You know a trucker requires driving experience with a Class A CDL license. However, who handles the rest of the process?
There are many steps and procedures before and after a carrier is loaded and hauled. A broker keeps tabs on such responsibilities to ensure smooth operation.
Many have chosen to become a broker instead of a trucker in the trucking industry. Whether you are a newbie or someone with prior experience, this article will explain the questions often left unanswered.
Shall we begin?
Who/What Is a Broker?
A broker is a person or an organization that deals with shippers and drivers. The job entails assistance to shipping or trucking employees regarding transportation updates.
You either become an individual broker by forming a new business or work under an existing brokerage company.
Responsibilities of a Broker
Being a freight broker is not an easy task. Things might become overwhelming in the beginning. Nevertheless, you can do it as long as you have the knack for it.
The first step is to acquaint yourself with the responsibilities of this service. You will have to improve the sales by connecting with new leads. Finding reliable carriers is another task.
Here you will have to assure the customers that the carriers are safe and within budget. You have to answer various questions with promptness and remember shipping estimates.
There is also the preparation of the scheduling carrier orders and recording of all the accounts happening. Plus, keep your customer/receiver satisfied with freight status updates.
Basically, you have to cooperate with people like the shippers, truckers, correspondents, etc., to prepare carriers for the journey. Of course, discussing the contracts and costs also falls in your hand.
Steps to Become a Broker
As you can see, these responsibilities help build a healthy economy in the country. Thus, it is crucial that you are thoroughly ready and up-to-date with the industry trends.
1. Train Well
This will be the first key to become a successful broker. No matter what happens, you must attend freight broker training school to learn various courses. These courses will cover everything you might need to learn.
Even if you have no experience in the field, taking up these classes will teach you real-life shipping and trucking industry trends. You will also learn about tools to recognize carrier efficiency and understanding how to operate the freight brokerage business.
In short, you will not lack in knowledge regarding technology or business after the proper training.
There are online classes you can attend on this subject. Researching online in various forums and pages can also help you navigate the learning capabilities. Just make sure they are authentic.
Besides, if you are a reader, get the books about trucking, shipping, or logistics. Read them in your spare time. Another way to consider training accomplishment is by working at a brokerage company and observe everything live.
The bottom line is, you must learn before entering this field to avoid failure.
2. Plan Your Business
There are three additional steps a future broker must comply with to attain successful groundwork.
It is also known as the start-up cost. Every business will require a certain amount of money to fill in the expenses during establishment.
If you calculate all fees, purchases, legal charges, etc., the overall cost will fall somewhere from $5,000 to $10,000. Not everyone can afford this much unless years of savings.
Then, you can always seek a credit option by taking a loan or borrowing from family members.
Do not forget to target a location beforehand so that the hassle of seeking a place is minimized.
Having an office for face-to-face contract signing and meetings allows the other party to trust you better.
Choose a Business Framework
Now, what type of structure should your business have aside from the eye-catching name? There are four ways a freight broker company can flourish.
- LLC: Limited Liability Corporation is where profit and loss of the business go to the personal income account after passing through LLC. There is no corporate tax, though self-employment tax is unavoidable.
- Sole Proprietorship: There is only one owner, and he/she will have to bear all the losses or debts if responsible. Any company liabilities or assets shall be linked to his/her personal liabilities and assets.
- Partnership: A partnership is when more than one person shares the ownership, and the company profits will follow the LLC framework in the personal income.
- Corporation S or C: An S-corporation is when the framework is detached from the owners. It helps to avoid double tax payments. A C-corporation is pretty much the same, except double taxation is inevitable.
3. Register Your Business
Once you pick a name and framework to become a broker, it is time to register the business. The IRS will provide you a tax ID upon registration.
4. Pick Proper Carriers
Your success depends on the type of carriers you choose. Whatever trailers and other motor vehicles you pick, you have to confirm that they are safe to drive.
Each vehicle must have experience in the field and highly reliable. Choosing the right carriers for your business is the second step of broadening the trucking network.
Many online references or directories nowadays can help you pick the best models.
5. Comply with License Requirements
The first thing you have to do is check the licensing and its requirements. Next, apply for the USDOT number for the carriers. This process is done in the Department of Transportation.
You will fill out an application, OP-1, that processes within a few weeks. The FMCSA will mail you the DOT numbers after the approval.
It takes about 10 days to complete the registration and own the MC authority; better to start operating after that.
6. Get Freight Broker Bond
It is crucial to apply for a BMC-84 bond – also known as a freight broker bond. The fee is $75,000, which can be a lot. However, it is not an upfront payment, so rest assured.
This bond works like insurance to your brokerage company in case something went wrong. Consider it as a backup to severe financial instability if it arises.
7. The BOC-3
What is a BOC-3? The broker must file the BOC-3 form after assigning a process agent. A process agent is assigned to accept all the legal documents you have prepared on your behalf.
It is his/her job to handle all the legal procedures in each state you operate.
8. Build a Strategy to Market Your Business
Finally, it is time for developing ideas and strategies to target customers. Find out which platform in your region gets heard the most.
List your business in the digital directories for various shippers and trucking companies to come across. Participate in varieties of programs to announce your freight brokerage business.
Start with the old acquaintances who can, then spread your company name further throughout the state. In short, it is better to go online to catch up with today’s industrial trends and advertise accordingly.
Do not be afraid of choosing unique paths.
We hope you now have grasped how to be a broker for trucking through the article. Remember always to have a unique strategy to advertise your business. This will help your brokerage company to stand out from the rest.
Lastly, always be prepared for anything. It includes initial studies on the declines in profit. We wish you all the luck in becoming a successful broker in the future!