The Final Mile #14 A Website for Freight Brokers to Find Shippers

Freight 360

October 24, 2023

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

  • Cost to start a freight brokerage
  • Real advice for new brokers
  • Website you can use to find shippers
  • How to build credit as a new broker
  • Should you focus on your customers, carriers, or both?

Support Our Sponsors:

Recommended Products: Click Here

Freight Broker Basics Course: Sign Up Here

Join Our Facebook Group: Click Here

Check out all of our content online: Click Here

NFL Pick ‘em League: Join Here

Show Transcript

See full episode transcriptTranscript is autogenerated by AI

And we're back with another edition of the Final Mile from Freight 360, where we are going to answer your questions that you guys have said it is all come from either our contact form on our website or from our Facebook group this week. So thanks for everyone's participation and involvement and asking questions. We love to do it. Please take a moment to check out our sponsors in the description box that help support the channel.

And if you'd like to learn more about Freight threesixty and our training, make sure to check out the Freight Broker Basics course. All right. Our first question today comes from Jamison, who asks, I want to start a freight brokerage, but need to have an idea of how much money it will take or it will take to ensure I don't sell.

I understand that there's a lot of expenses involved and appreciate the breakdown, but what I really need is a number. I love it. So we can't give anybody a solid number because there are so many variables that go into this, right? One of the biggest variables is your bond, for example. One person's bond will cost different than someone else's bond, all based off of personal credit, business credit, things of that nature.

So we can't give you an exact number. But what we can do and I'm going to pull up one of our handy dandy blogs from our website here to help us out is look at the kind of the range of expenses for some of the different things here. So let's take a look here. Well, first of all, we know that you have a $300 application fee and you've got the.

Well, let me just pull it up here. We've got costs to start. So make sure you go to frame 360 dot net and you can get all of our good stuff right on there. And here we go. How much is it cost to start a freight brokerage firm? So you've got your $300 application fee. That has not changed since I've been in the industry.

Your bond or trust. So you can either put 75 K and assets into a freight brokerage trust or you can purchase a bar or pay for a bond on an annual basis. And I've seen ranged like 1500 or 3ka year on the bond. Ben, have you seen anything outside of that?

I know I've heard of people say they came in a little higher, like in the mid fours and low fives depending on their credit. But again, anecdotal just what people have said to me that they got quoted a little bit higher. But again, that's going to be company to company. You can get quotes from other companies as well.

Exactly right. Other stuff there is the UCR of the Unified Carrier Registration System, which almost every state requires, and it's under 50 bucks. I think it was like 40 something dollars for 2023 for brokers. And then after that, I mean, those are like your basic requirements, but then you're going to look at like you're going to want a TMS, you're going to want load boards, right?

So let's say if you want bare barebones minimum, let's say you got a TMS. Like, for example, Ascend TMS, right. And you could check out a link in our show notes to get you get a a deal on that if you use the promo code but it's on 100 bucks a month and you get full access to everything that they have.

Right. Try out free version two if you want to test it out first. Load boards and get 10% off your first year with. Use a link in the show notes, but you can expect to probably spend conservatively. I would say 300 bucks a month on your software TMS and your load boards. Right. And that's like on the cheap side.

As you grow and expand, you'll have to have more licenses, more features, things of that nature. And then the big question mark is insurance, right? What are your customers going to require out of you? I shouldn't say that's the only big one, because that's too much. Cash flow isn't our big one.

Yeah, go through it because I finish out those two. What can insurance, run, give or take on using?

Depends on the size of your business. You're you could have no insurance outside of your bond, so you're going to pay zero. You might have $100,000 in premiums with a big brokerage who has big general liability umbrella policy contingent cargo contingent, auto. Right. All this fresh.

Start up say first startup and they're only going to get 100 you know, and a million in general and they're running 5 to 10 loads a week at most within their first.

You have to get with an insurance broker. I'm going to I'm going to take a stab at it and say, you're probably a few grand a year.

Yeah, probably.

It's my guess. Don't know. I don't sell insurance. I don't price it out. But that's my guess. And then there's the question of do you use a factor in company and cut into your margin or do you cashflow right? And then you have to figure out how much money do I need to have in the bank if I'm going to do that?

So those are my big ones. What do you have in mind?

Okay, so let's just break that down real quick, right? Like if you add your bond, which anyway we'll call it 2 to 4 grand, you just speak to somebody to get that right. Just call it 3500 for an average and then you got your $300 fee. You're UCR and all of those cost to just get your license to be brokering.

Right. A little under five grand depending on what your bond cost. Right. Maybe it's for maybe it's 3500 somewhere around there now you got factoring and all that stuff and everything you're talking about, your factor is going to charge you usually on the business you've done. So you probably won't really incur a factoring charge until your moving loads.

So you're looking at about five grand. Give or take to get it off the ground. And then you got 3 to 400 bucks a month in ongoing operational costs. Right. It's kind of what we just outlined. And now when you go to your first customer, say they ask for insurance, you know, standard is 100,000 contingent, a million General, I have clients that are doing 10 million a year and they were paying under ten grand.

So, you know, if you're just starting out, I'm guessing it's a little less than five. Tonight's Point, we're not insurance companies can't quote this but again, five grand give or take to get you off the ground, 300 a month ongoing. Once you got a customer, maybe you're at a couple of thousand for insurance. Now, tell me those aren't the numbers you need to worry about.

And here's why. Because the first question I always ask, if you are an entrepreneur and you're going to start your own business, how much money do you need to bring in to survive? What is your burn rate as a person? Right. Because usually these business are started by people, right? That also either have another job. So the first question is how much have you saved to give yourself runway to give this a true attempt, meaning if you're working part time and your bills or whatever, four or five grand a month and you're bringing in five grand a month, how much time do you allocate to this if you're leaving your job to start a new

venture, any company, right, you've got to figure out how much money do you have saved to pay your bills and all the numbers we just said for how long before you need money coming in the door? Because one of the biggest mistakes I think people make in starting any new company is when they leave a job to start the next company.

They don't ask the question of what is the time to money. So if you're going to start a free brokerage from scratch, I wouldn't expect you're going to have any income for at least three months because even if you get a customer in your first 45 days and you get the insurance and you're running loads, they're typically going to pay those bills on 30 days.

So now you're a two and change months. You're almost into the three months already. If you've got to factor in company, you'll get your money quicker, but you're going to get less of it because part of that fee is going to come out of it. So the numbers I always talk through with any new business entrepreneur that wants to jump into it is how much do you have saved and how long can you allocate a real amount of time to getting this business off the ground before you need more money coming in the door?

Right in my opinion, if you're going to start a free brokerage, you should have 4 to 6 months worth of runway, probably a little bit more. And that is if you have no income coming in from anywhere else.

That's probably a kind of a standard recommendation for any entrepreneur selling for.

Your right. And it's nothing to free burgers. This is just what we used to do. Like I used to be a small business lender and this is the first question you ask, because every person that wants to start their company when they would go to a bank, their first words, I was like, I want to start this business to quit my job.

And as a bank you're like, Well, I need you to keep your job because that's how I qualify. I use the loan. It's you quit your job, you don't qualify for the loan. So how are you going to have the time to build this? You either have to have money saved or you got to work 14 hours a day, one job at night, and the other job during the day, which is what a lot of entrepreneurs do.

And there are lots of ways around that, Right. But I just use that as a drastic example. Sure. Because we've had clients that do both right. They own businesses. They're able to allocate four or 5 hours a day at this until they get some customers and then they'll allocate more time. But they still have money coming in right?

Same thing with truck drivers that we work with that we have clients, right? Like they're driving on their resets, They're making phone calls until they can get one customer, they can start to get that off the ground. And as they get some more business and they move towards a brokerage like we have a client today that I was working with, similar scenario was a driver, got a great relationship with a place he delivered to often that person he had a relationship with said, Hey, I would love to give you a shot if you want to try your hand at brokerage.

And they literally gave him his first loans. He was able to stop driving and transition into brokerage. So there are ways. But the numbers I always want people to think about is like, if you have no money coming in and you're expecting this new business to be able to support your lifestyle, whatever that number is, make sure you have reasonable expectations of when money will start coming back into your bank account and then add an extra 20% in time or 50% in time.

Yeah, everything takes longer than we expect and comes in over budget. That's just part of planning.

I've heard. I've heard that in a variety of scenarios. All right. Next question. Amory asks, I'm new to this brokering thing. What real advice do you have? Well, if someone truly is brand new and looking for advice, I'm going to say educate yourself as much as possible and shadow somebody some way. Like somehow, even if it's virtual, you've got to understand the lingo and have some education and you have to get exposed to it to know if you're going to like it, are you going to be cut out for the amount of rejection and hustle and grind?

And then you've got to have a game plan, right? No. Know how you're going to prospect and have a game plan for how much you're going to prospect. I think that's typically the biggest failure point is lack of education or they're not prospecting the proper way. What do you think?

Absolutely. I mean, those are the two biggest reasons why I think people don't succeed, right? Is are they making the calls and are they doing the right things on those calls? We've got a lot of content out there through our library at our website. 4836. net search through the videos, be a sponge, learn as much as you can at the beginning.

The more you learn, the easier it will be, the less your gut voice mistakes you're going to have to make in order to learn. Right? And I always say if people are thinking about it or they're jumping into it, take a goal that is reasonable. Go for call output and see if you can stick to that for two weeks.

If you're not able to stick to whatever you set for yourself consistently for a few weeks, that should be a red flag. Right. And again, if you're new, pick a low number to start with. If you've never made a cold call, not to start out at 100 a day.

Make like ten.

Ten, 15 whenever it is a reasonable number, right, Get ten, number 50 numbers, start doing that every day. You'll know real quick after the week or the second week whether or not you feel like you can keep doing this for the next year, two years or three years because it is part of the gig. You do not get to build a business without that aspect of it for sure.

Next up, Samir asks, Is there a website where I can get some shippers? So I laughed when I first started this one because people are like, is there a load board you just go to to find shippers? And the answer is no.

But there are there.

Are a ton of websites you can use to help you generate leads. So I want to and by all means, check out the rest of our content on how to how to generate leads and how to find shippers. But I want to hit on a couple that are really cool that I've personally used and help folks use to finalize data.

Axl used to be called Reference USA. Ben I learned about it from you years ago. It is available for free if you have a library card that your local public library is on there. On there. Typically the resources section, it's a great one and it's going to how you build it. You can search companies by their industry or visit their A.f.c. code or S or.

NAICS code.

Code. Other websites I So if you've heard of Zoom info, that's one that you can get company and contact name, email and data on them. Apollo dot i o. I checked out recently. It's similar to zoom info. They they get their data from different different blend of sources. It's much cheaper than zoom info. Chamber of Commerce websites are huge if you're a county or if a county you're prospecting in has one you can similar to that reference USA data axial style thing you can search and segment leads using, you know, the the type of commodity that they're hauling.

Blue book services right lumber blue book, and produce both you know membership based organizations where they've got tens of thousands of very specific niche leads and companies with their contact information inside of their website. For those two entries. Google dude, I've even checked. Remember, we play around, like I said, like, let's go to Bard right from Google.

Give me the top 50 steel manufacturers in the country. Right. And it'll spit out with somewhat good accuracy just a bunch of names of companies. Yeah. What do you think? What else?

Once in LinkedIn is number one, seamless? I think it's seamless. Dot II is another one that's similar to Apollo. It's like zoom info, but it's cheaper. Rocket reach is another one that functions like Zoom info that our clients have used. I've not used any of the three of those, but I did recommend all three of them to somebody earlier because enough of our clients do use all three of those Apollo rocket reach and Seamless Start II.

The other place, you know, you said Chamber of Commerce. I mean associations are.

Great sensations for sure. They have a membership list.

Yeah. Blue Book Services is another one. Blue book lumber Blue book produced right are two other great places to find leads. The other thing for me too, is I think you should think about where your interest is and again, see our video on prospecting with a purpose for more on this topic. But think about your history, what you've done and what you have experience in.

And I would look for areas where there are products that ship in your interest. Maybe you play, you know, roller hockey. There's lots of products that get ship that support that industry. Maybe you're in a basket weaving. There are huge industries that support quilting and things like that. Needlepoint. You would be amazed at how many products are manufactured to things that seem like small niches that are really good opportunities for shippers, and you're going to be able to have much more effective conversations with a representative about a company.

If you have a passion for what it is they manufacture or distribute, it, just have better conversations. So whether you are a bartender and you have an interest in different types of liquors, there you go, liquor manufacturers, you talk about bottling companies, right? Think about where your interest lies. And I think that's always a good cue for to start with.

What I use is I look for things that are happening in the news related to the economics of an industry. And those are what give me the start and I just pull on that thread until I find more information like the auto autoworkers, unions strike, right? Like, okay, there are issues with auto parts being shipped. Maybe there's less, maybe there's more, but there's disruption in that industry.

To me, I'm going to go start to look for companies that manufacture auto parts. Right. Look for the NAICS code and data. Axl, throw that in, find another list of companies, throw those into LinkedIn, and then throw whatever I get out of LinkedIn for their titles into Apollo. And now I've got a real lead to dump into my CRM.

So the takeaway here is that there's no easy website that just gives you shippers that want to give you business, but you can I would say the majority of your prospecting will probably be done using websites on the Internet. So but you still put the hard work in and do it. All right. Next up is Haiti. Who asks?

I have a question. As a new small broker, how do you get a credit rating with factoring companies? I've been declined by a few carriers because they're factoring won't work with me. We've gotten this question a lot and we've definitely check out the episodes we did with desk clerk and Pardeep Singh about their success getting started as a new broker.

The there's a couple of wait, there's no like right way to do it. It takes time and it is difficult. The easiest way is just you have to have money and you have to like quick pay carriers at no expense and ask them to report your payments to credit or credit companies so that way your days to pay will then be populated.

And to also.

Just go to.

That one before you go to the next one. Right. One of the things that you can do easily, like hall pay does this is you set your pay terms to every carrier to 14 days for like six months. So to your point, it just automatically pays at 14 days. That's going to help your credit. But what you want them to do is you want them to pay your carriers factoring company, because if you pay a carrier direct, the carrier is not likely to report that even when you do it to the agency to get you the benefit.

So when you can, you want to be having your factoring company basically pay their factoring company because they will report it more often and more likely than paying directly to a carrier to.

Yeah, I mean that's a way to guarantee that the payment gets reported. Yeah, for sure. The other thing too is call it beast factor in companies and ask them what is it that you need to see from me that would make you feel more comfortable working, Right, Because we give you advice. But that doesn't mean that a fighter and company thinks the same way that we do.

So just ask them person to person.

Yeah, and a few of the other things that I think Desmond pointed out or we've talked about on the show. Right. Are literally put money on deposit with the factoring companies. I think maybe Pardeep mentioned that where he'd like literally went to the factoring company like put 15 grand on deposit and as it drew down, made sure there was some in there for a short amount of time that made the factoring company a little more comfortable with it.

At the end of the day, a factoring company is a lender that will operate like a bank right? So again, if you get the automated response of know, pick up the phone and call it, it's a human being. There are people over there that you can talk to, you can make your case to. They can make exclusions, they can make you know, exceptions can offer.

Yeah, exceptions to policies where I was gone with it. Absolutely.

All right. Last question from Madam 18. I love the username. Brokers are considered the middlemen, but who do you fight for? The customer, the carrier? Or do you try to appease both and who is responsible for educating either side, if not you? This is a great question and very good question. A lot of people will think that you've got to focus on your customer and that is not the right answer.

I will tell you, I think that if you are equally supportive of both parties, the shipper and the carrier, you will likely have the most success as a freight broker because you are not in it for yourself. You are literally doing I mean, you're going to profit from it and prosper because of that, but you're becoming an extension of your shippers supply chain and logistics department.

So you're helping them solve their problems and handle their needs. And the same thing for the carrier. Their problems and needs are being met and solved as well. Right? Which is fine. Me freight that pays me what I wanted to pay and puts me in a location that I want to go to. That is our job. So we should be advocates of both sides.

If you start to let one slide and favor the other, you'll likely lose the other side, right? If I favor my shippers and my customers and I basically say screw two carriers, I'm not going to bad reputation and have carriers that don't want to work with me and are not reliable. If I'm so focused on my carriers and not my customers, I'm going to lose my shippers.

I'm going have no freight to give to my carriers. So it's a balancing act. It's a juggling act. You've really got to fight for both. Now, the education side, you should be educating both, right? Let your carriers know what's going on with demand for trucking right now for capacity. And that comes from your shippers, right? Let your customers, your shippers know what the available capacity in certain markets look like for trucks.

And that's on you as a broker to add value. What's your take?

100%. I mean, not only does it make good business sense and is it ethical to treat them both well? Right. But furthermore, it makes good business sense. Right. And I'll give you an example. Right. And you point it out and just go a little bit further in it. Right? So let's say I favor my shipper and I am pushing my carriers below what is feasible, meaning I leverage everyone into taking a load for a little less money than they want to because they really needed it.

Right? Well, I win temporarily because I get a little bit more margin, right. But guess where I lose? I lose in multiple ways. One way I lose is next week. If I have that same load, I have to put the same amount of work in than I spend in today. So I literally have to go do the same thing to get the same benefit.

The second way to your point is not only do I have more work fine in that care, but I'm less likely to be able to get the same load from that shipper too. And the carrier. And here's an example of how you can execute this in a way that it works for both. If my shipper wants to pay a thousand and, you know, my carrier 50% margins, try to pay him 850.

Right? And he's like, look, I would really like this line. 850 won't work with where I'm at right now. I got a little deadhead, can you get me 875 Now in that instance I can either shrink my margin or I go back to my customer and I go back to my customer and I educate them and I go, Hey, look, I've got a reliable driver that I've worked with in the past that is delivering close to where your load picks up every week.

I think this would be a great fit for him every week. Can we get an extra 25 bucks to help him out? Because if this load goes well, I think he could be a fit to run this load for you every week at a pretty reasonable fair rate. And if I've educated my customer well and listen to my carrier and their concerns, there's a very good likelihood that now every single week that driver, when he gets there, sends me an email, says, Hey, you got that load.

And every week I email that customer at first go, Hey, you got that load. If they can give it to me. I spend no effort in finding the truck. And yeah, I made maybe a few percentages less if I even didn't get the extra 25 for my customer. But I got the same carrier, run it every week. Now it's like plug and play, right?

Like I've got that revenue on my book of business every single week until that lane doesn't do what it's supposed to do, what it's doing anymore, and I don't have to spend any more time. The carrier wins, the shipper wins, the broker wins, everybody wins because you find a way to make it work for everybody. And economically it makes better sense for everyone to like, You don't got to beat one side or the other.

It's like that old saying, I always think like cutting off your nose to spite your face, right? You do something that seems like it's going to help you, but you really just created more work for yourself in the future and you never get out of that hamster wheel. So to me, you're right. You should be constantly educating both sides and often right, because they're going about what they're doing.

It is our job to bring market insight from not just the truck, but what is happening in the market to the shippers. They don't see the market the way you do. Just because they pay money to access a market doesn't mean they're in the market, right? In the same way lots of people buy stocks, None of them really have the same insight as the person on the trading floor that is trading those stocks.

Right. Same thing with brokers. We live in that market. We've got to educate both eyes as to what's happening when and why. Right. And if you communicate effectively now, you're doing the job at a higher level than the people just trying to perform tasks.

Love. It gets good insight, man. Appreciate that. Well, great questions. Continue to send them our way. People. We will get them on the show as time permits. We tend to get to about five each week, but we appreciate you joining us on the final mile. Ben, Final thoughts.

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

Until next time, go bills.

About the Author

Freight 360
Freight 360

Freight 360 was born from a vision to share knowledge about transportation with everyone.

To read more about Freight 360, check out full bio here.