How to Start Your Freight Brokerage Company
Becoming a freight broker does not require a lengthy college degree, extensive training or a big financial investment. It does, however, require that you are strongly self-motivated. What you earn as a freight broker and your success in getting and keeping clients is highly dependent on the effort you put into the job, even more so if you plan to start your own company.
There are essentially two ways to work as a freight broker: join an existing company, big or small, and work as a contractor or employee or start your own brokerage. With your own company you can either work alone as the sole broker or you can expand the business and hire others. If your plans are to go it alone, here are some steps you should take to start and operate a successful freight brokerage:
- Learn about freight brokering. Your first step should be to learn more about what a freight broker actually does. While a degree or even a formal education isn’t necessary, you’ll be off to a much better start if you get some type of education. Do your research and read up about freight brokering or look into a short online or local training program for learning how to do this job.
- Get your freight broker license. The U.S. Department of Transportation requires that freight brokers are licensed through the Federal Motor Carrier Safety Administration. You don’t have to have any kind of degree or diploma to get licensed; simply apply, pay the $300 fee and purchase a surety bond. Expect it to take a few weeks before you actually have your license.
- Get bonded and insured. Liability insurance and surety bonds are essential for protecting your assets in this industry. Moving goods can be unpredictable, and even for the best freight brokers, things can go wrong. You must have a $75,000 surety bond, which ensures you can cover any amounts you owe clients when contracts are not completed. Liability insurance is not required but can protect you in the event of unforeseen issues that cost money.
- Register your business. Decide what type of business structure you want for your company, such as a sole proprietorship or a limited liability company. Your state government should provide the options and applications for registering.
- Set up an office. With all of the above details covered, you’re ready to actually set up and start working in an office. If you’re starting out small as a single-member business, all you need is a home office. Be sure you have designated space where you can concentrate and be free from distractions. You’ll need a computer with internet access and a phone at least, but a fax machine may also be useful in working with some clients.
- Keep careful records. Now you’re ready to start working, and as you do business, be sure to stay organized and keep records of everything. Each transaction should be recorded, including the contracts, invoices, the lists of goods shipped, called a bill of lading, and information on the shippers and carriers involved. Set up a system for billing and receiving payments so no transactions get lost and you get paid for every job.
- Develop relationships with shippers and carriers. The heart of the business of freight brokering is connecting carriers and shippers. Your first steps in this job will be to contact and establish relationships with the companies who will rely on your services—the shippers—and those that you will provide with work—the carriers. Take time early on to connect with these companies so that you will have clients and carriers you can rely on for future business.
- Consider hiring agents or other brokers. As you get busier with transactions and clients, you may want to think about hiring employees. You can hire other brokers or you can hire freight agents. Know that for the latter you will be liable for their work as they are not licensed freight brokers. Hiring others to work for you can help you grow the business, but it is also a bigger responsibility, so weigh the pros and cons first.
Starting a freight brokerage company is an exciting career step. This is a fast-paced career, partly because your earnings are determined by your own efforts. You truly earn what you put into this career. Take your time building your company and learning so that you can be successful for the long run.
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