New Broker Problem...Please help!

How many posts have you seen where a broker tells his business numbers? I haven't seen one. However, I have reverse engineered numbers on big moves where we all knew what it paid and we all knew how many loads were moving. I figured this one broker grossed over $50000 that week. Just one week! I also know for a fact he works out of his home office.

I just want to hear some numbers on the small broker business, or just from the one man agents working for carriers like Landstar, for example.

Is it too obscene to speak out about? The truckers on here aren't afraid to open up. Why shouldn't these poor, overworked, and abused brokers not open up?

 

At the risk of being called a defender of the brokers or whatever I find this difficult to believe. Of course there may be some brokers who play the game really well and can manage numbers like that but it seems illogical to paint with such a broad brush. This business, every business, is competitive. Numbers like that attract competition and bring prices down. Brokers have the same pressures transport companies do.

 

Just a heads up. I started a new thread on this in the broker section. Hopefully a few brokers will be interested in the broker income survey. I promise not to hate on them in that thread. This is a real question I'm wanting answered. I think it could change a few perceptions among drivers and brokers if were as widely known as driver income is known.

I still believe driver's not sticking together and fighting for drivers is the biggest problem. Who expects to join a team and be cut down by their own players more than the oppossing team? It's crazy.

 

I don't understand this"join a team, stick together" mentality. Unless you are driving for me, you are my direct competition.

 

The gross was $7300, the agent got 7% which is $511 on each load, there were a little over 100 loads. That equals $51100 on 100 loads for the week it took to get the loads moved.

Does it happen every week like this? Probably not, but still not hard to see doing over $10000 in gross revenue to the agents office in a typical week. The skys the limit, and very little overhead or risk like the truck owners have for their $5400 cut, with a lot more risk and overhead than a home office.

 

All you did was reverse a single situation with very little details. If it was me on my own, I wouldn't have touched it for anything less than 20% margin. Not because I'm greedy but because the risk of going out on the limb on $700K is just too high.

If the broker was an agent, then I am sure that he was still at risk for some of this by only getting 7% margin and at that they would have only seen half of that 7%.

Since you are good at reversing numbers then you need to go look at the public documents of publicly traded companies. You will see that 15% is a good quarter. And when you look at profits it is less than 5%. And these are large companies that get economies of scale.

Very small brokers that are moving less than 20 loads a week may be able to beat the overhead of a large broker as compared to revenue (working from their home, doing billing and collection themselves, having capital to not factor, etc.). But as a broker grows they lose that advantage. 5 loads a day per person is being busy. And once you get to several people in the office you are looking at someone to do the books.

So let's look at the typical numbers of a 5 person office (4 brokers and 1 admin). If they can cover 5 loads a day per headcount that is 25 loads a week.

At $1,000 per load average (it is likely lower than that but we are running budget numbers) that is $25k per week.

15% margin (high side) and that works out to $3750 a week. That is $750 per head for the week to cover all the overhead.

Now, the number of loads per head is pretty standard. As you get larger you can push that up a bit to get better returns. But in reality the only ways you have to make money in this buinsess is to increase the revenue you get per load. That happens by getting a better margin and/or getting bigger loads.

So even if you double that to $50k at 15% I still don't like the risk/return numbers for being a staight broker.

And as far as your example goes, it is likely with a project of that size that they moved 15-20% of those loads at a loss or break-even. That is sucking up a lot of capacity in a short period of time. Pleanty of smart O/O's like Rollin Coal that will sit back and make them pay.

The idea of using a single project to gauge what happens in a typical brokerage would be like me presenting Rollin's numbers to prospective O/O's. It tells you absolutely nothing other than what is happening with that person or company.

 

Wouldn't 5 loads per day x 4 brokers x 5 days a week be 100 loads a week? Personally, I don't think there is any chance in hell that a new brokerage would ever cover 5 loads per broker per day but I'm just asking. I think you need lots of contacts and repeat customers and a proven reputation for that.

 

Pretty easy for one person to cover 40-50 loads a week with repeat business.(not likely starting out)Point is to have the loads covered before getting them. After a while they pretty much take care of themselves. Always have a few that take more work.

 

You are correct. Been a long day.

At that you are at $3000 per week revenue that you have per head. If you are an agent, 40% of that goes to the company. So you have $1,800 per head to cover all expenses. So if you pay a top broker 20% of the top line margin that leaves $1,050 per broker ($4,400 per week) to cover admin, office, internet, insurance, phones. (this assumes the owner of the agency is admin or broker)

And the broker is getting an income of less than $40k per year.

And I agree 100%. It takes a lot to book 5 loads a day. And it takes even more to get 15% margin even when you have great freight. The competition is tough.

 

I believe that it is easier to cover and get loads if you have a carrier behind you. Accounts that are willing to work with straight brokers typically have no loyalty and will jump based on rate.

8-10 loads a day? I am sure that some can do it but that is so far over the norm in this industry. When I have seen brokers that do that volume they typically have admin doing billing, rate cons, updates - pulling the loads-to-headcount ratio down.

But I will say that in December we did over 10 loads per head but when you make 1 call and book 10 loads that skews the numbers. And thank God every month is not like this last December.