Overcoming Broker Obstacles | Final Mile 110

Speaker 1: 0:19

Welcome back. It's another edition of the Final Mile. We're going to answer three Q&A questions here. They come from our listeners, a mix of via email and it might have been our Facebook group and YouTube comments, I think. So we'll get right into it, but first check out all the other content Freight360.net. You can also see the Freight Broker Basics course there if you're looking for an educational option for yourself or for some of your new team members, and check out the sponsors to help support this channel. All right, ben.

Speaker 1: 0:54

Question number one this actually came to us. Someone had emailed me directly. It was one of our folks that we did a TIA session with, so she was in our TIA group and it was a great question I thought it was worth answering. She said my factoring company and I'm paraphrasing here my factoring company won't offer quick pay, since I'm so new and I'm required to factor 100% of my loads with them. Is there any work around?

Speaker 1: 1:21

So basically, like you know, she's losing out on a pool of carriers that want quick pay, um, but the factoring company won't offer it, and then she's stuck in this like handcuff relationship where, um, she's got to put 100 of her business, all of her loads, through them. She can't, like you know, exempt one and run it or just pay it herself. You've dealt way more with factoring companies than I have so I'll defer to you on that part. But my initial thought is it's the wrong factoring company to be working with. But I did tell her. I said in that current relationship, until you build up a history, there's really not much you could legally do in that relationship. But my thought would be just find a factoring company that is not requiring an exclusive partnership. I mean, what would be your take on that?

Speaker 2: 2:14

A few things. One I would for sure reach out to other factoring companies. I mean even use like Gemini or an LLM to say like hey, can you help me research factoring companies that are more open to working with new trucking company owners. This is a broker right, or is this a trucking company?

Speaker 1: 2:32

Yeah, she's a broker. She's a new broker.

Speaker 2: 2:35

Yeah, reach out. I mean you can probably find one or two that you can start to talk to. The other thing is like I think it's really important that you ask why and what could be done in the short run in the long run to maybe like mitigate the risk or the why.

Speaker 1: 2:53

And I'll give you like, a couple of examples, because the factoring company should understand that, like, that's a common service that a lot of runner-ups are going to want.

Speaker 2: 2:59

Here's one that I've seen with a client even recently, right where the the factoring company said we don't want to increase the credit line with this customer. And the customer was like a pretty big company and I didn't like pull their credit but like just looking at them like they probably had pretty good credit for who they were Right. And when I asked a few more questions, you know coaches said hey, like ask them, like is there anything we can do to maybe help you guys? Or what is the concern with increasing the line? Is that their credit rating? Is it our load volume? Because they went from like a very few loads to a lot of loads really quick, which is what you want to happen as a brokerage. But from the factoring company's point of view, their response was well, we need something in writing from the shipper that says your volume is increasing so that we know these loads are legitimate. And then I asked the broker, who's my coaching client? I said are you guys sending over your load tenders to your factoring company every time you invoice for a load? And they went no, we just send over the invoice from our TMS. And I said well, from the factoring company's point of view, you could create an invoice for a load that wasn't even run and theoretically just get the factoring company to front you a bunch of money and then go out of business. And then the factoring company's stuck. I said when they asked the factoring company like what can we do to increase the credit line with this customer? All they wanted was proof that the loads were coming through from the shipper. So it was literally a simple fix of just making sure the tenders were uploaded with their invoice to the factoring company. That made the factoring company be able to substantiate or prove that their load volume was going up instead of just their minimum requirement of sending over the invoice, which is just like one way to do that Right.

Speaker 2: 4:39

And like there are many different reasons why a factoring company might be a little more concerned or risk averse to working with a new broker. But like ask that person hey, how long does this typically take? What are you looking for to be able to finally extend some factoring credit to a broker? Is it just a hard, fast rule of time? I need to be in business a certain amount of time, no matter what.

Speaker 2: 5:01

Is it the customers I'm working with? Is it the credit worthiness of my customers. If I have a customer that has good credit and is a legitimate company and I can verify to you, the factoring company, that this load is going to be paid by this company, what is your concern with me factoring that load? And like I don't want to say push back, but like ask some of those questions to find out where and why this factoring company doesn't want to work with a new broker because they might just have a policy across the board, but they probably can and will make exceptions if you're able to work with this person to understand what are they trying to achieve, what are they trying to avoid and what are some additional things that you can do that maybe other brokers aren't willing to do to be able to get some credit or factoring sooner than later.

Speaker 1: 5:48

Right, yeah, it leads to a larger discussion that factoring and credit is a hurdle, that almost every new broker is going to have to work through, but each scenario is a little bit different, which is why there's not a one-size-fits-all solution to solving these problems. So that's where having a conversation, because you could be the you could also be the broker that a carrier won't book one of your loads because their factory company won't won't.

Speaker 2: 6:20

Yeah, and here's and here's another way. Like this is a very like one-off situation, but like we had a client a couple of years ago that was in this position and I asked him I said, like well, how's your credit, what are your assets look like? And he's like well, you know, I own my house outright, I have good credit, but like I don't have like extra cash to cashflow my own loads. So what we did was we asked a bunch of these questions and the factoring company said well, if you deposit like 10 or 15 grand with us, we'll allow you to factor and then we can literally grow your line of credit month over month. Well, he's like well, I don't have 15 grand.

Speaker 2: 6:52

I said well, you do own your house outright, but you can go and get a personal line of credit against your home, take that 15 grand, give it to the factoring company until you establish credit as a business with them. Then, once you have your credit, pull the 15 grand back out and then pay off your home equity line of credit and then you go back to a traditional relationship. And I'm not suggesting everybody borrow against their home to solve this. I am just saying there are lots of different ways to be able to work towards the solution that you're trying to, but you only find those avenues if you ask more questions to understand, like what is really the holdup right, like why is this an issue? Have you done this with other companies? Is it just me? When have you made an exception? What were the circumstances? What other options do I have to be able to make this work? And it's probably somewhere in the middle right.

Speaker 1: 7:40

At the end of the day, too, like those with more access to capital, are going to have an advantage when starting a business. So that's, you know, that's just the reality of, of our economy. Um, so, unfortunately, you know, if you, if you have nothing and you have no way to prove that you're you're, you're worthy of your uh debts, people aren't going to want to extend that out to you.

Speaker 2: 8:05

Well, here's the other thing and this came up with another client very recently where they didn't want to work as an agent. They wanted to start their own company and they said I'll get to keep more of the pie and get my money sooner. And the agent option they were looking at was willing to pay them the margin percentage on loads delivered. So if you ran you know five grand in gross profit this week, you got to check Monday for your 70% of that five grand right. So you're literally getting paid honestly. Before that brokerage got paid, probably from the factoring company and long before the customer pays the bill.

Speaker 2: 8:37

Okay, Now they wanted to open their own company and they're like well, I'll just factor it. But what most people don't understand is that 5% holdback from a factoring company is 5% of the invoice amount, not 5% of your margin. So, for example, if you run a thousand dollar load and you make a 10% margin, you have a hundred dollars in margin. People assume they're going to get like 90 or $95 out of that $100. That is not true. The factoring company will hold back 5% of the thousand Guess what number. That is $50. So what you're actually able to get out from the factoring company is half of your money. You get the other half the other 5% of your 10% margin when your customer pays the bill.

Speaker 1: 9:25

Yeah, the idea of factoring should be to help you cashflow the carrier payment, not access to your company's profits earlier.

Speaker 2: 9:33

Correct, but most people rely on that in the short term and the reality was just from a math standpoint. As an agent, they would have got 70% of that $100 on Monday. As a company owner, they got half of that money and then the other 40% 35 days later.

Speaker 1: 9:49

Yep precisely, not to mention any other expenses and the fees the 2% or 3% fee that they lost.

Speaker 1: 9:54

We do it the exact same way with our agents at Pierce. It's like you know, if it's like literally like we're recording on a Thursday and all the commission reports just got sent out for Friday deposits, and if we invoiced it by yesterday, on Wednesday, our guys are getting paid tomorrow morning. So stuff to think about, all right. Next question I'm a new broker trying to get a book built. I need shippers or advice, anything that will help. Cold calling, very, I mean my most basic advice. When it comes to um the early on cold calling, I'm going to defer back. Listen to episodes I think it's 77 are prospecting with a purpose, have a lot of leads and make a lot of calls and do those at separate times. Right, generate a lot of leads. So you're going to use tools like you know, it could be chat, gpt now to generate like give me a hundred companies that ship whatever commodity. It could be something like an industry directory, it could be a zoom info. It could be Apollo. It could be something like an industry directory. It could be a Zoom info. It could be Apollo. It could be a chamber of commerce directory. But get a lot of leads that have something in common, whether it's commodity, equipment type, the geographical location of their shipments, et cetera. Get a bunch of those and then, at a separate time, go through and hammer out a bunch of calls and the repetition is what's going to make you better. The repetition on both sides is going to make you better at generating the right leads of the right person to call with the right phone number and having the right kind of conversation, asking the right questions, knowing what to say to a gatekeeper, knowing how to navigate your way through to get to the right person. But that's it. I mean the sooner you can just get to that prospecting phase is better, right?

Speaker 1: 11:41

People sometimes have that procrastination or the paralysis analysis where they're like I've got to have the right, perfect everything, and you know, a month goes by and they haven't done anything or prospected. Like Ben we did did literally. We had a coaching session with TIA. The one week we talked about lead generation and a week later right Seven days later, we asked like did anybody get any new leads? And a whole lot of circuits. Yeah, so the one guy said I got some leads. I didn't make any phone calls. So the faster you get to that part of doing this job, you're going to put yourself ahead of your competition. I'm telling you your competition who is paying money to be a member of the TIA? They're not, on average, doing this. So you've got to get on the phones. My old boss always said, like your activity on the phone will correlate to your numbers.

Speaker 2: 12:40

I can 100% guarantee that Activities directly for your income Any other basic tips on that.

Speaker 1: 12:46

It's just really simple.

Speaker 2: 12:48

Here's another one that I've been using because I've been cold calling on very specific types of freight for the past couple of weeks and this one works so well Don't start with the person you want to talk to. Start with the person most likely to pick up the phone that is connected to the person that you want to talk to. So, for example, I was working on a very large company yesterday like 10,000 people and I have Zoom info so I can get pretty good phone numbers for almost anybody in the logistics department. But guess what? People in logistics department get cold called the most. They are the least likely people to answer an unknown phone number. Right, guess who the most likely people are to answer the phone at a company?

Speaker 1: 13:27

that big Sales rep.

Speaker 2: 13:28

New sales reps.

Speaker 2: 13:31

The older sales reps don't necessarily answer the phone unless it's somebody they've been doing business with the kids that are 24 and 25 that have been there a year or two.

Speaker 2: 13:38

They're so worried about not answering their phone because it might be a boss, a customer or someone else that needs them.

Speaker 2: 13:44

They answer every phone call and they're more I don't want to say intimidated, but they're more likely to just open up because they don't know what they should be saying. And in three phone calls I was able to get two younger people at the company to answer the phone. Give me exactly who the point of contact was at shipping. I got one of them to send me an email introduction to the person I needed to talk to. The other guy gave me the cell phone and when I called the point of contact cell phone who wouldn't answer my phone call, I was like yeah, I just talked to Mo over in your Chicago office. He told me to give you a ring related to this Boom Warm opening guy opened up immediately because it wasn't a cold call. I was now referred to the guy who just gave me his phone number that I talked to I don't know five minutes before that and just created my own referral to get directly to the person.

Speaker 1: 14:30

Yeah, it's pretty good, I like that. Another one I have heard too is the new hires. So, like, um, one of my, one of my brokers would have like an indeed she I don't think she does anymore she used to have like an indeed alert set that whenever there was like a hiring a new position coordinator.

Speaker 2: 14:50

Like job posting?

Speaker 1: 14:52

she would. Um, she knew either they were having problems in that department or that they were growing and hiring new people, so like yeah, like to basically be able to get a hold of someone that's either new or someone that clearly is having trouble and needs some sort of help help.

Speaker 2: 15:15

So yeah, and you know what I would do, honestly, in that scenario. I would probably call HR and try to ask some questions to find out maybe who the hiring manager is or who I would be reporting to, or what the title of the person I would be reporting to. If I wanted that job, then cross-reference that title and then I would reach out to the person because that's the person directly that needs that help.

Speaker 1: 15:31

Some good investigative work there, ben. All right, our last question today what business certifications can help me get government freight, if I am eligible?

Speaker 2: 15:42

So we're talking there's a list and.

Speaker 1: 15:47

I would encourage people to look them up. But if you are, if again, these come down to the ownership status of your company. So like veteran owned, for example, um, there's a any of these. Like women owned, minority owned, um, underserved um area or demographic, I think is one of them. Um, if your business has that certification because it meets those criteria, there is a percentage of certain government freight, whether it's DOD or FEMA or any other DOD-related shipments, and in contracts in general, they reserve a percentage of their contracts to businesses that meet those criteria. Your business needs to A be eligible based on its ownership and and B needs to actually go get the certification.

Speaker 1: 16:37

I ran into an issue last year where a guy's like he was trying to get in with a large company that had had a government contract that they ran freight for. If you have veteran status, you can, um, we can, we can bypass the quote. We're not adding any new carriers right now or any new brokers. Uh, it was like their exception of policy If you were a veteran owner and the guy's like Nate, he's like you're a military guy and I'm like I don't own the company though, oh, um you want to sell me the company?

Speaker 1: 17:09

I'll take 55% apply to you If you're not the actual, like principal owner or officer of the company that is.

Speaker 2: 17:16

Nate outside the box man, 55 percent man, I'll get you the veteran owned status.

Speaker 1: 17:23

We had a conversation similar to that and he's like you know, we need to work something out on paper, but it ended up we didn't, we ended up not going that route. But so those are those are my big things is, you have to, you have to truly qualify for it, Cause I've, I've, you know, I've had people that they think they can do that and then they realize they set up their business in a certain way and they aren't necessarily a 51% owner of the company or higher, and they went 50, 50 and now it screws them over. So any other thoughts or take on that. We actually we talked with somebody a couple of weeks ago who had like six of them, and it was, you know, specifically for that reason. So what's your thoughts? I can actually pull the list of what they are too.

Speaker 2: 18:03

I had to pull the list on them earlier, I don't remember. Off the top of my head there's a lot of them for sure.

Speaker 1: 18:10

I mean I'll give you some right now. You've got a rattle one off, in no particular order. There is disabled, veteran owned small business. Small percentage of the DOD. Required by law is to give contracts to them, Even if you have a zero, even if you have a zero percent rating, but you have the rating, like you know, you claimed something, so the medical part is covered, but you weren't given a percentage of disability to receive an additional check every month. You can qualify.

Speaker 1: 18:40

Um, there's veteran owned small business. There's hub zone, which is the historically underutilized business zone. Um, small disadvantaged business program. Women owned small business, disabled business enterprise. There's a ton. There's like a whole crap ton of them.

Speaker 1: 19:00

But yeah, and again, depending on the department that you're looking at, will, you know, differentiate what percentage goes to that? But those are good questions to ask too. If you're prospecting government freight, you can ask like, hey, is there any certifications that you can let me know about? That might help me in my chances of getting awarded some of this freight, and they should know. But again, you're not going to qualify for everything if you don't meet their criteria. So if you didn't serve in the military, you're not going to get veteran status. If you're a man, you're not gonna get woman owned business status.

Speaker 1: 19:38

But, um, yeah, so there's a whole bunch of I didn't I didn't even know about the hub zone one before, but there's a whole bunch, a whole bunch in there. Um, let's see, is there any others? No, that's pretty good. Any other thoughts on that one? Ben Cool, I kind of feel like the whole theory of today's Q&A was like thinking outside the box to try and A get factory companies to work with you, carriers to haul for you and customers to do business with you. So hopefully we helped somebody out there. Final thoughts Ben.

Speaker 2: 20:10

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

Speaker 1: 20:14

And until next time go Bills.