The trucking industry is booming, which is why it receives so much attention from investors. In 2021 alone, the trucking sector earned approximately $875.5 billion, meaning there’s plenty of revenue to go around.
The question lies in how you can invest in trucking companies to get in on the action. The answer is actually far simpler than you might expect. In this article we reveal seven simple steps that will help you find a trucking business to invest in.
Can you make passive income investing in trucking companies?
Absolutely, and that’s precisely why so many people invest in trucking. When you use your capital to back a trucking business, you can generate a passive revenue stream and build wealth.
Naturally, the exact return that you experience will vary on several factors. These include, for instance, the amount of capital invested and how successful the company is. Making the decision to invest in trucking can be a smart one, provided you follow a few established best practices.
7 steps for investing in a trucking company
If you are ready to invest in trucking, follow these seven steps to find the ideal partner for your venture:
- Research the trucking industry and its players
During the first phase, familiarize yourself with the trucking industry as a whole, and the various companies within it. There’s a broad range of businesses out there, including (but not limited to) the following:
- Less-than-truckload carriers
- Oversized freight haulers
- Flatbed trucking companies
- Hazmat carriers
Generally speaking, each type can be a good investment. Still, you should study the trends and learn which are growing most consistently before investing in a particular trucking business. You could also conduct research on load boards to see which sectors make the most per load.
- Determine your investment goals and amount of capital
With more information about the industry under your belt, decide whether you want to be a passive or active investor. Being a passive investor is what it sounds like: you provide financial support to the business of your choosing. However, you won’t get any say in how the company is run.
On the other hand, becoming an active investor requires more work. The advantage is that you can influence the direction of the company and maximize your returns. If you’re really interested in taking a hands-on approach, you could even become an owner-operator.
Once you determine your role as either an active or passive investor, you must decide how much money to invest. The larger the investment, the higher your risk — but also your potential return.
- Choose a trucking company to invest in
Now you’re ready to explore investment opportunities. Prioritize businesses that are financially stable and boast a solid track record of success. Also take into account the company’s management team and their industry experience.
If a business has been around a while and seems to be thriving, it may be worth investing in. On the other hand, if a company is very new and has an inexperienced leadership team, the investment may be riskier.
- Conduct due diligence on the trucking company
Research the company’s financial statements, including its reported revenue and net income. Pay close attention to its earnings before interest, taxes, depreciation, and amortization (EBITDA). Study its safety record and compliance history, along with the company’s customer base and contracts. These documents will tell you everything you need to know about your prospective partner.
- Analyze the risks
Consider the various risks associated with investing in a trucking company. A few examples include fuel prices, regulatory and legal risks, and market competition. Each investment carries some risks, but conducting your own assessment will help you determine how much you’re willing to tolerate.
- Make your investment
Once you’ve identified a company you feel comfortable investing in, commit your capital. You can invest in several ways, such as loaning the company money or purchasing shares of the business.
Some companies are open to less common investment approaches as well. For instance, you could explore purchasing a truck in return for a share of the company’s weekly or monthly profits.
- Monitor your investment
Even as a passive investor, you should always monitor your capital to see the kind of return it’s producing. Keep track of the company’s performance and make adjustments as necessary. If your investment is performing well, you may want to pour more capital into the company. If it’s falling short of expectations, you can adjust your investment strategy to protect your assets.
Am I ready to make a trucking investment?
Investing in a trucking business is no small decision. If you have liquid assets and are looking to generate passive income, though, investing in a bustling trucking company can be a wise move.
With that said, it’s critical to perform extensive due diligence before making a trucking investment. As long as you do your homework, you can develop an additional revenue stream that supports your long-term financial goals.
That largely depends on the size of your investment and whether the company is successful. If you make a large investment, such as purchasing a truck and putting a driver on the road, you could make $500 per week or more.
Investing in a trucking company can be a great way of generating passive income and putting capital to work. That said, you must carefully research a company before committing hard-earned money to it.
The exact return you experience will vary depending on several factors, including how many trucks you own and whether you operate one yourself. That said, a successful small trucking company owner can certainly earn a six-figure income.
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