Good News for Small Transportation Companies

The bad news is obvious: Fewer contracts and higher operating costs make it difficult for small transportation companies to compete with major players. The economics of scale make coping with market fluctuations, rising prices, and CSA compliance easier for larger companies than for owner-operators. The seemingly unfair advantage of larger companies may or may not be increased depending on who ends up in the White House next year. Either way, though, there’s hope for owners of small transportation businesses. That hope is tied to how a company, big or small, strategically responds to transportation needs.

Responding to Regulations

We might not be able to keep safety regulations from increasing; however, small businesses can keep those increased regulations from costing them significant amounts. Owner-operators will be able to do so by taking a proactive approach, aiming to achieve compliance rather than reacting to violations. This kind of mentality is possible without HR or IT departments like big business have. Safety management software can be purchased to monitor compliance. When properly programmed, even expensive new software can end up decreasing expenses over the long term.

Finding a Specialization

While small businesses can’t compete with larger companies when they’re trying to do exactly the same thing, they can succeed famously when they find an area of specialization that meets a specific need. Often, large companies aren’t willing to fill particular niches, so they open that potential for the little guy. Whether the chosen specialization is a particular area, unique transportation mode, or niche idea, a small business can have the capability to provide a singular service quite well.

Growing by Expanding

Small transportation businesses can more than survive—they can thrive, even when trying to keep up with larger companies. This kind of success requires the right market conditions, purposeful specialization, and a proactive response to regulations. For many, though, it will include stepping out from owning a small fleet to growth through acquisitions. While an owner-operator doesn’t typically buy into one of the largest transportation companies, budding entrepreneurs often acquire other small companies. The benefits of such acquisitions include saving money, having larger customer bases, and becoming better insulated against industry and market-wide changes. When small business owners are poised to take on the additional responsibilities that come with owning a larger company, they can grow successfully through acquisitions. From larger management teams to more advanced technologies, many entrepreneurs thrive on such increased potential.

For entrepreneurs looking into the transportation industry, there’s plenty of opportunity for ambitious owner-operators to succeed. With the help of a transportation-industry specialist such as the business brokers at The Tenney Group, you can find out exactly what’s out there and receive expert advice on how to get started.