From Solo Freight Broker To Business Owner | Episode 320

SPEAKER_00: 0:19

All righty. Welcome back to the Freight 360 podcast. We're up to episode 320. And today we're talking about going from being a solo broker to becoming a small business owner. So most folks start off as that one man show doing everything on their own, making the calls, booking the trucks, billing, et cetera. And there comes a point in time when it's time to grow and uh let go of some of those controls and responsibilities. And we're gonna dig into that today. So, but first, make sure to subscribe, leave those reviews and questions in the comments and contact form on our website and um share us with all the other folks in your office or your friends in the industry, and check out all the other content right on our website at freight360.net, or a lot of folks are checking on our stuff and engaging on YouTube. Um, the Freight Broker Basics course, you'll find that on our uh website as well. That's a full-length educational option for yourself. And it's really, I mean, our topic today, right, is you're growing a team, um, training is a big part of it. So definitely give that a a uh uh checkout if you haven't done that yet. Uh, Ben, how did you make out with the uh polar vortex and the iguanas in the trees, man?

SPEAKER_01: 1:30

Dude, it's so funny. One is it like I just kept laughing in my head because you sent me a picture of the snow a couple days ago, and I texted you back. I'm like, I like I have this like nostalgic and also like I grew up playing in the snow and skiing. Like, I have very very much was a winter person before I moved here. So every time you send me those pictures, I'm like, oh man, that's so nice. Like, build a fire, it's cold outside. 24 hours later, it was 40 degrees when I woke up, and I'm like, this is horrible. And I'm like, I took my trash out. I was like, I am so grateful that I don't have to live for months of this now. And it was funny because it was a little colder this morning, like it was like 45 yesterday, but this morning it was like 50. And even just the mental block to go in my cold plunge was so much harder because like the water's 37. So, like, does it really matter? I walk eight feet and 50 degrees to get into it, right? But just in your head, knowing it's not warm, yeah. Okay, and just knowing it's not warm around you, like just in your head makes you feel I'm like, it was so much harder. I'm like, literally, I check the temp, same temp, do it every day, and I'm like, it felt like almost unbearable because my brain's just like, you're not supposed to do this. Like, this is a terrible idea.

SPEAKER_00: 2:42

Yep.

SPEAKER_01: 2:43

Absolutely.

SPEAKER_00: 2:44

Well, in the uh in the world of sports, yes, the Buffalo Bills are just stressing everybody out in Western New York. They fell to six and three against the uh the dolphins. So I bet a lot of folks down in South Florida were loving that. We've got some of the some of the folks at Pierce work in our um, we've got a trucking terminal and a brokerage operation in in central Florida, and they're they're big Finns fans.

SPEAKER_01: 3:07

So they were Did you hear about the Dolphins coach trolling the Bills fans at the Elbow Room?

SPEAKER_00: 3:14

No, I didn't see that.

SPEAKER_01: 3:15

You didn't see it? No. Um apparently Mike the the Elbow Room's like a famous bar in uh Fort Lauderdale, and um Mike McDaniel lives in Fort Lauderdale. Okay. So all these pictures showed up. They were first on social media, but like they were talking about it on the local news where he literally drove in front of the bar because all the Bills fans were hanging out there after the game.

SPEAKER_00: 3:38

Oh, yeah, that's like every year when there's the away game, like Bills fans all it's isn't it like right on is it on right on like A1A or something like that?

SPEAKER_01: 3:45

A1A. It's like I think it's on the corner, and it's again like it's a really popular, very old bar, but there were pictures of him driving back and forth in front of the bar yelling at Bills fans from his car. And the funniest thing is you got to look up the interview where he's asked about it. Somebody was like, you know, one of the press conferences, they were like, Was that you? Like there are pictures, it's clearly your car, your watch that you had on. You could see it was you, and he goes, You know, AI, I live in Fort Lauderdale, so you know, and that's literally his response. And the reporter's like, So are you saying that was you or not you? And he just goes, You know, AI. Next question was so funny because he's like almost admits it, but doesn't admit it. It was like clearly him. It's funny.

SPEAKER_00: 4:35

Um, just a weird, weird week around the league, though. Let's see, you got Pittsburgh loss to the Chargers. Broncos are eight and two, man. I it's it's probably I don't know if you saw that Thursday night game, or it's 10 to 7 against the Raiders, like just very little scoring, but like the Broncos Broncos are eight and two, man. So wow, Colts pulled one off. It was an overtime game um against the Falcons. They went they won 31-25. So we're midway, we're halfway through the season. You're gonna start seeing the playoff picture pan out here. Who's gonna make the playoffs, who's not, who's gonna take their division, and who's gonna be a wild card. We we shall see. Um, anything else around the sports world?

SPEAKER_01: 5:10

Yeah, it was just depressing Steeler game. They look terrible. No really positive takeaways, nothing else that I know of. At least not the top of mine anyway.

SPEAKER_00: 5:20

News. I mean, I haven't seen this morning yet. It's Wednesday right now, but the government shutdown looks to be like looks like it should be over this week. It's kind of what it like I I know the house, the house approved the spending bill, and it's what they had the I think they had like the some committee last night, and then it's supposed to go the, I believe, to the Senate today, and then it would go to the president's desk. So um I think that's a you know, call it a you know, uh a sigh of relief on one side, and then realize that the uh January is right around the corner where it basically extended it through. So we maybe we'll be dealing with this again, but just crazy, man. I I didn't realize like my sister is uh she's in the Air Force, but she's like a um she's a federal technician, so like she wears the uniform every day. She's considered a civilian contractor during the week and then a reservist when they have drill and like deployments and stuff. And she's like, I haven't gotten a paycheck in like five weeks. I'm like, Jesus, like that's insane. So just wild, just wild.

SPEAKER_01: 6:26

But yeah, and also what's gonna be really interesting, at least what I've been reading, is like none of the data is getting out to Wall Street, none of the government data. So like jobs, oh yeah, jobs, deployment numbers, all that. Yeah, it's gonna be very interesting to see.

SPEAKER_00: 6:39

I think I saw it a big data dump within the first few days, right?

SPEAKER_01: 6:42

You'd imagine by the end of the week, is again, I think the hopes are what they were saying this morning, but like they think we lost jobs in October, so it's definitely not looking great.

SPEAKER_00: 6:53

So yeah, well, we'll see. Yeah, it's as as of this morning, uh House is expected to vote today on ending the record-long shutdown.

SPEAKER_01: 7:01

So you know what irritated me. And again, like I know it's politics, I'm not trying to go down a rabbit hole, but like I just keep seeing like clickbait articles of like Trump saying, Well, if the Supreme Court rules against these tariffs, then like it's gonna be a giant mess and the economy's gonna just uh take a tank. And I listened to some of the Supreme Court hearing when they had it last week, or at least what was public, and like it did seem like the tone was more that like it they're going to be repealed or they're not gonna give the president basically unilateral authority to just negotiate taxes because that's Congress's purview and always has been, and it's in the Constitution. And I just keep thinking it's like well, if if the economy is theoretically going to be tanked even more if they repeal them, like maybe we should have thought through this before you just decided to do something without verifying whether or not you had the authority. Like the what's the old saying of like beg for forgiveness instead of ask for permission?

SPEAKER_00: 8:05

Or uh beg for forgiveness instead of asking for permission.

SPEAKER_01: 8:07

Yeah, you kind of did that with the entire global economy, and then now you want to yell that like if the thing you did, which you probably shouldn't have done, is gonna have horrible repercussions.

SPEAKER_00: 8:18

Did you see the uh the whole concept of the um tariff dividend checks? Like two thousand dollars, two thousand dollar minimum checks to out to every taxpaying adult or whatever. Again, I think that's more clickbait, right?

SPEAKER_01: 8:34

And it would do literally nothing. Like, I mean, okay, so a bunch of people spend two thousand dollars in the next week and then it's back to the same position you're in. Like it it's effectively nothing.

SPEAKER_00: 8:44

But it that's uh I'm hopeful. I'm cool. I hope it works out.

SPEAKER_01: 8:48

I'm not at all trying to be pessimistic. I'm just like, it's a lot. Yeah, yeah.

SPEAKER_00: 8:53

Freight market, what have you been seeing in the uh anything out of the ordinary?

SPEAKER_01: 9:44

I mean, uh, people I've talked to seem to be doing pretty good for all the talk of doom and gloom and rates going up. I mean, it seems like people keep talking about capacity of leaving the market, but every brokerage that I have as a client that I'm looking at their numbers seem to knock on wood look pretty good.

SPEAKER_00: 10:01

Yeah, I was looking at um I was doing this, let me see if I can pull it up here. I was looking at like Pierce, like kind of like trends throughout the year. And it it sat kind of flat like throughout the summer, and we have seen a slight um tick up in in overall just numbers across the board the last um couple of months. What I found interesting, because I like track a lot of really I track a lot of stats that I think are important that I think a lot of people should keep their eye on, like things like your revenue per load and your profit per load, right? Not just your load count or your total profits, but like Well, I look at all three, right?

SPEAKER_01: 10:39

Yeah. What does the top line look like? What does the profit margin or gross profit look like? And what does the truck cost look like? Because the truck cost creeping up tells you what's going on on the carrier side. If you start seeing your customers paying a little more, you know they're facing some tightness or on-time percentage issues. And if your margin's looking bigger, but the top number and bottom number doesn't change. It's like you really care about the middle number, but you need to know which one's moving more, the top or the bottom one, cost or revenue to know what's happening in the market. Because I think revenue is a good leading indicator of like other brokers having issues or carriers like not showing up because your customer never pays you more unless they have to. So if your customer is starting to pay you a little bit more, something is not going well on their end, right?

SPEAKER_00: 11:27

Yeah, like I look back, I'll just give you a couple like litmus tests here. So, like if I go summer of 2022, right, revenue per load was about$3,000, right? Today it's like 60% of that. Like we're seeing anywhere from$1,400 to$1,800 a month of average cost per load or uh revenue per load. Our margin percentage has always been pretty healthy. We I think we just we do we have pretty good uh customers, and I think we've got really good processes in place to get efficient and get the right carriers on the right load. So we've we've done very well there. But I look at like it's wild to me when I see a decrease in overall revenue, but an increase in gross profit. Like that, and to me, I mean, that's obviously we're doing something right, right? We're growing in the right areas. Um, but it just feels like you put so much work in to grow and you grow at such a slow pace because rates have suppressed so much.

SPEAKER_01: 12:25

So and here's there's like a lot that goes into that. I don't know if we want to go down this rabbit hole, but like the other things that I think are just good for the listener to hear about like what to look at when you're evaluating this is the next thing I look at after what you would have just told me is I'm like, okay, what is the load makeup? Because, for example, if in 2022 you were doing a lot of long mile runs with your customers, and now you're doing more like regional stuff or short hauls, your average revenue per load is going to go down just because the types of loads you're moving are different length, right? And that also has to do with the market, because like I've seen this with some customers. Okay. We had a client, I looked at their, you know, the same thing we're looking at loads, gross profit, the types of loads they're moving and where. And they had very low gross profit margins. But the reason they did was because, but their average margin per load was high. So let's say they're making$300 per load, right? Across average, which seems like a high number. But then you look at it and you're like, well, these are on like$4,000 loads, right? So when you're making$300 on four or$5,000 loads as a percentage, that's very low. So you could see a lot of dollars per load, but if it's all on long mile runs, your gross profit percentage is very low. And in this example, like they factored. Well, when you have a 5% holdback from the factoring company and you're paying another 1.5%, none of that money actually benefits from factoring because the factoring company doesn't disperse anything unless it's above a 5.5% margin. So when you're running freight at 6% margin, you're literally not seeing any of your profit margins until your customer pays the bills. And that is also something like you really want to kind of look at not just the dollar margin per load, but as a percentage per load and seeing, like, are they long miles, are they shorter miles? And what does that actually play out as? Because that is a function of your cost.

SPEAKER_00: 14:28

I just added a calculation in the profit per mile. I that's that's a metric I've never looked at, but that's interesting. So, like every mile, how much profit? Um, I won't disclose that on the uh podcast here, but but again, it it's it's helpful to understand a few things.

SPEAKER_01: 14:45

How and what's going on with the cash flow of the brokerage, but two, it also helps you understand like what's going on with your customer. Why is my customer giving me more long hauls all of a sudden as opposed to this, right? Like all of these little things give you some indicators into understanding just what's going on in the market with your particular customers on the carrier side and on the shipper side.

SPEAKER_00: 15:06

Well, I'll tell you this as like a little teaser. Our profit per mile is about half of what it was in the summer of 2022. So just to give you context. Interesting. Um, all right, well, cool. That's uh fun little sidebar there. Today we're gonna talk, you know, going from being that solo broker to, you know, a small business owner and then and beyond. So, like I kind of teased early on, when most people start, it's just them. So you, you know, whether you're an agent or you get your own authority, or maybe you start as a new hire at a you know, as a W-2 somewhere and it's just you and it's cradle to grave, right? Um, you're wearing a lot of hats, right? And depending on the business model, like if you're an employee, you don't wear every hat. But let's let's look more so at like if you're an independent agent or you start at a brokerage, which we have a lot of people that listen to this show that are getting into brokerage on their own, have their own authority, et cetera, right? Uh this a lot of this stuff still applies if you are an employee somewhere. It's just a matter of who's gonna pull the trigger on, you know, make taking the next step. Is it gonna be a manager or um the owner or whatever, right? So, but eventually it gets to a point where um, you know, you you know, when you're wearing all the hats, it's great. Ton of experience, right? You get exposed to billing and claims and all you like literally everything that happens, you get experience in, but you are limited on your growth potential. Like I was talking with one of our guys last week, and um, it was actually a great conversation because he just like he started off and he did um he used to be at like TQL years ago, and I'm curious if you if you um know this number, but he's and I think I told you about this. It was I gotta do the math so I have it right. It was$19,231. Does that number ring a bell to you at all? You stepped away, so I'll just anyway, I'll I'll fill it in here. So that is if you do$19,231 per week in profit, that makes you a million dollar broker, meaning you're gonna do a million dollars in profit for the year. And he's like, he's like, here's where I'm at.

SPEAKER_01: 18:12

It's a title change too. A T12, they call it, which means once your rolling 12-week average, which is a quarter, hits that number, you become an S it's senior logistics account executive, right? Like that's their highest broker title, at least it was.

SPEAKER_00: 18:30

Okay. And so like we've got we've got uh agents at our company that do that, right? And he's like, you know, how do I get there? Here's where I'm at now. And everyone that is doing that at our company now, they have gone through this process that we're gonna talk about today, which is going through the experimental phase of hiring and figuring out who to hire and what to hire for and who not to hire and all that stuff, right? Um, and we got we kind of just had a really good conversation. I started talking about stuff that he was like, What? I was talking about like taxes and retained earnings and LLC. Like he's just like, ah, this is so over my head. I'm like, well, this is good though. Like, this is why like the age of model for a lot of people makes a lot of sense, right? Or if you're, you know, if you're just a um you got your own company, having someone to consult with, right? Whether it's a coach or a mentor or whatever, because you don't know what you don't know. And having someone who has the experience and understands um the things that you should be considering and looking out for, that's gonna give you a really, really good just second perspective on where you're headed and maybe you know where your blind spots are. So um the uh the one man show, what I've always found is that like when you I think that the good thing is like being aware of like when, when is it time? Like when is it time to get to the next step? And I think the first thing is you have to want it, right? Because the guy, the guy was asking me, he's like, you know, how do I know when? And I'm like, look, I'm like, he's like, like, you know, if I just stay the same size like five years from now, you guys are gonna fire me. And I was like, no. I was like, there are plenty of people in brokerage and in business that like they don't have a desire to build like a large organization. They just they want, they basically just want to own their job, right? They and that's essentially what you're doing when you're a solo broker, is you just own your job. Um, because if you were to try and sell your business and you know, you are literally the the thing that ties it all together, um, there's no guarantee that that business continues on without you, right? You've got to have people and relationships in place that go beyond just you. And I think that's the danger that a lot of folks have, or a misconception that they have is like, oh, I've got this great book of business, I'm just gonna, you know, my exit strategy is you know, when I turn whatever age, I'm just gonna hand it off to my kid, or I'm just gonna sell it. And it's like, well, in theory, that could work. But there's a process and things you've got to do in order before the likelihood of that being a successful transition actually happens. So um, what would you say, you know, in your experience, what are some of the like the the key things to look out for that start happening when you realize, hey, I think it's time for me to look at the next step? And I'll kind of give you like just to kind of lead you into it. One of the first things I tell folks is like, if you find yourself not having the adequate amount of time to do your regular prospecting, that is one key indicator that you've got a lot on your plate and it's time to consider looking at the next growth point. But what what would you say are some other uh maybe indicators that you're focusing too much on one thing and not the other?

SPEAKER_01: 21:42

So just so that I understand where we're at and what we're asking, we're talking about like an agent that is making the decision to grow from one person to a large organization, or we're well, it could be it could be an agent who's just a solo agent, right?

SPEAKER_00: 21:57

They're cradle to grave doing everything, or it's someone who started their own brokerage and they're wearing every hat, you know, they're doing the billing and literally everything.

SPEAKER_01: 22:05

So this isn't a W-2 transition to 1099, right? Or growth from agent more. It's like, okay, I'm one person, I'm doing everything. When do I decide I'm either going to start hiring or what my next step is to grow more, right?

SPEAKER_00: 22:21

Yeah.

SPEAKER_01: 22:22

The the first thing I always try to understand when someone I'm talking with somebody about this is like not just the time, but like, what does the the in in like investment they call it like the burn rate? But like at the end of the day, it's pretty simple. It's like, how much money are you bringing in and how much do you need to survive, right? And what is the difference between your bills to survive and how much money you're making, right? Because I think that is a big part of this, right? Because at the end of the day, if you're making 10 grand a month and your bills are 10 grand a month, okay, theoretically you probably should be hiring somebody if you're out of time, but how are you going to pay your bills next month if you got to pay your next employee, right? Which is really, I think, where most people are in some of these is like they want to grow, but they either haven't saved enough or they're spending more than the business makes and they're kind of stuck. And I think that's one of the first things people need to think about is like if you want to grow a business beyond being like a sole proprietor, it just being you, which is really a job where you don't have a boss, your boss is just the market and getting it.

SPEAKER_00: 23:31

Yeah, you just own your job. Yeah.

SPEAKER_01: 23:32

Correct. And like, I think the first step in this, where most people don't spend enough time and thought or planning, is like, if you want to grow, most of the time before you're gonna hire that first person, is you either need to be able to reduce your expenses, if they're the same number, what you bring in and what you spend, or you've got to first make more money and save enough to create some type of savings or cushion, right? The other way is you can borrow money, but borrowing money in some ways makes this harder and is not as what easy as most people think. If you don't have a house to be able to mortgage, like most banks aren't just gonna lend you money to grow your business unless you have some assets, or you can show some reason why you're leaving money on the table unless you borrow some money, right?

SPEAKER_00: 24:19

Yeah, I mean, I go ahead and then I'll give you my perspective.

SPEAKER_01: 24:22

Well, the last thought is like somebody used this analogy, and I always this is the one that I have like as a mental image in my head, is they said, you if you have a pizza shop, right, and you have a couple people coming every day, you probably shouldn't borrow money to hire more staff before you get more customers. But if you have a pizza shop where the line is around the block and you can't make enough pizza to fulfill everyone's demand to buy it, you need to go to a bank or you need to go to someplace and grab the money because you're leaving money on the table every day. If you got a hundred customers at the door and you're only feeding 50 of them, it makes sense to go borrow money from the bank to buy another oven and to hire somebody because you're literally leaving 50 customers unsupplied every day, right? So if like the demand is higher than what you're able to produce, like now it makes sense to borrow. So, like in freight brokerage, if I've got customers asking me to move their freight and I've got business and loads I'm not moving and I'm leaving money on the table, even if what I make and what I spend are the same number, now it might make sense to talk to an investor or to some place to get money, because like there's literally money right there that you can use if you plugged a person in. So like you're not spending before you make it. Because the time piece is really important, right? If you've got customers like, hey, I want to give you more business, when are you gonna be able to take more of my freight? Okay, now theoretically, if I hire Nate at whatever dollar amount, Nate has business I can just give to him to feed him once I get him over that training hump. And I think the timing aspect is really important because if you misjudge that, everything kind of goes and falls apart.

SPEAKER_00: 25:56

Yeah, so my I got a couple thoughts there. I think the first one is the the leveraging or borrowing money is um it's kind of a shortcut in a lot of people's mind, right? Instead of instead of having the cash flow available to do it at that pace, you could, yeah, you could look at a line of credit or something like that.

SPEAKER_01: 26:13

Or using or making the difficult decisions of cutting expenses and not buying things you want, which to me is really where you get at. Because like you and I talked about this a lot. And what's the like Dave Ramsey? Like, he's the huge advocate of like you should restrain your spending to save money, not just increase your income.

SPEAKER_00: 26:29

Short-term, yeah, short-term sacrifice for the for the long-term, yeah. Right.

SPEAKER_01: 26:33

And I don't think borrowing money is the way to solve that. I think you should be doing both.

SPEAKER_00: 26:37

And I'll tell you this for I've been I've been in this industry for a while now, and the folks that I have seen do this successfully have done it organically, but at the speed at which they can, you know, they feel comfortable and it's without having to borrow money. And it's not just because of, you know, not borrowing money, it's because if you try to do it too fast, things can kind of get out of your control. Not not unrelated to the money part. So like I mentioned, you know, if you're um if you find it your your bandwidth is uh thin or you know, absent altogether, um, that's a big that's a big indicator that it's it's time, or maybe it's way past time to look at hiring somebody or outsourcing something, right? It doesn't have to necessarily be a full-time hire. Um things like you can't get your all your check calls done, or you've dropped the ball on something, or you're not prospecting enough, those are indicators. And I think that in a margin-based business like this, um you're right that there are people who they they'll say, like, I'm I have no bandwidth, and I'm you know, my outgo is just as much as my the money coming in. I don't have money to hire anybody. Well, in that case, you probably don't have the right business right now that's going to be correct uh able to hide to support hiring somebody. Like either your your pricing's too low or you're not excuse me, you haven't fine-tuned your your carrier uh pricing and selection criteria to make it as optimal as possible. So I think you need to you need to like fine-tune the solo RV first, right? Because you have to put someone else into it.

SPEAKER_01: 28:13

And here's an example, right? You have somebody that's new to the industry, they've been moving freight for a year, they're paying their bills, but like all their freight they're moving at 7% margin, right? Which is very low margin, and they're moving lots of building materials, lumber, things that are traditionally just low margin customers, because those are the ones you get first. That's how you learn. But they typically aren't the kind of business that you could really build a big brokerage on. Like you need the longer-term customers that take a long time to get in, that are service-oriented, where you can make margins enough to like sustain a business. And where I see people make and mistake here is like they've got a bunch of transactional customers with no loyalty. They've got 50 of them, and they're like, Oh, I got so much freight I can move, I need to hire somebody. And it's like, but it's all jump ball freight. And you bringing somebody else in doesn't really increase the profitability per load, to your point, which is really the issue. And in that case, that person should be spending more time prospecting and being patient to get one or two larger customers or service-oriented customers. They don't have to be big companies, but a company that's going to pay you enough margin where you've got enough money coming in to generate business growth. Like if your expenses on what you spend to just operate the business are very close to what you're making, there might not be enough juice left to adding a person doesn't solve that problem, right? Maybe you bring a sales guy, but that's the other thing is everyone goes, well, then I'll just hire the sales guy to get me the hard-to-get customers problem solved. Okay, but that's also the riskiest person to hire, the person that cares the least, and they're going to want a salary. So now you're spending more money than you're making in the hopes that the new person can do what you didn't, right?

SPEAKER_00: 29:51

Yeah. So I don't want to get ahead of myself, but somebody made a comment to me last week that I was like, it blew my mind. And he was like, he's like, I don't know any other industry where if I just dedicate a little bit of time every week to prospecting and I get one new customer that does a few K a week, he goes, I can just get myself a hundred thousand dollar raise in a year. He's like, I don't know anywhere else that you can do that.

SPEAKER_01: 30:15

And I did that training like three days ago with a whole company, and that's literally the analogy I used. I was like, it's like investment, right? Like you're not trying to get a 25% or 100% win on investment. Like you want to add 1% per week. And your investment isn't money in this industry, it's effort and time, and that's a phone call. Do that an hour a day if you're not doing it now. And pretty soon in a month or two, you'll have another one. And then another one. And then it compounds, right? You give yourself your own raise by investing time and effort into prospecting.

SPEAKER_00: 30:45

Yeah. So the we kind of gave you like the indicators, right? You're out of time, you're dropping the ball, you just don't have time for the prospecting. So then it looks like, well, who who to hire and what roles? And are they gonna be an employee? Are they gonna be an intern? Are they gonna be a 1099? And those you're gonna just decide on your own with what you're comfortable with. Um, but and we've we've said this a lot. But the the I the guy I was talking to last week, I said when he's like, he's like, what do I even hire for first? And I'm like, I'm like, here's what I want you to do. What's that?

SPEAKER_01: 31:16

Not sales.

SPEAKER_00: 31:17

Yeah, exactly, right? And I told him, I said, I want you to write down everything that you do in a given day. And I said, and then after a week is done, I said, let's talk and let's look at everything on that list that is not directly um producing revenue or profits because those are the things that you're doing because you have to do, but someone else can supplement you with those and you could slowly ease them in, and then you can focus more on prospecting and getting that next 3k week customer, right? And um those are things like check calls, uh load entry. It could be automation, right? It doesn't Always have to be hiring somebody, right? It could be it could be using something like Levity for email automation. It could be adding a compliance tool to help you verify and select carriers faster, right? It could be a mix of both, right? And what I he told me is like, you know, I got a few guys that I'm in a uh a group chat with, and um, you know, a couple of them have been interested and you know, asked, like, hey, what do you know, what do you do? And I said, tell them. I'm like, if if any of them are serious about wanting to come work for you, I said, have them just like sit with you for a couple hours one day and you know, experience the the calls that you're receiving, the calls that you're making, the emails that you're sending and receiving, some of the common uh things that you run into in a day. And somebody might see what you're doing and be like, yeah, dude, not for me. Right. And someone else might be like, I could totally do this. Like, this is totally up my alley. Like you get to just talk to people all day long. You get you find someone who's got, you know, thick skin and can can take a nasty uh phone call either from a customer or a carrier or a scheduler or whoever, right? Um, and handle it professionally, right? Those are those are are are great folks to get in. But those are some of those tasks that if you can find time in your day where you can spend more time growing your existing customers and prospecting new business, that is going to be your key to growth. And I always say if you're not growing, you're ultimately shrinking because you you will eventually lose a customer or a lane of a customer, or a customer gets bought out by somebody else, or they get, you know, there's someone gets hired or fired or whatever, right? Like things will change. And if you don't have this continuous growth mindset, you will find yourself in a bad spot. So um interns, like I've actually had people that have had great success where like, you know, someone's home from school for the summer, and like they're in college and they're, you know, maybe they're in supply chain or business or whatever. And for the summer, like they come in and intern either for like really cheap or like for free. Like we had a guy that we at my last company that came in and it was like, you know, I wouldn't say it was low pay, but it was intern pay, right? Like he's just a kind of on a trial basis for the summer and um he loved it and he was became a full-time hire after graduation. So like those those are ways to do it. And I I also tell people too like if you're gonna hire somebody, like have expectations set. Like we're gonna do this on a trial basis for 30, 60, 90 days, whatever it is. And after that point, then if you're meeting all my expectations and we you're performing at a level that I think is sufficient and it's helping me out, and I decide this is the right fit and you decide it's the right fit. Now we'll look at full-time employment or you know, 1099, whatever makes the most sense. And then here's your actual pay, right? Or maybe you get some kind of bonus in there too, right? But it's gonna be a you know trial basis at a lower rate to start off because you gotta you're spending time to train them, you're paying them to get trained by you to ultimately potentially you know set themselves up to be running their own book of business and and all that. So, but those are some of the um some of those like key roles and tasks. I'm I'm curious, like when uh have you guys hired anybody like in the last year um to come in, like just to uh help out operationally or anything like that.

SPEAKER_01: 36:32

Yeah, a couple clients and TLX and that I've worked with absolutely brought on some people, some near shore overseas, some domestically. I think the first thing I would say is like the things you would want to hire for first are, like you said, tasks that are easily or the shortest time frame to train somebody else on. Because the shorter the time frame to get somebody to know what you need help with, the faster they can start to provide value. So check calls, knowing where your trucks are, building loads, right? Maybe helping with invoicing, all that stuff, setting up tracking, doing those things are a great way to get somebody to learn the business and don't take forever to get somebody that can actually help the business, right? The opposite end of that spectrum is the prospecting, right? And like I would say too, on the other side of that, is almost every single brokerage I've seen that has stalled out in growth. And I would categorize as like, you know, a one person doing a half a million to even brokerages doing like 30, 40 million, all stall out for the same reason from what I've seen. It is there's a really good salesperson or a couple, two or three, right? They leave either a big brokerage or go to start their own brokerage, right? And they grow and they add customers. Then they hire for the support roles and then they keep growing. So those are the ones that hit 20 million or 30 million. So you got two or three people that were just killers, really good, prospecting every day, making sure they're always focusing on adding new customers. And then they kind of reach the point where they're either making enough money or are just honestly like the personality side of it have gotten older or just kind of don't want to do that anymore. They're just kind of burned out and they're just like, hey, we've built this business, it's working, we've hired people, and then they start hiring salespeople. And in some cases, like they've saved enough money that they're not taking big risks to do this, right? But the people they hire, like it is for sure like a one in 10 person you hire in sales is actually going to grow your business, right? So it's like you got to go through a lot of them, and usually like they just kind of get frustrated, they hire a handful, those folks don't really work out, and then pretty soon nobody's prospecting. And now it's all focused on expenses and operations and efficiency. And the three or two or one guys that grew that business to what it was aren't willing to do it anymore and aren't spending enough time recruiting to find the salesperson or going through enough of them to find the right one, and they all just kind of plateau. Then it then the next conversation is, well, let's sell this or let's figure out how to save money and expenses. And at the end of the day, like you can't grow a business by cutting expenses. You can keep a little more of the money, but they don't grow. And like to me, everyone I've ever been brought into is some version of that. And like I'll say to some like, hey, how did you get to the 10 million or the 20 million or the 30 or the five or whatever it is? Like, oh, well, you know, me and my partner or me or me and my two buddies. Well, how much are you guys prospecting now? Oh, we don't have time. Why don't you have time? Oh, because we're dealing with all the operations. Okay, well, you've hired all these operations people. Are they not doing what you thought they were? Well, they are. Well, what are you spending your time on? Well, we're just making sure that they're doing everything great. And it's like, okay, that's just another version of creative avoidance. Like, you don't want to pick up the phone and prospect. So you're convincing yourself you'll somehow make more money by making sure these people work harder or more efficient. And like the truth is, like, you need to do some of that, but most of the time they're spending all of their time in the business just avoiding the thing that would grow the business, which is picking up the phone, like you said, prospecting. If two or three or one person does it an hour and a half a day, that business would probably be growing. And then there's just it's the mental block where just internally they just avoid that like the plague and focus on every other thing in the business. And the business just starts to shrink little by little by little.

SPEAKER_00: 40:35

Yep. So one thing I wanna, I wanna um hit on before we fly past it is when you when you bring that first person on, like the guy I was talking to last week, he's like, Do I need to do like an LLC? Like, how do I handle expenses and write-offs? And I was like, I said, Hey, look, I'm like, right now you're a sole proprietor. I said, What I would recommend is if you if you establish an LLC and you get a business bank account, that is like step one. And now, because one of the examples that came up is, you know, he was talking about his cell phone. He's like, you know, I like, you know, I get pay, I get my commission because he's an agent. He's like, I get my commission. He's like, and then I like pay for the stuff that I use to do the job. He's like, Am I supposed to write those off? And I was like, I'm like, well, you can. I was like, or I'm like, if you just have a business and a business account and those expenses run through the business account, I'm like, though those are all, you know, you don't have to write off the taxes later, like you just don't ever pay the taxes on it because it was a business expense paid for by the business. And I said you gotta make sure that you're like pay spending uh you know appropriate expenses through that, right? Like you're not like taking your girlfriend out to dinner and putting it on your business account.

SPEAKER_01: 41:42

But you would be surprised. It's there's a lot.

SPEAKER_00: 41:45

There's a lot you can do.

SPEAKER_01: 41:45

So to that, I have a good friend of mine. Um, he's a dentist, has been a dentist for a long time, um, a little older than us. And um, he just bought another dental dental office. And I was talking about them literally during the Dolphins Bills game on Sunday. I was asking him because we were talking about just vehicles. And I was like, Yeah, I was like, I think my lease is almost up and I need to get a new one. And he had bought like a couple-year-old used car. And I'm like, I'm like, that's great. And I'm like, I used to do that, but now that I own a business, like when I went through with my accountant, an entire lease you can write off. I mean, like your whole car payment is a write-off as a lease through a business. But if you own your car and you have a business, you write off the mileage, which is a much smaller number, right? So, like for me and just like our family and how long much we drive, I'm like, it makes way more sense to lease my vehicles from a tax perspective than to own one, even if I paid it off, because like the tax write-off is significant. Health insurance, all that becomes a tax write-off, right? Yep. There are things that you spend, like even prescriptions and stuff that you do on like the healthcare side that is all tax deductible. There are a lot of things and advantages to running everything through a business that I think for sure you should be talking to a good accountant about because and that was the big thing where I told this guy.

SPEAKER_00: 43:06

I was like, this is like, you know, I'm like, get your LSEA. I'm like, when you do your taxes, I said, you're no longer doing like your little free turbo tax. I'm like, you're going to pay somebody a little bit of money to spend. That's also tax deductible, by the way.

SPEAKER_01: 43:19

Exactly. Literally, literally, my accountant, our accountant, like, we write off the bill that he gives us to do these things for us. Yeah. And it's like, the more you get into it, and here's the thing I would say is like, it seems, I think, overwhelming, or like, I need to understand all these things to do it. But honestly, like if you spend honestly two hours a year, maybe every couple of months at first, with your accountant, go out to lunch or whatever, like ask questions. Once you get it set up, it's honestly easier. Like, because from my perspective, it's like what you said. Like, we have I have two businesses, we have one together, like we have business cards for it. So like when we go and spend money for free 360, you just use that bank account. So it's not a deduction, it's just literally from the money that's expense. It runs right through it. That just gets spent from it, right? Like, and same thing with our my other business. It's like, I just know which purchases are categorized. And I'm like, oh, I use this card, I use this card. So at the end of the year, I'm not counting receipts and going, hey, can you look at this? Let me go look at everything I spent at this store. It's just like, okay, here's all three of the bank accounts. Everything that happened all year, I paid out of that business. There's not really anything left. Yeah. And like it gets actually easier once it's set up. And like your effective tax rate goes down. I pay way less as a percentage in taxes as a business owner than I did as a W-2 employee.

SPEAKER_00: 44:42

And that's like the thing I kind of explained to this guy last week. I was like, you know, when you run expenses through the business, whatever's left, that is what you then pay yourself, and you will pay your personal income tax on. So having a good CPA is is gonna help help you make that so much easier. So you're not like getting all the money and then trying to, like I said, keep receipts and try to write them off when you file. The other thing, too, is like if you're doing payroll, like under understanding the difference between having someone as a payroll cheaper versus a$1099, right? The employment taxes, payroll. Um, you can I mean it's very simple to get like a cheap payroll software for like$20 a month that you just type in the amount and it pays out the right person, the right amount, and all that stuff. Um but yeah, like these are these are things that like you don't have to think about when you're just a solo broker, right? Now, now you're dealing with someone else's earnings and taxes that you might have to pay if they're W-2, or you know, when you get to like a certain size, and depending on your state and everything, like you might have a requirement to have a um to offer certain retirement options if you're doing it for yourself. Like there's a rule that if you if you set up your own solo, and I I might botch this, but like the solo 401k, if you get to like over five employees, like then you've got to start offering like a match or something like that. I forgot I forget the specifics on it, but like understanding this is where you're gonna pay a professional that's gonna assist you with those business um questions, right? Uh but yeah, I don't I just didn't want to skip past that because that is a big part of when you first hire somebody, right? And then you got to think like, are they in person? Are they remote? Are we in an office space that's gonna require a lease and maybe require us to have a general liability policy? These are all things that you're gonna you're gonna come across. This is why we say doing it at a pace that not only you can afford, but that you're going to fully be able to keep it under control and not like miss some of these big, these big steps.

SPEAKER_01: 46:41

And here's another big bucket. And again, it's not all in favor, is the last thing I want to say on just like the LLC and tax perspective, right? Is that like some things it makes less sense to write off than it doesn't, right? Like it's not like you put everything through it because it's just, hey, I want to pay less income. Some things actually work in the opposite direction. Life insurance is one of them. Like, because if your business pays your life insurance and something were to happen, you pay taxes on it because it goes through your business in a different way. Like there are pros and cons. That's why, to your point, like you want to have someone you trust to set this up correctly. And I think you should revisit it at least once a year to make sure you're not you're taking advantage because these things also change. They're not the same. And tax and all the things gap and what you can write off and where changes. But the other thing, too, and what you were saying about like hiring, even your first person, right? As like a rule of thumb, I think this is pretty true almost all the time. If you hire somebody remote far away, they tend to be cheaper. But what you save in money, you will spend in time. Yep. If you have somebody sitting next to you, you will probably pay more, right? Especially if they're at an office, but the time it takes to train them is exponentially lower. And your oversight goes through the roof because like you're just next to them.

SPEAKER_00: 47:55

Yeah.

SPEAKER_01: 47:55

Like I don't need to watch what somebody sitting next to me is doing all day. I've got a pretty good idea of whether or not they're working and doing what they should be. If somebody is remote, and I've been doing this with you for like seven years now, where like I have every screen, I've got two or three computers I can set up to have a Zoom and a screen share and this no amount of technology solves that, is I would say at the end of the day. Like there was the push at the beginning of COVID, everyone's gonna work from home, and then everyone's pull back. I think at the end of the day, like we've all kind of learned that it's a trade-off, it's not good or bad. It's that you will save money and spend time and you'll have oversight risk when they're farther away and you're not sitting next to them. If they're next to you, you're probably gonna pay a little more, but you'll be able to get more out of them sooner because they're gonna learn faster. And you just kind of know when people are at work and whether or not they're working.

SPEAKER_00: 48:43

Yep. And again, 100%. And that that's the considerations I always tell people is like if you think, you know, oh yeah, my cousin, I can trust him, he's great, and he'll work from home. Like, it's gonna take him so long to learn because no one's going to care about your business as much as you will, right? That's super important to me. Like the I will say this. One of the ways that I found I got a group of guys um at our company that work together and they don't have an office, like they just all work from home. They literally have like a Teams meeting open all day long that they're all in. And if like someone's on the phone, they just like mute themselves and turn their volume down and turn the camera off. But like they can just like chat with each other through the messaging or like if someone's available that can talk. Like it you can kind of supplement that and um you can kind of replicate that in-person thing. But like, even like I've got I've got two guys in Buffalo that work on my team that are they work from home. We get together like at least every two weeks um and just work together at someone's house. Just because like you cannot get that efficiency remotely. Like you, like you said, it's a trade-off, right? Um, the next thing I want to hit on too is like when you're starting to grow it out, you got you, you're gonna decide the business model that you're gonna roll with. And when you just have you know your first hire um versus you're up to 10 people, it's you know, it's gonna look a lot different. But you know, you have to decide is it gonna be kind of like the big three models that we tend to see in brokerage are uh cradle to grave, and I'll break each one of these down cradle to grave, pod, and then um the what do they call it when it's the split. Yeah, the split model. So cradle to grave is like, you know, once someone's fully trained up, they will be the sales rep. So that they they're getting their own customers, they're the operations person that they're securing a truck and getting them, you know, negotiating the rate and they're doing all the track and trace, right? That's that's an example of someone that's cradle to grave. Um, the pod model sometimes is like you have different groups. So like maybe team one has five people on it, and maybe one person's the sales team leader, but you might have another like a system broker, and then you have a couple other folks that are assisting with like pricing and carry procurement, etc. All right. And then you kind of have these different like teams. The split model is where you have like one giant sales team and one giant operations team, like a procurement team or a track and trace team. And you could even split it up three ways where you have like business development goes and gets new business, and then you have account management that just does day-to-day operations with those existing customers, and then you might have an operations team that just does like track and trace, finding carriers, booking the trucks, all that stuff. So um, those are three of the common ones. Um the I think like the Chicago model is what that split model, that's what it's also called. It's because it's common in a lot of the brokerages in in the Chicagoland area, which is like you're either on the sales side or you're on the carrier sales side, right? Um, but either one of those, or you could do some sort of hybrid between all of them. Like you might, your first hire might just be like become an operations person, but then you know, they get really good and they're like, hey, I would love to give it a shot at at making some calls to customers. And maybe in their free time, they start, you know, getting some nibbles on that, and then they've got a couple of customers of their own, and then maybe you hire an another person to come in as operations to support both of you now that have some customers, and you kind of like grow it out as as you see fit. And there's no there's no rule that says, like, once you decide I'm gonna have this model that you can't switch it. Like, if you look at uh Pierce Worldwide Logistics, where I work, if you look at it six years ago versus today, the business model has almost completely changed from when I came in and we pivoted to a very heavily agent-focused business model, um, which is a whole nother animal in and of itself. Um, we'll be answering a question on that for the final mile. So tune in for for Tuesday's uh edition on that, where we break down some agent questions. Um, but you can always pivot, you know? You can all and you could pivot back into one that you've maybe shied away from. Maybe you come across someone that like we've got we've had folks come to us and they're like, yeah, I don't really want to be an agent. I I really prefer to be in the office. I'd love to be on on salary with commission. I just I'm more structured that way. You can you can support multiple types of models as long as you have the the processes and and folks in place to you know to take care of the different scenarios and types of folks in your company. So yeah, that's a that's a big decision to make. And then ultimately, like when you go through this, and this takes you know years and years of time, and you you know, you you you kind of tweak things and figure out what works and what doesn't work, and eventually like you you have now got yourself to a place where you no longer own your job, like you own a business, right? You have a you have a business where if you if you were removed from it for a day, or if someone else is removed from it for a day, it still operates. And that is ultimately the goal of where you want to be able to get to for a business to truly be a business and not just a job. Um, and I think a lot of people struggle to get to that point because they think, you know, if I hire someone, they're gonna do things exactly the way that I do. And there's that whole like personnel hat you gotta wear where you have to understand someone's strengths, their weaknesses, their communication style, and things like that. And um, everyone is different. What they value is different. Like some people value time off or work from home flexibility more so than they value commission levels or salary levels, or you know, you name it. So you kind of shift from that um being the worker bee to being like the cultural leader within the organization. And um, you know, I've I've seen people scale it in three to five years if they do it very well. And I've seen people that like 10 years in, like, still just for some reason that they they just lack either the the desire or the ability to just to lead and like run a business versus just managing themselves. And typically the the folks that you and you probably have like you probably met folks like this where like they're so disorganized themselves that it would be a disaster for them to try and be someone's boss. So yeah, you might kill it at sales and put up good numbers, but if you're super disorganized, like um it's it's gonna be a ball of fire if you bring someone else into the equation before you fix your own your own issues there. So yeah.

SPEAKER_01: 55:18

I think that's a really good too, kind of final point. It's like again, just from like very simple, like first principles, like if the whole business is in your head and you make decisions on how you're doing everything step by step just based on feel, it's really hard for anybody to know how you're making those decisions. So it's gonna be really hard for you to get somebody to be able to help you. If you can't standardize or organize how you're doing it, the likelihood that someone else is going to be able to just mimic what you've learned and how you've done it is almost zero, right? Like, because like you said, it just stuck with me the way you phrase it. You're like, people think they're just gonna be able to do everything the way they want it, and someone else is just gonna be able to step in and do it the same way. Like that's very unlikely. Yep. And again, like I think at the other extreme of that is you have a very big company that makes everybody do everything the same, because you need to to have something that big, efficient, or not fall apart. But also, like the advantage of a one-person brokerage growing or just a couple people hiring somebody, like you can offer things a big company can't, just like you said. Like, when people always ask me, it's like, what should I pay this person, or what is standard? I'm like, just a I don't think you should start there. I think you should start by asking that person what they're looking for in the role and what would make them a good performer, and then work towards something that fits because you can. You don't have to apply the same pay structure to everybody in your company. You could have one person cradle to the grave, and you can have the whole rest of your company be in a pod scenario, right? Like they're not mutually exclusive. Like, if you found a really good salesperson that wants to be cradle to the grave and your whole company is running in a pod model, like, hey, that's great. Find a way to make that work. You don't need to disrupt what you have to bring this person on. You can give them a different commission structure, let them have different responsibilities. Like you have more flexibility as a small company, which is your advantage over a large company, right? And I think that shouldn't be overlooked either.

SPEAKER_00: 57:22

So I'll give you like to give it context to kind of put a bow on this. Like if you look at I look at Pierce specifically right now, and I look at the different roles that we have that didn't all used to exist as individual roles, right? A lot of them were like somebody did three of them. We have um folks that just deal with um, they're just analyzing credit for customers, new customers or increases for existing customers. We have people that just do carrier compliance. So analyzing our rules, analyzing our override criteria. We have people that just deal with accounts receivable, that just deal with accounts payable, that just deal with claims, that just deal with agent recruiting, that just deal with tech support, right? These are roles that at one point somebody wore all the hats. And over time, someone takes a hat off and puts it on someone else's head, right? And eventually, then you've got what's really wonderful when you get to that point is like somebody becomes so specialized and and and such an expert in one specific field that it starts to snowball, right? When you have when someone's sole job is to look at carrier compliance and analyzing you know the risks and the fraud that's out there and what kind of measures can we put in place and what kind of rules should we have and what tools should we use, then that and that's that person's sole job. Well, then someone else doesn't have to think so hard about it because they've got the process in place and they can focus on what they're doing well, which could be, you know, securing loads from their customers or getting new business or focusing on accounting or whatever the case might be. So, and if someone else is like, you know, just focused on the books and the profitability of the of the of the company, well then the the person that's doing carri compliance doesn't have to worry about that. They can focus on what they're doing, right? And you get all these people that are just experts and they're in their one niche. And I think ultimately every business that is is massive now and has grown to the size that they're at is going to have those specialized folks. Like if you think back to your days at TQL, like you probably have people, well, you definitely have people that were hired in to do accounting that never once did anything sales related, right? They're just, you know, they might have gone to school for for accounting and they got a job in the accounting department, right? Nothing to do with carry compliance, nothing to do with, you know, making cold calls, uh, nothing to do with like the tech side, just accounting, right? HR is another example, right? Like all they're doing is dealing with hiring, um, promotions, um, adding positions, benefits, like this the stuff that literally has nothing to do with freight moving, but is essential to an organization at that scale. So um, yeah, man, taking one hat off at a time, and that's that's really that's kind of like how I guess how you would put it all, uh, like summarize it. So any other uh any other parts we missed here? There's a lot that goes into this. Um, the different business models and all that, but that's kind of like the general the concept of growing.

SPEAKER_01: 1:00:21

Um I the only thing I would add is if you're curious as to what the next step would be, reach out to us. This is what we do all the time. So happy to jump on a call. This is 90% of what we do in coaching and consulting, is getting in, asking questions, and helping that person weigh the pros and cons of each. We're not, I don't ever come in, I don't think you do either, ever come into a situation and go, you should do this, right? It's not that. It's helping the the client be able to weigh which is the right fit and the right decision in each of these scenarios.

SPEAKER_00: 1:00:57

Yeah, and that's a good point too, like on the consulting side of it, because we're, I mean, you and I are both busy people, but we do, we really enjoy helping others, and we've got some good clients that we work with, um, where it's like, you know, we like you said, we don't say you need to you need to do this. We might say something like, here are a few ideas that you could consider. How do you think each one would play out in your scenario? Given your team, given your structure, given your desires, right? Those, and that's really how coaching and consulting can work. It's funny, like remember we talked to these guys earlier this year, and they like brought like a full-time consultant in or whatever, and like the dude was just telling them to like do all this stuff, and they're like, What? Like, we're paying you to tell us to go pay other people to do stuff. Like, what's going on here? So, yeah, don't don't fall for one of those. So, anyway, good conversation, good discussion. Final thoughts, Ben.

SPEAKER_01: 1:01:48

Whether you believe you can or believe you can't, you're right.

SPEAKER_00: 1:01:52

And until next time, hope for a bounce back weekend here. Go bills.