Let’s be honest. As an Independent Freight Agent, your goal is to make money. In fact, it may be part of why you became a freight agency owner. Owning your own business comes with incredible earning potential, but also pressure to provide for yourself and your loved ones. You must earn enough to pay your expenses and have plenty left over to pay yourself.
So, how can you increase your profit margins this year? Use these three strategies.
Change Your Profit Margin Mindset
When you consider your current margins, are you satisfied? What if you could do the same amount of work, but earn more? That is the magic of profit margins. But before you can even begin implementing strategies, you must take inventory of your own thoughts. Are you self-sabotaging? Do you doubt your value?
At Kopf, we encourage our Agents! We coach them to believe in their value and set ideal profit margin goals. With a confident mindset, it’s easier to stick to your pre-determined margins when securing freight.
Prospect New Business
Now that you are confident in your value and have determined your ideal profit margin, it’s time to go prospecting. The main idea to keep in mind is to only book new customers at your ideal margin rate. If you want 15%, don’t book a truck for 10%.
Why? Two reasons. First, you won’t be earning enough for your value. Remember, you’re worth it. Second, over time your customers will likely demand lower prices. You need to set a rate you are comfortable with from the start, understanding freight markets fluctuate.
It’s much easier to do this with new customers. Set aside an hour each day to research and make cold calls. You should be making as many calls during that time as possible, whether they are cold calls or follow-up calls. Use a spreadsheet to keep track of all your conversations so it is easier to personalize calls and reach out again in the future. If you’re not sure what to say, try this script.
Review Your Book of Business
Set a quarterly calendar reminder to review your book of business. Have existing customers reduced your profit margins to a rate that is unacceptable? If so, you have two options. You can find a way to reduce your carrier costs so your profit margins are acceptable, but be careful not to damage good carrier relationships. Or, you can find a new customer who can replace the existing customer’s volume.
You Can Increase Profit Margins
The more you increase your margin, the more you’ll prosper. You don’t have to work harder to increase your profit margin, but you do need to change your mindset and find customers who will pay your desired rate. A healthy book of business changes over time and in doing so should provide you with the freedom to succeed.
When you implement these strategies and start increasing margins, profits will increase! As an Independent Freight Agent for Kopf, we are committed to your success!