How to Become A Freight Broker with No Experience?
How to Become A Freight Broker with No Experience?
A freight broker assists shipping companies to move products from one point to the other. Instead of doing the job themselves, the broker finds a trucking company to haul the cargo. While doing so, the broker ensures that the trucking company will charge less than the shipping company is willing to pay. In this way, they make a profit. Also known as a load broker, transportation broker or truck broker, this professional is essentially a middleman in the freight and cargo business. Being a freight broker can be very lucrative. After completing the freight broker training and entering the industry, a competent freight broker can earn commissions ranging from 6 to 7 figures per deal! Some brokers even go all the way to 8 figures!
How do trucking brokers earn their money?
A freight broker earns between 10% and 35% profit for every shipment that they handle. When starting out, this can be $100 to $500 for every shipment. After gaining some experience and professional networks in the business, trucking brokers get to earn as much as $5,175 per shipment. Seeing as they perform 5 to 10 shipments per day, the total income can be astounding! The freight industry is constantly growing. Therefore, it is a great idea to learn how to become a freight broker with no experience.
Incentives for becoming a freight broker
There are a number of reasons why you should become a freight broker. They are:
- You do not require any experience so as to get started
- The cost of starting up is quite low
- The freight broker industry is currently worth $400 billion and is growing annually
- It is possible to work from home
Here is how to become a freight broker with no experience:
The first step to performing this job is to study. It is important to know how the freight industry works before you can begin to perform brokerage in it. You can learn by picking some books and gaining knowledge on how the enterprise operates. The freight broker training books can inform you about the characteristics of the freight industry, how to find shippers, carriers and agents. They also show you how to transport freight at a cost which is profitable for you as well as the carrier. Studying also helps you to stay compliant with federal laws and the strategies that you can use to operate your enterprise successfully. This step lasts for at least 3 weeks and costs between $0 and $3,000.
2. Pick out a company name and register your firm
Proceed to pick a name for your company. You can ensure its uniqueness by registering it at the US Patent and Trademark Office. As you do so, select the most appropriate type of entity for your business. In this step, it is highly recommended to register your business as a corporation (Inc.). The registration can be done at your local business license department. Having done so, proceed to get your Tax Identification Number from the Internal Revenue Service (IRS). This process can take up to a month to complete and cost you between $300 and $1,000.
3. Draft a business plan
Perform some market research. After that, create a business plan that incorporates all the information that you have found. Pick a market niche and adjust your marketing strategy to meet its needs. If you can, it is a great idea to hire a business consultant to assist you in drafting the business plan. This process can take an average of 1 month and cost between $0 and $1,000.
4. Identify appropriate trucking carriers
Your reputation as a freight broker depends on the quality of the services that you offer. Identify carriers that provide correct services for your niche and customer base. As you do so, make sure that they are reliable. For you to find partners that are trusted, scour through online repositories. Moreover, you can use your networking skills to gain a portfolio of trucking carriers. This is a continuous process that is always ongoing as you develop your career as a freight broker. It can cost between $0 and $300.
5. Make an application for a USDOT number and also attain your Broker Authority
For you to operate as a freight broker, you need a USDOT number. You can register for one through an OP- Form. The registration can be performed at the Motor Carrier Operating Authority. If your application is approved, the FMCSA will send your USDOT number to you. This process normally takes between 20 to 25 days at a cost of $300.
6. Attain a $75K Freight Broker Bond (BMC-84)
This specific bond shows your financial strength and sense of responsibility. The $75K Freight Broker Bond indicates that you can guarantee payment to trucking companies and shippers in case you fail to comply with contract agreements. This bond can be attained in 1 day at a cost of between $1,500 and $3,750. The BMC-84 requires annual renewal.
7. Invest in some Contingent Cargo Insurance and General Liability
Most shipping companies prefer to deal with professional brokers. To demonstrate professionalism, you need to invest in some insurance. This can be done by buying Contingent Cargo and General Liability Insurance. It provides ample protection for you as a broker. For you to gain these types of insurance, it is necessary to fill out and submit Form BMC-34 for loss and damage. You also need to fill and submit Form BMC-91 or BMC-91X for property damage, personal injury, and restoration of the environment. This process can take up to 2 weeks and cost between $700 and $1,400.
8. Identify some agents for Service of Progress
In each state that you choose to do some business in, it is necessary to identify some agents. This can be done by filling in and submitting a Form BOC-3 to FMCSA. The process can take 7 days and cost $0.00.
9. Invest in some equipment
For you to be a freight broker and work from home, you need some essential equipment. This includes a printer, computer, fax machine, and a photocopy machine. You also need a landline phone, a smartphone, office supplies, and a good Internet connection. For added efficiency, you can invest in some freight brokering software. Setting up your equipment can take up to 14 days and cost you between $6,000 and $22,000.
10. Pool some initial operating capital
As a freight broker, it is necessary to have some startup capital. This is because you need to pay the truckers for shipment delivered prior to receiving compensation from the shipping company. There are two main ways of going about this. You can begin by using your own cash reserves or by opening up a line of credit. The latter comes in handy as an emergency fund. This is a same day affair that costs between $5,000 and $250,000.
11. Market your freight brokerage business
This is the last step to becoming a freight broker with no experience. Set up your enterprise marketing strategy. After that, design a superb logo and some branding as well. Construct a website to show your expertise and portfolio of satisfied clients. Moreover, print out some marketing material and ensure that it has clear coherent wording. Distribute the marketing items and you will be in business! This step takes a minimum of 1 month and can cost between $500 and $1,500.