.

The contract market is more even keeled, has steady volumes / income (mostly), has extra parameters (appointments, lumpers, etc.) but has thinner margins.

Ideally a mixture of both is good... but that can be tough with a smaller operation.

What you probably want to do is manage more business from your existing clients that you already have a good relationship with... sell off the loads that you don't want to put one of your trucks under... and pull those tasty ones that you do want.

Then when an opportunity presents itself where you might have said in the past... "Thanks but we really don't go there." you can onboard that client... broker out the freight... and when they have something that matches your trucking footprint or it's incredibly slow bounce it to your fleet.

 

[Freight Broker]

I'm trying to go the other way: adding an asset based component to my business...I have enough local biz to run couple of straight trucks full time.

 

[theman]

Right... BUT... Good people that are great at building relationships are becoming more difficult to find.

Technology is great... but no 'bot ever built a relationship.

Finding freight brokers that can execute well on the opportunities they are given... build trust between your customers and your company can be extremely beneficial to building a solid foundation to a freight brokerage.

I got sick and tired of those looking for the one with the 'magic pill'. There is no magic pill, there really isn't such thing as a truly portable book either. Just a portable book of contacts that will generate opportunities.

Salespeople don't want to move place to place if they can help it because a true salesperson regards his/her portfolio as a business and doesn't want to keep starting from scratch. It's a building process.

 

[NotForHire]

Is it worth it? It has been for me, and me is all I can answer for. Your age shouldn't be a determining factor.. some people are old and worn down at 40.. others are young and energetic at 70.

About salaries and commission.. 60/40 split on gross profit amount seems to be the standard with a floor hourly wage to ensure you're in compliance with minimum wage laws. As a broker myself I found it too expensive to hire sales people and agents... too much money out and little left after the 60% is paid out.

I generally do my own sales: 25 to 50 calls every morning day after day works. From time to time, though, when I want to boost sales I hire a bunch of college kids and pay them a dollar for every call they make (I provide the call lists). Last year I hired five of these guys.. each one averaged 150 calls per day... that worked out to 750 calls out every day for a cost of $750.00 per day. I like doing it this way because I'm paying for what I'm actually valuing.. calls made. The 60% of gross model is I find a terrible model because the sales person gets that on recurring business with very little or no effort.. So let's say it's a weekly order that results in a $300.00 gross profit every week.. that sales person gets $180.00 on that order for doing nothing while my lower 40% covers all risks involved. Pay them to beat the phones!

dont want to work for you sir

 

[NotForHire]

I got sick and tired of those looking for the one with the 'magic pill'. There is no magic pill, there really isn't such thing as a truly portable book either. Just a portable book of contacts that will generate opportunities.

Salespeople don't want to move place to place if they can help it because a true salesperson regards his/her portfolio as a business and doesn't want to keep starting from scratch. It's a building process.

The customers are with the sales people not the business

 

[NotForHire]

Freight brokerage as a stand-alone gig these days is tough. It's fine if you are doing it from a small box perspective, but once you are trying to be a primary supplier of someone, it requires to offer more.

I disagree with hiring kids to pound phones, but also disagree with the full commission model. Any good business in this field is one with a relatively long cycle so you really need to be paying salary plus commission. And it's a gamble to an extent - you won't see immediate payback but once stuff is set up it works for both employer and employee so long as you don't screw with it. Many firms out there offer a commission on top of salary that pays more on new business than recurring.

Hiring kids for a 1$ CAD per call is like outsourcing dispatch to India. Shame on you sir

 

[NotForHire]

The American double brokers working remotely from Armenia are paying their employees 150.00$ usd commission per load that is successfully delivered and invoice. How can you expect success at 1.00$ CAD per call

 

[Freight Broker]

The customers are with the sales people not the business

The customer is with whoever "owns" the account.. that could be the sales person or it could be the owner of the business. As the owner of my business I make sure that the relationship resides with me.. that way the accounts stay with me regardless of what the sales person does. It's also why I prefer to be involved in my own sales directly.. I try to outsource non core activities, but sales and marketing remain in house for that reason.

 

[Freight Broker]

Hiring kids for a 1$ CAD per call is like outsourcing dispatch to India. Shame on you sir

It's not that hard to make 25 calls an hour..

 

[NotForHire]

I can

It's not that hard to make 25 calls an hour..

If they make 100 calls per hour and you pay them 100 per hour and get zero loads from these calls , then really how well was your money spent?

 

[Freight Broker]

I can

If they make 100 calls per hour and you pay them 100 per hour and get zero loads from these calls , then really how well was your money spent?

Very well.. the law of large numbers pretty much assures that out of those calls some will be positives..but 100 calls an hour is unrealistic. I look over my own call record over the years.. I divide my total sales over the last 20 years by total sales calls made... it works out to $150.00 per call made. So every time I dial out.. even if the other side hangs up or I get VM.. I in affect get paid $150.00. The key is to make a lot of calls.. or have someone/some people make those calls for you. Make a hundred calls a day for a year.. and at the end of it you'll have a million dollar in sales business.

 

[Jim L]

Very well.. the law of large numbers pretty much assures that out of those calls some will be positives..but 100 calls an hour is unrealistic. I look over my own call record over the years.. I divide my total sales over the last 20 years by total sales calls made... it works out to $150.00 per call made. So every time I dial out.. even if the other side hangs up or I get VM.. I in affect get paid $150.00. The key is to make a lot of calls.. or have someone/some people make those calls for you. Make a hundred calls a day for a year.. and at the end of it you'll have a million dollar in sales business.

Makes sense. I can tell you, 100% for sure, that zero calls get you zero dollars.

To have a more accurate number, the correct way would be to use your yearly total first sales. Sales after the first or repeat sales may or may not have happened, you want to remove repeat sales. Take that number and compare it to your $150.00 to see how effective each call was. It's the best way to be true to yourself.

 

[Freight Broker]

Realistically one should include all sales.. the total sales made divided by the total number of cold calls made. Repeat sales are integral to success...I use 20 years.. a long time frame. Let's say your total sales over 20 years is 50 million dollars. Over that 20 years you/your team made 80 thousand cold calls.. some of those calls resulted in repeat business while others did not. But the fact remains that X number of calls resulted in Y amount of sales.

 

[loaders]

The best place to mine for new business is sitting in your own data. Every shipment that you haul has at least one potential new customer. Either the shipper, or the receiver, or perhaps even both if it was a third party billing. You probably already have a contact name, a bit of knowledge of what they make and hopefully if the shipment went smoothly, a satisfied potential new customer. Cold calls are fine, although tedious and possibly confidence crushing for a new sales person. My advice to sales staff has always been to look all around your own house first for new sales leads before going out to pound the cold, mean streets.

 

[Freight Broker]

The best place to mine for new business is sitting in your own data. Every shipment that you haul has at least one potential new customer. Either the shipper, or the receiver, or perhaps even both if it was a third party billing. You probably already have a contact name, a bit of knowledge of what they make and hopefully if the shipment went smoothly, a satisfied potential new customer. Cold calls are fine, although tedious and possibly confidence crushing for a new sales person. My advice to sales staff has always been to look all around your own house first for new sales leads before going out to pound the cold, mean streets.

I agree.. to cold call you need a list of people to call. And the better the quality of that list then the better are the odds of making a sale. Calling can be confidence crushing for sure, thus it's important to remember that every call has a dollar value attached to it..in my case it is around $150.00.. for others who have better selling skills it is much higher..

 

[AgentSmith]

Is it worth it? It has been for me, and me is all I can answer for. Your age shouldn't be a determining factor.. some people are old and worn down at 40.. others are young and energetic at 70.

About salaries and commission.. 60/40 split on gross profit amount seems to be the standard with a floor hourly wage to ensure you're in compliance with minimum wage laws. As a broker myself I found it too expensive to hire sales people and agents... too much money out and little left after the 60% is paid out.

I generally do my own sales: 25 to 50 calls every morning day after day works. From time to time, though, when I want to boost sales I hire a bunch of college kids and pay them a dollar for every call they make (I provide the call lists). Last year I hired five of these guys.. each one averaged 150 calls per day... that worked out to 750 calls out every day for a cost of $750.00 per day. I like doing it this way because I'm paying for what I'm actually valuing.. calls made. The 60% of gross model is I find a terrible model because the sales person gets that on recurring business with very little or no effort.. So let's say it's a weekly order that results in a $300.00 gross profit every week.. that sales person gets $180.00 on that order for doing nothing while my lower 40% covers all risks involved. Pay them to beat the phones!

I'm assuming the college kids are only prospecting and passing the warm lead to you or someone that can quote close the deal.

 

[theman]

Wow ... catching up on this. Yup, this is why I left.

There is also a difference between 'dialing for dollars' and strategically doing it. It should be strategic unless you are just indeed 'dialing for dollars'. But who lives by the sword, DIES by the sword. The best business is always strategic and relationship-based. Even if the monkey manages to find the odd good lead, it may still take several months or a year ... or more to close it. Only bottom-feeders are jumping all the time, or those who have money trouble.

The calling blindly sort of worked when the industry was in its infancy, but you would much of the time pick up a customer for a load or two, so the cost of acquisition was actually pretty high. I was probably 3 years in when I completely changed it to a combination of strategic and vertical integration. I would end up with the odd bottom-feeder if there was a specific reason why the organization I was with wanted whatever route it was., and usually it would tie in with the either the asset-based side of what I was doing, or positioning equipment to better handle juicy business.

But it's a different game now - penny margins as we call it in sales on the full truckload side of things.

 

[Freight Broker]

I'm assuming the college kids are only prospecting and passing the warm lead to you or someone that can quote close the deal.

Yes.. they get a contact name, an email, as well as phone number for followup. I would take it from there.

 

[Freight Broker]

Wow ... catching up on this. Yup, this is why I left.

There is also a difference between 'dialing for dollars' and strategically doing it. It should be strategic unless you are just indeed 'dialing for dollars'. But who lives by the sword, DIES by the sword. The best business is always strategic and relationship-based. Even if the monkey manages to find the odd good lead, it may still take several months or a year ... or more to close it. Only bottom-feeders are jumping all the time, or those who have money trouble.

The calling blindly sort of worked when the industry was in its infancy, but you would much of the time pick up a customer for a load or two, so the cost of acquisition was actually pretty high. I was probably 3 years in when I completely changed it to a combination of strategic and vertical integration. I would end up with the odd bottom-feeder if there was a specific reason why the organization I was with wanted whatever route it was., and usually it would tie in with the either the asset-based side of what I was doing, or positioning equipment to better handle juicy business.

But it's a different game now - penny margins as we call it in sales on the full truckload side of things.

Of course... I wouldn't advocate simply dialing blindly.. If you're selling heavy locomotives and your prospect list is "churches in the Greater Hamilton Area" it ain't gonna work.. One has to start with a list that offers some small hope of success without, of course, being too limiting. In my case I look at manufacturers, distributors, and traders. If they need stuff moved then maybe I can help in some way. At least that's a starting point. But I try not to limit myself too much initially.

A month/year to close? Not in my experience.. None of us is offering a unique service.. let's be honest. Thus anyone who is interested in your service is 1) price shopping.. 2) has new business to move.. 3) is looking to replace an under performer. It is up to us to discover the reason. I try to avoid 1) as much as possible.

 

[MikeJr]

The best place to mine for new business is sitting in your own data. Every shipment that you haul has at least one potential new customer. Either the shipper, or the receiver, or perhaps even both if it was a third party billing. You probably already have a contact name, a bit of knowledge of what they make and hopefully if the shipment went smoothly, a satisfied potential new customer. Cold calls are fine, although tedious and possibly confidence crushing for a new sales person. My advice to sales staff has always been to look all around your own house first for new sales leads before going out to pound the cold, mean streets.

Well said,

I found two little things happened that can bring on easy business.
1. Have an on hold message that explains the range of services you provide.
2. Change a tag line at the bottom of your email monthly that says what you do.

I've had shippers and receivers come off hold and say things like, you guys do LTL too? We are so happy with your services on TL and had no idea you did LTL... Or a receiver for our client ask to have someone in sales/pricing contact them because what they heard on hold or read at the bottom on my email is something that they are struggling with at the time.

Anyway, back to work!
Mike