How To Start A Successful Haulage Business

By Ayoola Olaitan

Shippers Guide is the learning page of MMS Plus newspaper. Here you learn the 5Ws and most important ‘H’ on various aspects of shipping. This week, we will take you through a detailed process of how to start a haulage business. 

Enjoy it:

Haulage is the process of transporting goods from one location to another by road or rail with the use of a truck, train, tipper, trailer, van, lorry, bus, car motorcycle e.t.c. It is a business that involves the moving and hauling of commercial goods.

Tangible items such as furniture, farm products, home appliance, building materials, natural resources, crude oil, machines, equipment e.t.c. are the products. Simply, anything movable can be hauled.

In Nigeria, several businesses and individuals employ the service of haulage companies to move their items from production locations to consumers, showrooms, retailers, and distributors.

In other words, it has become one of the most effective ways of conveying goods from one destination to another. And this explains why it is a lucrative business area in Nigeria.

Create A Niche

Hauling business is a wide business area involving crude oil, building materials, food products, medical kits, gravel and stones, e.t.c. To operate effectively, there is a need to carve a niche for yourself. The niche you choose will determine the startup cost, vehicle specification, and type of clients.

In choosing a niche, some questions must be answered. Questions like, what kind of product do I want to transport (solid, liquid, or gas)? Who is my target audience? Do I want to engage the service of other drivers? Can I travel on a particular route? e.t.c. As soon as you can settle this, deciding on the transport system and mode of operation becomes easy.

Aside from transporting consumer goods, raw materials, and other natural resources, you can also engage in transporting for homes (helping them move from one home to another), small producing companies, and traders.

Also, you can venture into cement, granite, iron, imported goods, agricultural products, FMCG, home appliances, stationery, solid minerals e.t.c.

Once you can decide on a niche, you can then follow the steps we are going to highlight here to start your haulage business.

Business Plan

For every business you want to start, there is no substitute for a business plan. A business plan is the documentation of everything that validates the operation of the business. It includes the vision, mission, objectives, goal, financial plan, market research, and product, e.t.c

In creating a haulage business plan, you will need to list the total capital you need and conduct a financial analysis of everything required for the business. At this point, you will know if you can afford the cost of starting and running the business. Otherwise, with the business plan, you can pitch your business idea to financiers and investors. That’s one of the reasons a business plan is very important.

Register Your Business

When you think about starting a business in Nigeria, you should also consider registering your business. Business registrations are done with Corporate Affairs Commission (CAC). All you need is to choose a unique and catchy business name relating to the service you want to offer. Then, decide if you want to do a sole proprietor registration or a limited liability company and follow the due process.

However, I understand that doing a business registration can be a bit tasking especially if you do not know how it works, that is why companies like ReDahlia exist. ReDahlia can guide you through the process and make it happen in the shortest possible time.

Fulfill Regulatory Requirements

Aside from business registration, haulage businesses need to fulfill certain legal requirements like tax and insurance. Also, you will need to obtain licenses for the vehicles, drivers, and other permits that are required to operate the business.

More so, due to the bad road network, it is advisable to insure the vehicles for operation as soon as they are purchased to reduce the risk of loss in case of accident or theft. So, ensure to find out different insurance policies that can be done for the business.

Capital

Haulage business is capital intensive due to startup cost, running cost, and vehicle maintenance. Your star-up capital will determine the kind and number of vehicle you can afford. So, the capital will tell if you can afford a new truck or a fairly used truck.

If you don’t have the capital, you can look out for partners who are interested in the business and can finance it. Also, with your business plan, you can approach commercial banks, Microfinance banks, angel investors or friends and families for loans and support.

Just ensure the funds comes with a good interest rate and flexible payment plan so you don’t end up servicing the loan for donkey years.

Business Operation

Once the capital is settled, you will need to decide a mode of operation. The following three major areas are to be considered as a mode of operation in the haulage business. They are Independent, Contractor/Sub-Contractor and Leasing.

Independent Haulage Company

An Independent haulage company that solely operates and directs the affairs of itself. They employ drivers, source for customers and clients, carry out their services, e.t.c, and manage the entire affairs of hauling.

For instance, you can haul products for telecommunication companies, oil, and gas, fast-moving consumer goods companies, or any other kinds of clients you wish to serve. Here, you are responsible for everything that has to do with the daily management of the business.

However, this area can be a bit tough because you have to be credible to earn job contracts.

Contractor/Sub-contractor

Here, you will partner with a company that will be in charge of your trucks and drivers and pays you a percentage of the money made at a stipulated time.

As a contractor, as long as you set up your business properly, you can sit back and earn money at the end of the month while your truck do the job.

However, you might be subjected to certain terms and conditions by the company you are registering with.

Leasing Trucks To An Haulage Company

This involves leasing your truck to a company for hauling services. It requires handing over the truck and receiving a percentage of profit as agreed. It is similar to a contractor or subcontractor model just that you may be responsible for servicing your truck.

Depending on your financial capacity, you can decide on which one works best, or perhaps choose based on passion and your long term vision for the business.

Truck

Full business in hauling begins with the purchase of trucks, trailers, or heavy-duty transport vehicles.

You can consider buying a brand new trailer that cost about 10 to 20 million naira or a fairly used one at about 6-8 million naira. Aside from that, you can buy the parts differently and employ mechanics to refurbish it.

While buying trucks ensure it is maneuverable, easy to maintain, and does not consume too much fuel.

The Workforce

Hauling business needs a certain number of human resources to effectively operate. Therefore, you need to wisely recruit them as they may make or mar the business especially the drivers. Aside from truck drivers, you need marketing and administrative staff with excellent communication skills.

Remember, the overall success of your business is largely dependent on your kind of drivers. You can’t afford to hire terrible drivers who deal in illegal activities or abuse drugs. Their bad conduct can create disasters like accident and can jeopardize the business and the brand you are building if you make a wrong choice.

Source For Customers

Since you narrowed down to a niche, you can easily identify clients and understand their needs. For instance, if you intend hauling fast-moving consumer goods (FMCG), start by writing down a list of companies that produce consumer goods. Then, devise a strategy to reach out to them.

Be sure to present yourself well in a way that you can be perceived as credible and reliable. Once you get a contract, deliver on your promises. And finally, develop a strategy to retain existing clients and plans on how to get new ones.

Deliver Service

Owning to the number of hauling companies in Nigeria today, you sure have to stand out by delivering quality services. Ensure that customers’ goods are delivered on time as agreed.

Also, make sure the goods are delivered as packaged in good conditions without stories of missing items. If you fail once, you are likely going to damage your reputation.

Maintaining A Haulage Business Company

Like other businesses in Nigeria, there are downsides and risks. For the truck business, your challenge can be bad road network, dishonest drivers, lack of truck maintenance, e.t.c

For the truck, find out the engine capacity in line with the weight of the goods it can carry. It is advisable to stick to a certain number of goods and containers so you don’t outweigh the flatbed of your truck and reduce the lifespan.

Also, in case the vehicle breaks down, get professional mechanics who can properly maintain the vehicles. If you treat your truck like a business, you will ensure it is properly maintained. Most businesses have a poor maintenance culture which finally translates to penny-wise pound foolish.

Although bad roads can cause unnecessary wear and tear to the truck, a good driver will know how to handle the truck and make the damage minimal.

In addition, create a unique logo that conveys the brand message. Several people tend to remember a company with a unique logo. Also, build an online profile by creating a website and social media pages. All of these platforms must exclusively talk about your hauling company and service offering.

Additionally, you can invest in billboards, radio and television advertising. Give your clients a good experience and they will be foot soldiers, evangelising your service.

Conclusion

The haulage business is a capital intensive and risky business, but the reward is worth the work. To succeed, you have to structure the business, deliver quality service, and employ a good management strategy.