How Much Does It Cost To Start A Freight Broker Business?

okay so you've been doing your research on freight broker and then you decided hey this is something that really marries up well that my skillset it's something that I can see myself doing and enjoying so I'm really looking at going into this thing and giving it everything that I got and usually the very next question that we have is how much is it gonna cost me we always want to know what is gonna cost us to get involved in something and really what the real question is here is what investment are you gonna have to make in order for you to get a printer up or business started because I say investment but because you're investing money into your freight broker business in order to course to produce a return on your investment so we're gonna talk about that today we're gonna go in and we're gonna show you exactly what it's gonna cost you or and this should give you a very good idea of what it's gonna cost you to start a freight broker business from scratch and I'm also gonna show you some things that are required that you must have as a freight broker and what those prices are we're gonna show some things that are optional and then we're also going to show you some things that we haven't placed in our business that we didn't start out with but as we've progressed things have changed and we've made upgrades to our business okay so those are the things that we're gonna dive into here very shortly so come with me as we go in and we take a look at what it's gonna cost you to start a freight broker business first we're gonna start off with some administrative costs and take a look at you know how does cost look and what exactly they are so number one we know that we have to set up a business in order for us to be able to do business with our customers we have to go ahead and set up a business entity so you'll be setting up an LLC sole proprietorship or what have you just depending on what you know what way you decide to go when it comes down to which entity you're gonna use for your business we use an LLC and the LLC is gonna cost you between three and five hundred dollars that's a one-time payment okay with us it cost us about four hundred dollars sold right out of the gate you're looking between three and five hundred dollars to get started with your LLC or to go ahead and start your LLC alright next up after you've set your LLC up you're gonna get a motor carrier Authority motor carrier authority allows for you to have the right the authority to be able to broker there's one count of authority that's a trucking Authority there's a different type of authority for a broker and that's called a property broker Authority that's gonna cost you $300 one-time payment one-time payment of $300 for your motor carrier Authority okay now you have your motor carrier Authority and in order for that motor carrier authority to go active you have to have what's called a surety bond this is a bond that all freight brokers have to have now I've seen this bond usually between 1,500 and 3,000 dollars when I first got started at least and now I've seen those numbers cut back to back to about 900 to 2250 it's what I'm seeing my students get now you know I get I have a rate of $1,500 and I'm looking to upgrade that bond this year probably with the T ia and even get a better bond with a better price so it's not just about cost we want to make sure that we have a you know a solid reputable bond but we should be in the neighborhood of nine hundred to two thousand dollars depending on your credit you know as you if you have you know great credit then of course that price should be closer to the nine hundred dollar range if you're what credit is not so good and it's gonna be higher when I first started my rate was three thousand dollars and I had excellent credit but I didn't know I didn't know to negotiate so I just took the price and that's the practice they gave me so you want to look between nine hundred and twenty to fifty is what I'm seeing out there for surety bonds now okay next up is the UCR registration all freight brokers and carriers have to register with the unified carrier registration service we have to go ahead and do a UCR registration every single year that registration is going to cost you about 60 to 80 bucks annually so that's an annual charge something that you can look for every year that you have to pay but it's only about sixty bucks depending on where you are what state you're in okay now that we've taken a look at those administrative costs now let's have let's switch gears a little bit and go down and take a look at the hardware what it's gonna cost us for our hardware and I say hardware I'm talking about computer okay next up the type of computer I use as a Dell XPS it has an i5 processor on it and it has eight gigabytes of hard drive it's more than sufficient for me you know it's not a very expensive computer if you have something with me or I 5 processor 8 gigabytes of hard drive you'll be just fine now remember always do backups because when you don't do backups you end up like I did and I lost everything and I didn't have a backup and I had to start from scratch I was able to you know there's saved some of my information but I lost a lot of it so make sure you're doing backups but you know Dell XPS something with an i5 processor 8 gigabytes of hard drive would be you know a great place to start now I'm not saying that you should go out and get a deal whatever type of computer that satisfies you then go out and get that computer but just look at the specifications i5 8 gigs and then you can look at that and say ok that's probably about what I'll need to get started probably can get away with less than that and that computer cost me about 600 bucks ok next up i use 2 monitors with my setup and of course there are Dell monitors their 22 inch and they're called p2 to 1 for H as in Hotel p2 to one for HSN hotel they're about 150 bucks apiece again those are 22 inch monitors the Adel and they're called p2 2 to 1 for hotel ok now you're also gonna need a printer you're going to need a solid printer there's a lot of printing that you have to do when you are moving loads and you're moving loads and having to get out rate confirmations and rate quotes and getting all your paperwork over to your freight factoring company if you have to use a factoring company or getting your invoices out to your customer there's a lot of printing that you're gonna do I found that you know brothers MFC 9 and 1:30 CW color printer for me scanner fax come combination has been an excellent excellent choice it's a very very good printer and I cannot say enough about how happy I am with that printer so you know I really like the brothers MFC 91/30 I don't think you can go wrong with a brother's printer myself ok now that we've taken a look at some hardware now I'm gonna take a look at some software costs and see what it's gonna cost to manage our business from a software perspective ok we Oh our going to need at some point a transportation management system some people say hey I don't need a TMS system I can get away with you know writing it down on notes or what-have-you but I disagree with that way of approaching it I think that you should definitely have a TMS system you know a TMS system to me keeps you organized keep all your loads in one place and when you have to provide information or you know send a rate quote send a rate confirmation you can do that at the click of a button so I really enjoy the TMS system you're gonna you know have a difference of prices when it comes down to TMS systems you can go from $50 I put 100 dollars here but I've seen TMS has go all the way up to $700 so it just depends on what type of tip system you're getting now I very much think that you should start out with a very basic system there's one called low pilot and it's gonna cost you about 50 bucks a month but you should be between 50 and 100 bucks a month what you start out with on your TMS my TMS currently cost about 225 bucks a month I'm using a different type system my test system is called afraid solutions I've been using that system now for about 2 and a half years I can do a lot more than I can do with you know my startup system but that startup system is more than you know sufficient for you to get started with I don't think that you should go out and get very expensive systems to get started because you know it's not about the system it's about moving Freight you just put Freight in the system and you know of course when it's time to upgrade the system you can but start out with an affordable system 50 to $100 a month ok next up is the low board we're gonna need a low board if you're gonna be broker and Freight if you're gonna go out and you know start giving prices to shippers you're gonna need somewhere to start afraid our low board is gonna give you a starting place when he comes down to you know getting your your lowest priced you can start off with you know dat or truck stop both of those are you know two of the largest you know low boards in our industry either either or is a great low board to start off with I personally started off a truck stop and now Loeb or cost me a hundred and twenty dollars a month with that rate make tool you know it to me it's very necessary to get the rate make tool because it's going to allow for you to see the rates you know what rates are in certain lanes and any lane that you put in you'll be able to see what those rates are so it'll give you a starting place when it comes down to developing or creating your rate that you're gonna take to your shipper now low boards gonna go from fifty to five hundred dollars I've seen and it just depends on you know what type you know all there are different things that you want to put into your load board but you're gonna be more than sufficient again with about one hundred and twenty dollar low board I wouldn't go in and start getting a whole lot of add-ons until you get your business established because the whole idea is to keep down the cost and then you know as you start to make money and your business becomes more established you can add on on different things but I would say go with what is needed to start out okay an accounting tool this is definitely an e you know in my opinion you're gonna need a way of accounting for all of the money that comes into and goes out of your business I think QuickBooks is a great great accounting tool I've been using it now for about four years and there's a definitely a learning curve you want to go in and play with it and learn how it works learn how to do simple tasks like recons and things such as that but it's a very very good system it'll definitely keep you organized when it comes down to your your finances and that's gonna cost you about forty dollars a month okay now let's let's look at some things that we're gonna need as far as communication is concerned okay first up we have a website and yes you hear some people say that the website is you know one of those items that's optional you don't have to have a website to start and you know I don't look at that the same I think it's you know a very good idea to start with a website because you're setting up your company like a company is supposed to be set up and when you look out there and you look at different companies all legitimate companies are at least most of them have website you know so you know it definitely when it comes down to the freight broker world so you want to have a website you want to have a presence and I don't mean go out and spend a whole lot of money on the website I mean a website that's gonna establish a presence who you are what you do and you know what your contact information is so you don't need a very elaborate website to get started but a very basic website to give you a presence so that when someone goes in and put you know put your business in or put your website in what comes up is a representation of you this is my business so I highly suggest starting off with a website and it's gonna cost you between 250 and 500 dollars again of course websites can cost you thousands and thousands of dollars but we're talking a basic website that just gives you a presence between 250 and 500 dollars I wouldn't spend much more than that okay high-speed Internet high-speed Internet is gonna cost you about a hundred bucks very very important you don't want a system that is you know delaying and very slow because you know when you're looking for rates and trying to get rate information and things such as that you want that information to come up fast so you can get it back to your customer in a timely manner now I'm not saying that you're in a race but you want to do things in a timely manner and high-speed Internet is a very very key piece to your business definitely want some good solid internet so that you can you know do your job as efficiently as possible so get you some solid high-speed Internet and it's gonna usually cost you about 100 bucks okay next up we have this telephone system I use a system called RingCentral and it is actually voice over IP now I could just use my cell phone but I like the idea of having a landline so to speak and really is not a landline it's voice over Internet but it gives me a second option for my phone and I like having that second option now is it required no you can definitely you know say hey I'm just gonna use my cell phone for now and then once I start making some money then I can go ahead and put in a voice over IP line or or landline if that's what you want to do but it's gonna usually cost about 100 bucks okay now we're gonna look at some optional things some things that are optional you're not going to have to have these items but you might be something that you want to look at now there's something called credit builder because when you first come into the business as a new freight broker you have to build your credit it does not build itself so there's a company called trans credit you can go in and start building your credit profile with trans credit and they are going to help you to establish your business credit it cost me when I first started 250 dollars annually and it was very very good for for my business it helped me to establish credit and get a credit rating established much quicker than it would have I did not have you know that service so it's definitely something that you want to think about not something you have to have but you may want to give it some thought considering you know the benefit that it can bring to your business all right contingent cargo insurance you often hear a lot about you know contingent cargo insurance out there is it required is it not required the FMCSA does not require you to have contingent cargo insurance as a broker I highly suggest that you take a look at it and consider getting contingent cargo insurance because most shippers are gonna require that you have contingent cargo insurance when I first started my business my contingent cargo insurance was about a hundred and thirty dollars per month that's a basic you know plan and I would suggest that you get a basic plan when you get started talk with your you know your insurance provider you know tell them about your business so that they can you know move you toward or guide you toward the right insurance setup for your business that usually is gonna cost between 100 and 400 dollars again I started out with one hundred and thirty dollars now my insurance is about four hundred dollars a month but it's because I'm working with different customers that require different endorsements on my insurance so as you you know get a you know a bigger customer base some customers that are bigger customers they're gonna require that you have additional insurance and if you want to work with them you'll have to go ahead and increase your insurance and get those the necessary endorsements in order to do business with them but usually between 100 and 400 dollars is what you're gonna see first year and a half almost two years as a matter of fact my business was doing one hundred and thirty dollars per month you know in contingent cargo insurance that's what we were paying 130 dollars per month for CCI now 400 so as you progress you know your costs are going to increase you're gonna get different TMS systems as you progress you're gonna do things you know you might given an additional add-on on your low board you might get you know different things that you're able to do and see are gonna cost different prices so a factoring company this again is optional you don't have to have a factoring company factoring company is going to allow for you to you know basically have all your receivables paid for without you having to be concerned about paying for them out of your pocket the factoring company come in and does that and and you are going to pay a fee in order for them to do that and that fee is usually about 5% on every single invoice that's gonna be a little costly when you first get started but it will give you the comfort of knowing that you can move loads without having to worry about how you're gonna pay them but it's gonna cost you about 5% per invoice again this is optional you can factor your own invoices through your own money if you have that type of money lying around or you can use a factoring company like 95 percent of the people do like me and I did it as well when I got started I use a factoring company okay next up we're going to talk about the freight broker training program now this is an optional thing here you don't have to have a freight broker training program in order to start a freight broker business the FMCSA does not say that you have to have a freight broker training it says that you have to have a motor carrier thority a surety bond to get started okay but at the same time the freight broker training is gonna give you to know how right now you don't know how to be a freight broker and a train and it's gonna give you that know-how that you need to be effective as a freight broker to be able to make money as a freight broker a training is definitely something that could be a very very big benefit to you now those trainings are usually going to start out about $100 and go all the way up to $5,000 when you look at a price is not based on price you know to say okay because of training costs $4,000 it is just the training you know it's just a training it cost $4,000 so when you're looking at a train and again find somebody out there you can trust and you can identify with and then when you can see that person doing what it is that you're interested in doing then you have a confidence more than likely that that person can teach you how to do it but if that person is not doing it then you may be a little bit hard to see how they're gonna teach you how to build something that they haven't built themselves so freight broker training between one hundred and five thousand dollars is again optional how I suggested now let's look at the total cost that we've just gone over and see what exactly is it gonna cost us to get started here so we've taken a look at the website we San that's gonna cost us we're just topping it out at 500 bucks we start said 250 to 500 we're gonna top out at $500 LLC cost about 400 bucks to get the LLC set up motor carrier thority and again with LLC you know to get your LLC started you're gonna have different prices for different states for about $400 you can look at to be somewhere in the neighborhood of that number Motor Carrier thority about 300 bucks sure Devine $2,000 we just estimated at that number based on what we've been seeing with our students and the prices that they've been getting lately to start between 900 and 2250 so we're gonna start at $2,000 and again that's an annual charge that's not a monthly charge you're surety bond is a $2,000 you know I'm estimating $2,000 remember we said between 900 and 2250 could even go up to $3,000 a year but it's a per year charge and we're gonna show you how that breaks out per month we're gonna estimate it at $2,000 for a surety bond of course if again this is gonna be dependent on you what your surety bond is gonna cost you okay you see our registration as we talked about already between $60 and $80 a computer setup is gonna cost you a thousand bucks printer 350 bucks TMS about $50 you know they start off that's your first month payment of $50 with low pilot and then we also have your low board the first month of your low board is gonna be 120 bucks to get started so we look at those cost we'll take a look at what that total cost come to here shortly but monthly costs for your TMS is gonna break out the $50 a month low board cost is gonna be about 120 dollars a month quickbooks $40 a month internet $100 telephone $100 we're saying your bond times 12 months we're breaking that down $2,000 a year times 12 months about 166 dollars a month but most people are gonna pay their bare bond every quarter or semi-annually or annually usually you don't pay a bond every month so just think about that when you're looking at what your costs are gonna be I'll just break it down into what it's gonna cost per month so I can get an idea of what my business is paying out per month come on this of course here is contingent cargo insurance times 12 months 130 dollars per month so when we add up all of these costs for a monthly charge cost it's gonna cost us 706 dollars per month so about 700 bucks a month for our totaling total monthly cost when we added these up and came up with 47 80 we just added all of everything that we have here and came up with a total cost but when when you take a look at this if you already have a computer if you already have a printer that's $1300 1350 that comes off of this price all right you know so some of this stuff you may already have when it comes down to your computer don't go out and buy a new computer if you already have a computer even if you have a laptop you know if you have a solid laptop and you don't have you know a whole lot of information on it already then that laptop could be something that you used to get started with so you're talking about less than four thousand dollars to get started in your freight broker business and then when you look at a monthly cost we're talking about seven hundred bucks a month so now when you look at that cost less than four thousand dollars to get started in your own business and then less than $700 a month of operational cost then all you got to do is go out and make a thousand dollars a month and you're winning you're you're you're on the up side of your business now it's gonna take some time for you to get to that point but it's not something that you're gonna have to eat a whole lot of cost up front and then work a long time to make that money back it's a very minimal investment upfront and when you start working in your business when you start making money you don't have to make loads and loads of money until you break even you know so it's it's a very very good business very good business model in my opinion because of the fact that it does not cost a whole lot at all to get started especially when you compare it to other businesses okay those optional costs that we talked about earlier 250 for your credit builder 1,200 to 1,800 dollars per year for your contingent cargo insurance and your list purchase some people like to purchase lists and I get it I purchased a list when I first got started but I found that I really didn't need a list at all them when I talk about a list I mean a shippers list you know basically all it is gonna be as a lead sheet and you go down that lead sheet and you can call shippers from that lead sheet but you can find those shippers on Google as well without paying $500 so you don't have to pay that amount now there's 1,200 to $1,800 contingent cargo insurance if you look back here I've already included that in the monthly cost here cci times 12 130 bucks per month so we've accounted for that in the costs already okay so that's what we wanted to share with you we wanted to give you a very good idea of what it was gonna cost you to start a freight broker business and as you as you can see it doesn't cost a whole lot of money to get started in this business what this business is gonna cost you is time it's gonna be a time commitment it's gonna be something that you have to dedicate and commit yourself to building and starting out small and growing it as big as you want to grow it I certainly hope this has been helpful if you found this to be helpful please share this with your network like the video if you've if you like it now I certainly don't want you to like the video if you don't like it I certainly don't want you to share it if you don't like it but if you do like it give us a like give us a share we certainly would appreciate that we try and make sure that we come with valuable information that you can use and hopefully it is going to be the information that helps you move your business to the next level so with that said see you at the top because the bottom is much too crowded [Music]

Channel: Brandon Scott

Views: 296,714

Rating: 4.9599419 out of 5

Keywords: freight broker, freight broker startup costs, how much to start a freight brokerage, freight broker training, freight school, freight broker course, broker school, truck broker school, freight broker class, how much does it cost to start a, how much does it cost to start a freight broker business, cost to start a freight, Cost to start a freight brokerage business

Id: 3P-n1wneOuk

Length: 25min 0sec (1500 seconds)

Published: Mon Jan 28 2019