How Profitable is a Moving Company?
A Closer Look At How Much Moving Companies Make
If you’ve chosen to start your own moving company, you may be curious about how profitable a moving company is. In the moving service industry, nearly 28 million people moved in the United States in 2021.
With millions of relocation moves occurring each year, and a market size of over $19 billion, the demand for moving services is constantly rising. The profits you can expect from the moving industry depend on several factors, with an emphasis on what stage the business is currently in.
If you’re looking to start your own company and become profitable, get our free step-by-step moving startup guide below.
How Much Do Moving Companies Make?
When considering how much moving companies make, it’s essential to look at the size and operational efficiency of the business. Larger moving companies typically command higher revenue due to their broader audience reach and ability to handle multiple jobs at one time.
Large Moving Companies
On average, a larger moving company can generate monthly income ranging from $100,000 to $500,000. This depends on the market demand and pricing structure. However, this number can turn into millions if properly scaled over time.
The average profit margins for larger moving companies often hover around 10-15% after factoring in variable costs such as transportation, marketing, and overhead expenses. These expenses include vehicle fleet repair, utility bills, and workers’ compensation. Despite these costs, larger moving companies can still yield a high monthly net profit.
Small Moving Companies
In contrast, small moving companies might have lower revenue annually, but they can still make good money. With a one-office setup and one or two crews, small movers tend to have fewer expenses, resulting in higher profit margins. On average, a small moving company might generate monthly revenue ranging from $10,000 to $50,000, with profit margins potentially reaching up to 20%.
It should be noted that startups can see significantly higher profit margins. This is due to small moving companies being able to launch their business without a truck, which is arguably the largest expense for any moving service startup. When offering labor-only services or renting trucks, startups can see well over 20% profit margins.
All Moving Companies
Regardless of size, all moving companies must carefully manage cash flow and expenses to ensure profitability. By focusing on decreasing costs and properly estimating moving jobs, moving companies can expect their revenue and profitability to grow steadily over time.
Moving Company Owner Salary
Understanding the potential salary you can expect as a moving company owner is crucial. Moving businesses vary widely in profitability, directly impacting the owner’s income. As mentioned in the previous section, the size of the company will influence many factors, one of which is the owner’s salary.
For larger moving companies with substantial revenue annually, owners can often draw significant salaries. Owners of such companies can expect to earn a good income, sometimes reaching into the six figures annually.
However, this salary is often contingent upon the business’s net profit after accounting for all expenses, including overhead costs, marketing costs, and more. On the other hand, owners of small moving companies might draw a more modest salary, especially in the initial stages of the business.
Since small movers may have lower monthly revenue, the owner’s income may reflect this reality. In some cases, owners may opt to reinvest a significant portion of the profits back into the business to fuel growth, which can impact their personal salary. However, doing so aims to see larger returns in the future.
Ultimately, the owner’s salary is influenced by various factors such as the size of the business, its profitability, and the owner’s financial goals. While some owners may enjoy a comfortable salary, others may prioritize reinvestment to increase profits and expand their business.
How Much Does it Cost to Operate a Moving Company?
Operating a moving company entails several costs that determine profitability. Let’s break down the key expenses involved:
- Marketing Budget: Acquiring moving leads and reaching new customers requires investing in marketing. This includes online advertising such as Google Ads, email marketing, and other promotional activities such as print marketing.
- Equipment: Moving trucks and specialized equipment are essential for the moving business. Purchasing or leasing vehicles, dollies, packing materials, and other necessary tools contributes significantly to the operating costs.
- Employee Wages: Employee wages form a substantial part of operating expenses. This includes full-time employees, crews for moving jobs, workers’ compensation, and payroll taxes. Providing competitive wages is crucial for attracting and retaining skilled staff members.
- Transportation Costs: It should come as no surprise that transportation costs are one of the key expenses for a moving business. Fuel consumption, maintenance, and moving truck repairs add to the total transportation costs. These expenses fluctuate based on factors like distance traveled, fuel prices, and the condition of the vehicle fleet.
- Overhead Costs: Utilities, insurance premiums, and administrative expenses fall under overhead costs. Maintaining a functional office space, covering insurance for employees and equipment, and managing day-to-day operations will contribute to the success of a moving business.
Overall, Profit margins can be accurately evaluated by considering these costs alongside revenue. Moving companies can increase profits by carefully managing costs and improving operational expenses.
How to Increase Profits for a Moving Business?
Decrease Operational Costs
Setting up automations is crucial to increasing profits for a moving business. Automations streamline time-consuming tasks and lower operational costs. One effective strategy is to automate manual tasks such as follow-ups, quoting, and invoicing through a CRM software.
This process saves time and reduces the likelihood of errors, leading to increased efficiency and cost savings. Utilize email marketing tools to automate follow-up communications with potential clients and nurture leads. Implement software solutions that offer automatic quoting for quick and accurate pricing estimates.
Likewise, automated invoicing systems can speed up the billing process and ensure timely payments, improving cash flow. By streamlining administrative tasks through automation, moving companies can decrease costs and focus their resources on the core business operations. This ultimately leads to increased profits and sustainable growth.
Increase Revenue
Growing profits for a moving business involves strategic approaches aimed at increasing revenue. One effective method is offering new services to cater to a broader range of client needs. This could include specialty moving services like furniture assembly or storage solutions which can attract more customers.
Additionally, upselling existing services can significantly boost revenue. For example, offering premium packing materials or expedited delivery options can enhance the customer experience while generating additional income. Raising prices is another tactic, especially if the business has established a strong reputation for quality service. However, this should be done strategically to avoid driving clients away.
Although initially a cost, increasing marketing efforts can yield large returns on investment (ROI). Platforms like Google ads or print marketing campaigns can reach both a broad and local audience. By implementing these strategies, moving companies can increase net profits and achieve long-term business success.
Bottom Line: Are Moving Companies Profitable?
In conclusion, moving companies can be profitable ventures, but success hinges on various factors such as the size of the company, operational efficiency, and market demand.
While larger moving companies may enjoy higher revenues, smaller movers can still thrive by focusing on niche markets and managing monthly expenses.
By finding ways to increase revenue and closely monitoring fixed and variable costs, businesses can turn a profit and succeed in the moving industry. Get our free guide below and follow the step-by-step startup process to become profitable.