Brokering school

First step after getting your own authority is getting direct business. Then if you have more business than you can haul, you can add broker authority to your carrier authority. Or create seperate brokarage business for liability reasons.

Having freight that you can broker is first about selling and second about brokering. Without the clients you have nothing to broker.

The pitch that some of the brokering schools make to O/O's is they will teach you how to find direct freight so that you can cut the broker out and make more per mile. It takes time pounding the pavement to do this and not much more to it than walking in a door or picking up a phone and saying "Hi, I'm Jolly Joker and I was wondering who in your office coordinates shipping. I have a super duper, better than most, dry van..."

Most don't do this because it is a grind. But get just a couple accounts and you can grow and prosper.

 

Thats the best way to put it

 

The thing you may be missing is she would need her own direct customers to be successful as a broker. Same as you need your own customers as an owner/operator to make more profit.

Putting her in business just gives you one more person taking from your money. Technically you can't double broker a load and doing so would decrease your gross revenue.

What were you hoping to gain this way? Maybe just pay her to find your direct loads.

 

Brokerage schools are a joke. One truck operation is best to make good with few brokers and run with them. To go direct only to make an extra 100-200 bucks is not worth the headache. Atleast with a broker you have a bond to file on, with a shipper...NADA. I ran my own brokerage and made good money till a big customer left me in a whole after filing bankruptcy. There is a middle guy and most of us dont like it, but if one understands this industry-middle guy is good to have.

 

David Dwinell out of Sun City, AZ (you can google him) has a small brokerage training office and is a wealth of information. However, as an owner operator, you want to send your Mom or Wife to learn the business/industry and the thought process of the broker to then use to your advantage in negotiating and choosing freight and brokers to work with. So, in other words, put your Mom to work as your DISPATCHER to aide you in being a successful owner operator. David pushes $1/mile freight mentality which completely turned me off of being a broker agent seeing as how my husband drives and I do not want to be part of lowballing hard working carriers. I went back in Nov 2002 as my experience was strictly with local heavy hauling and I knew nothing about over the road or brokered freight and my husbands then 18 years of driving was Chicagoland area local deliveries home every night. We purchased a truck and trailer, got our own authority/credentials/insurance etc. and put the truck on the road on 7/29/03 after also taking some local Community College courses in entrepreneurship and have had roughly 12-15 months down over the course of 8 years (6+ months alone when the economy bottomed out 10/08-4/15/09). We have since booked $1,309,000 in brokered freight without ever taking a quick pay or getting stiffed on a load YET. There have been some close calls no doubt. But if your Mom has business experience and you have good driving experience, it is a win/win situation. I work from my home office. We currently operate at 38% Net/Net meaning after ALL taxes and we are incorporated. It takes a lot of hard work and dedication and constant number crunching to be successful but it can be done. I could definitely be a broker agent and have been asked by a few but we are comfortable and do not "need" to do both. I hope this helps you and that I didn't go "off topic" too much. All the best!!

Oh and as usual BigBadBill was absolutely correct in his post.

 

'Broker Schools' are a joke. You don't need a school to learn the bad habits of the brokers. You need an understanding of booking loads, where to find them, etc, and those schools aren't going to teach that much of how to really find the loads or how to operate in a way that is going to treat the drivers well and get the best paying loads possible. The key is good working relationships and good customer service. That can't be taught in a school anyway. Either you have that naturally or you don't.

 

Bonds are almost worthless. Even a small broker can book $10k of loads in a day. Credit checks by a service or factoring company on a regular basis is the best way to protect yourself.

I think you would be the first Independent O/O that looks at direct business as being a headache. I would say "getting direct business" hits the top 5 list on "How to make it as an O/O".

What I will add to Lilbit on what I have seen from broker schools. They don't just teach bad habits. They encourage and promot unethical behavior. A broker can provide a valuable service. But many of these schools are teaching to sell that they provide that value and then how to turn around and book loads based on getting the best rate PERIOD with not consideration to what they sold the shipper.

 

LIlbit Can we hear about your successes as a broker / broker agent / owner operator? You sound like a wealth of knowledge and must be very, very successful in this industry. How many trucks do you own?

 

Your mother could learn more by going to work for one of the major brokerage firms or an agent for one of the big carriers who have their own agents. Some broker schools charge thousands of dollars. She can learn a lot about how brokers work if she acted as your dispatcher. A broker is a salesman. If she has sales experience and is a good people person then she might do well.

One other thing you should consider is the cost of setting up your brokerage business. Right now brokers are required to post a $10,000 performance or surety bond. It will cost you $1,000 or 10% each year for the bond unless you want to post the entire amount yourself. You may also be required to put up $10,000 in collateral to secure the bond. There is a push on to increase the broker bond to $100,000. That means that you will need to pay $10,000/year to maintain the bond and may also be required to have $100,000 committed to the bonding company to secure the bond. Some feel that it is necessary to get rid of some of the scumbags, but I see it as a way to get rid of the smaller brokers and to limit competition. Personally, I would like to see the bonds eliminated all together. All a bond does is give some carriers a false sense of security. All a carrier needs to do is check credit of any broker with whom they do business.

If you primarily want to get broker authority to make more with your single truck, I don't think that it would be worth it. Broker authority costs $300 and you must have the bond in place before it will be approved. You may also need to have money available to pay carriers whether you have been paid or not. Their contract will be with your or your mother. Your contract will be with the shipper. Whether or not you have been paid does not affect your obligation to pay the carrier, as agreed.