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

Michael Ludwig

Michael Ludwig

Well-Known Member
Jul 6, 2009
1,933
2,811
113
64
Simcoe, ON
20
I've recently come in contact with some talented people that may be willing to staff and start our own brokerage. I have questions !!! ... LOL
First and foremost, is it worth it?
On the upside, we do have some unique services to sell, and I can definitely see where this will be profitable.
On the downside, it is going to put me at odds with the broker community as I'll definitely be eating their lunch. For the most part I really don't care about their feelings except for that part of the community that I enjoy working with. FWIW, I would try to stay clear of those accounts.

How do you pay these people?
I'm assuming salary and commission. What's a reasonable salary, and what's the going commission these days?
 
Hello Mike.

I'd be happy for you should you begin a new brokerage. How many people to start and in what positions? That info can help people offer advice about salary/commish/etc. Also, will the offices be in Simcoe, ON, work from home, or elsewhere? This will be relevant as wages can differ based on physical location.

Assuming the brokerage would carry the good Ludwig name? I ask because carriers, and rightfully so are a little worried dealing with a new brokerage not tied to an asset based company. Too many Otal's out there that will fuck you over, rebroker your load and disappear when the transporting carrier starts calling your shipper...

On a positive note, you can tap your existing clients (quickly and easily) as they may have lanes you don't run but your brokerage can.

Is it worth it: yes. Will you and your team rock it: yes.

Oh, don't feel like it will put you at odds with the broker community, I've always assumed that every carrier also brokers freight, good for you for keeping the two businesses separate and no doubt you will have a broker bond and trust account because you don't mess around with rules.

Looking forward to more info, hopefully you get some good feedback from the membership here.

Keep well,
Mike
 
  • Like
Reactions: EricG, Freight Broker and Igor Galanter
Michael Ludwig said:
I've recently come in contact with some talented people that may be willing to staff and start our own brokerage. I have questions !!! ... LOL
First and foremost, is it worth it?
On the upside, we do have some unique services to sell, and I can definitely see where this will be profitable.
On the downside, it is going to put me at odds with the broker community as I'll definitely be eating their lunch. For the most part I really don't care about their feelings except for that part of the community that I enjoy working with. FWIW, I would try to stay clear of those accounts.

How do you pay these people?
I'm assuming salary and commission. What's a reasonable salary, and what's the going commission these days?
Click to expand...
applying for a work from home position -
good luck - it is always good to branch out ... you never know what turns up
 
If these staff are coming from another brokerage they might have a do not compete. The only real harm other than that is if these brokers come to you and do not pay the carriers. I would watch all invoices to make sure they are paid on-schedule.

In terms of pay it's all over the place. Most brokers will pay extra to steal larger accounts. It all depends how much business these brokers can bring on.
 
FYI @youngtea Non competes are no longer enforceable in Canada.

Also... if you're looking to hire ops people that are going to bring their "clients' with them (Not that Michael would) proceed with caution. If they'll do it to their former employer... they'll do it to you.

That said... a decent base and a taste of what they build as it grows is key. Give folks some skin in the game... you make money they make money.

Brokerages can be beneficial to fleets and fleets can be beneficial to brokerages and really... other than having enough capital at start up to pay your bills on time... not a huge expenditure for an established carrier.
 
  • Like
Reactions: Igor Galanter, MikeJr and youngtea
Michael Ludwig said:
I've recently come in contact with some talented people that may be willing to staff and start our own brokerage. I have questions !!! ... LOL
First and foremost, is it worth it?
On the upside, we do have some unique services to sell, and I can definitely see where this will be profitable.
On the downside, it is going to put me at odds with the broker community as I'll definitely be eating their lunch. For the most part I really don't care about their feelings except for that part of the community that I enjoy working with. FWIW, I would try to stay clear of those accounts.

How do you pay these people?
I'm assuming salary and commission. What's a reasonable salary, and what's the going commission these days?
Click to expand...
Base for sales people today is 70-90k plus 10-20% commission..... Lots of smoke and mirrors out there!!
 
Michael Ludwig said:
I've recently come in contact with some talented people that may be willing to staff and start our own brokerage. I have questions !!! ... LOL
First and foremost, is it worth it?
On the upside, we do have some unique services to sell, and I can definitely see where this will be profitable.
On the downside, it is going to put me at odds with the broker community as I'll definitely be eating their lunch. For the most part I really don't care about their feelings except for that part of the community that I enjoy working with. FWIW, I would try to stay clear of those accounts.

How do you pay these people?
I'm assuming salary and commission. What's a reasonable salary, and what's the going commission these days?
Click to expand...
Sarah in planning that enters load information from customer emails ... RPA that process and hand Sarah a pink slip.
Bethany in payroll that tally's up driver's time sheets or log book entries ... RPA that process and hand Bethany a pink slip.
Gerald in dispatch that books customer X's loads with the same 6 trucks every day as they become empty ... RPA that process and hand Gerald a pink slip.
Michael in operations that reads Inside Transport posts and replies to them ... RPA that process to have ChatGPT read the posts and reply to them, then hand Michael a pink slip and a one way ticket to Costa Rica !!!

Michael I think you answered your own question in another post you made.
 
  • Haha
  • Like
Reactions: Michael Ludwig, Shakey, thebluffs1 and 1 other person
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!
 
Last edited:
  • Like
Reactions: artmax and MLCAR
Hmmmmm….looking at this from a different perspective. Why not approach one of the many older owners of existing freight brokerage companies and see if a deal can be crafted to buy them out? Combine that existing business with the new blood. Under your experienced and professional oversight you good very well be sitting on a real money maker.
 
  • Like
Reactions: Freight Broker, Nawk and MikeJr
  • Like
Reactions: Shakey, Igor Galanter and MLCAR
Nawk said:
www.ontario.ca

Non-compete agreements | Your guide to the Employment Standards Act

Know your rights and obligations under the Employment Standards Act (ESA). This guide describes the rules about minimum wage, hours of work limits, termination of employment, public holidays, pregnancy and parental leave, severance pay, vacation and more.
www.ontario.ca www.ontario.ca
Click to expand...
Thank you! they can still enforce non-solicit and NDA's, so still not worth the hassle of trying to "poach talent" from other firms just for their sales book.
 
  • Like
Reactions: Nawk
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.
 
  • Like
Reactions: Shakey and Freight Broker
Melroy75 said:
Thank you! they can still enforce non-solicit and NDA's, so still not worth the hassle of trying to "poach talent" from other firms just for their sales book.
Click to expand...
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.
 
  • Like
Reactions: jackhole, MLCAR and Igor Galanter
@Michael Ludwig Brokering looks easy until you actually do it and then you find out brokers are not making 30% margin or $1000 rips on FTL , we are just trying to be completive at 10% margin, if lucky, in todays market.

If you want to work in the domestic US market you will need a MC number, it will be brand new so no one is going to work with you unless you already know them or they are pirates.

Most carriers already broker freight without the proper licensing, at least you are going to set up an actual brokerage.

I personally try to avoid carriers with a brokerage division to ensure the brokerage division does not "accidently" mine the carrier division's database of shippers / receivers and start calling my customers, but who does not like a little competition? Keep in mind that we are also going to try and eat your lunch.

If you are bringing on people with a book of business, depending on how much freight they are moving you will need a minimum of a few hundred thousand in start up capital or line of credit.

Good luck with this new venture.
 
  • Like
Reactions: Igor Galanter and Freight Broker
You must log in or register to reply here.
Top Bottom