When you get into the freight broker business, failing to plan is planning to fail. Whether or not freight broker training school will teach you how to craft your own, the most important thing you can do before hanging your business sign out the door is to prepare a business plan.
Why should freight brokers bother with a business plan? After all, brokering is just a matter of finding shippers and carriers and matching up the two, right? In a manner of speaking, yes, but if you want to succeed at it, you’ll have to plan for it.
A good freight broker business plan will help you determine if setting up your own brokerage is a viable idea or not. It gives you a detailed view of the opportunities and risks that come with operating a property brokerage firm.
Also, with a good business plan, you break down management into bite-sized, doable pieces. It goes without saying that the investors and bank managers you’re approaching for a loan/investment will need to see one, too. They’d want to know if they’ll get a return on their investment and when.
Use the following business plan template that’s tailored for freight brokers
The Freight Broker Business Plan
A. Executive Summary
This section of the freight broker business plan is the last part you’ll ever write. It sketches a bird’s eye view of what your company is all about—what you do, why, and how you’ll achieve success. It’s usually two pages long and contains a summary of all the points covered in detail in the following sections.
But don’t let its short length fool you. Most of the time, it’s the make or break portion of your presentation when you’re looking for investors or applying for a loan. It’s usually what busy executives scan first. Their decision to invest could depend on the strength of the Executive Summary.
B. Business Description and Vision
Starting with this section, you get into the details of your freight brokerage business. Here, anyone reading the plan will get a firm grasp of what the business is all about and what it represents. Your insights on the company’s growth and potential also goes here.
- Mission Statement
- Company Vision
- Business Goals and Objectives
- A Brief History of the Business
- List of Key Company Principals
C. Definition of the Market
Defining your market is perhaps one of the more important parts of the freight broker business plan you’ll have to deal with. It involves deciding on your market niche, getting to know your customers, and the potential reach of your freight brokerage so take your time.
Some of the questions you will need to answer include:
- What is the industry you operate in and its prospects?
- What is the scope of your freight brokerage business and what is the potential market share for it?
- What are the market segments you’ll be targeting?
- What are the customer needs and problems that you’ll be addressing?
- Who are your target customers?
- Who are your main competitors?
- Business Industry and Outlook
- Critical Needs of Perceived or Existing Market
- Target Market
- Customer Persona
- Market Share
- Competitive Intelligence
- Main Competitor Profiles
D. Description of Services
Freight brokering is basically a service-oriented business and there are many ways you can differentiate yours from the rest of the competition. After reading this part, your potential investor should have a firm understanding of why you’re in this business, the range of services you’ll offer, and your competitive edge.
- Description of Services
- Pricing Strategy
- Competitive Edge
E. Strategic Direction
This is where you do the SWOT analysis. You study your freight brokerage firm’s strengths, weaknesses, opportunities and threats in the context of the market your targeting, the industry you’re moving in, and the bigger economy in general. It may also include new service segments you’ll be offering in the future (say, in five years’ time) and business goals that you’d like to tackle down the line (for example, turning the business into a franchise).
Some would include this section in either market assessment or in products and services, but others choose to separate it as it allows them to drill down on the freight brokerage’s success factors.
- Strengths of the Freight Brokerage Firm
- Opportunities in the Marketplace
- New Services
- Future Business Goals/Objectives
F. Marketing and Sales Strategy
This section of the freight broker business plan discusses the ways and means to promote and grow your business. Describe the forms of marketing you’ll use—advertising, web strategy, sales plans, promotions, public relations efforts, and the like. More importantly, get into detail on who your market is, how you’ll reach it, and how you’ll sell your services competitively.
There’s also a subsection on forming strategic alliances—the people and companies you’ll be working with to find new and serve old customers. Describe also your networking efforts—how, when and where.
- Market Description
- Service Demand
- Marketing Strategy
- Promotions Strategy
- Sales Strategy
- Web and Internet Marketing Strategy
- Strategic Alliances
G. Organization and Management
Your freight brokerage firm will need to define work flows, record keeping, billing and accounting…basically the operational flow of your business. Outline business routines as well as the legalities of your business. Name the leaders and their responsibilities and roles.
- Form of Ownership
- Management Team and Roles
- Organizational Structure
- Personnel Plan, including freight agents
- Legal Process Agents and States of Operation
- Corporate Legal Representative
H. Financial Management
This is the numbers-crunching part of every freight broker business plan…and the least liked by most. However, this is one of the chief areas that potential investors and bank loan managers will be looking at closely. They’ll want to see your freight brokerage firm’s financial viability and the bottom line projections.
If you’re just starting your business, show an estimate of your start up costs, and the projected figures for the next year’s operations using the following: balance sheet, income statement and cash flow statement.
If your brokering firm’s been around for a while and you’re looking for new investors or a bank loan, highlight the following reports from your last three years of operations: balance sheets and income statements. You’ll also need to provide a cash flow statement. Bank loan managers would also want to have a copy of the personal financial statements of your firm’s leaders and your tax forms for the previous year.
Subheadings (where it applies):
- Start Up Costs
- Projected/Current Balance Sheet
- Projected/Current Income Statement
- Projected/Current Cash Flow Statement
- Personal Financial Statements of Business Principals
- Federal Tax Returns for Previous Year
As you can see, if you spend time preparing a business plan for your freight brokerage firm, you end up using rational thought and discipline in managing your business.
But this freight brokers’ business plan shouldn’t end at the writing of it. A good, viable business plan is a dynamic document that you should revisit, review and routinely update to reflect emerging trends and opportunities, current economic realities, and growth factors. Should you choose to get additional freight broker training, you’ll be taught how to spot these new changes in the marketplace and incorporate it in your freight broker business plan.