Starting a freight brokerage is a great way to get into the transportation industry. It can be a lucrative business, but it’s important to understand the step-by-step process for how to start a freight brokerage before you get started.
Here are the 10 steps you can take to get started on building your very own freight brokerage business.
10 Steps to Launching a New Freight Brokerage Business
1. Choose Your Type of Freight Brokerage Business
The first step in launching a freight brokerage business is to identify the type of freight brokerage business you want to launch. You might choose from the following types among others:
- Traditional freight broker: You will act as the middleman between a shipper and a carrier, helping to negotiate rates and coordinate transportation logistics.
- Freight forwarder: You will provide full-service shipping solutions for your clients, handling all aspects of their shipments from start to finish.
- Customized freight broker: You will specialize in a certain type of freight or shipping lane and build your business around that.
Learn more about the types of freight brokerage businesses.
2. Name Your Freight Brokerage Business
Give your freight brokerage business an identity so people will think of it as a well-known and respected brand. You can take the name of your freight brokerage business from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your freight brokerage business is to make it sound appealing and trustworthy so that clients will want to use your services.
3. Determine Your Freight Brokerage Business Model
There are several possible types of business models for a freight brokerage business including:
- Transaction-based: You will earn a commission on each shipment that you coordinate.
- Service-based: You will charge a flat fee for the shipping services you provide.
- Retainer-based: You will agree to a monthly or annual contract with your clients that offers shipping services at a discounted rate.
- Volume-based: You will negotiate rates with carriers based on the volume of shipments you coordinate for them.
You can also choose to combine multiple business models to create a custom solution for your clients.
No matter which model you choose, make sure that it aligns with your business goals and the services you offer.
4. Choose a Legal Form for Your Business
By incorporating your freight brokerage business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your freight brokerage business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common freight brokerage business structures.
5. Write a Freight Brokerage Business Plan
All freight brokerage business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
Read our article about how to write a freight brokerage business plan.
6. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your freight brokerage business.
For example, if you will be operating as a sole proprietor, you may need to obtain a business license from your local government. If you are incorporating your business, you will need to file the appropriate paperwork with your Secretary of State office.
You must also register your freight brokerage business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.
Read our article about obtaining the proper freight brokerage business licenses.
7. Determine Your Budget & Apply for Funding as Needed
In developing your freight brokerage business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your freight brokerage business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your freight brokerage business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about the costs associated with starting a freight brokerage business to help you determine if funding is needed.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your freight brokerage business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in a customer relationship management (CRM) system, which will help you keep track of your customers and prospects. A CRM system can automate many of the tasks associated with customer management, including sales, marketing, and customer service.
Read our article about the technology and software you need to run a freight brokerage business.
9. Market Your Freight Brokerage Business to Potential Clients
Before you start selling your services, you have to let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the freight brokerage industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Freight brokerage businesses should consider the following promotional strategies for which you should start getting prepared:
- Traditional advertising (print, radio, TV)
- Publicity and PR
- Content marketing (including blog posts, infographics, e-books)
- Search engine optimization (SEO)
- Social media marketing (Facebook, Twitter, LinkedIn)
- Email marketing
- Direct mail
- Networking
- Referral marketing
- Joint ventures and partnerships
Read our article about how to market your freight brokerage business for more tips.
10. Get New Clients & Grow Your Business
When you promote your services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your freight brokerage business.
Read our article about how to effectively grow your freight brokerage business to learn more.
Starting a Freight Brokerage Business FAQs
Why Start a Freight Brokerage Business?
There are many reasons to start a freight brokerage business. First, it’s a great way to be your own boss and build something from the ground up. Second, there’s a lot of potential for growth in this industry. Third, you can make a good living as a freight broker. And fourth, it’s a relatively easy business to start.
What is Needed to Start a Successful Freight Brokerage Business?
If you want to start a successful freight brokerage business, you need to have a strong understanding of the industry. You also need to be good at sales and marketing, and you need to have the right technology in place. Additionally, it’s important to build a strong team of employees and partners.
How Can I Start a Freight Brokerage Business From Home?
If you want to start a freight brokerage business from home, the first thing you need to do is make sure you have the right technology in place. You also need to have a dedicated workspace and be organized. Additionally, you need to set up systems for things like accounting and customer management.
How Can I Start a Freight Brokerage Business Online?
If you want to start a freight brokerage business online, the first thing you need to do is create a website. Your website should include information about your services and how they benefit potential customers. Additionally, your website should be optimized for search engines and include a blog.
Then, add plug-ins that allow clients to book services online.
What are Some Tips for Starting a Freight Brokerage Business?
Some tips for starting a freight brokerage business include:
- Research the market.
- Create a business plan.
- Build a great team.
- Invest in the right technology.
- Focus on marketing and sales.
- Always be learning.
- Stay organized and efficient.
Where Can I Find a Simple Checklist for Starting a Freight Brokerage Business?
A simple checklist to use when starting a freight brokerage business is as follows:
- Choose Your Type of Freight Brokerage Firm: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your Freight Brokerage Business: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your Freight Brokerage Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Freight Brokerage Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Freight Brokerage Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services.
Summary
Starting a freight brokerage business requires the right tools and advice. Then, it can be an incredibly successful endeavor. We have provided a simple checklist to help you get started, as well as tips for success. With these things in mind, you are sure to be successful.