I'm lightning like Steve McQueen I'm in the fast lane when the light turns green and I built tough I ain't nothing but grit cause I made rugged blood, sweat and spit yeah, like a horse I fly for a bumpy ride I like to play hard but I work harder and I under the storm cause I'm built stronger.
What's up, ladies and gentlemen, we are back. We are live. It is the freight quartz morning shore, the top show in transportation coming to you guys every single weekday. 08:30 a.m. Pacific, 1030 Central to break down the industry headlines, but more importantly, provide some actual insight into what you can do with all this information. If this is your first time tuning in, welcome. I may look a little different from what you've noticed me before. This is the real side of freight, ladies and gentlemen. And I say that before every single show. And when I say I, you know who I mean. And I only speak to transportation professionals because at the end of the day, guys, I'm gonna talk to you.
I'm gonna get you in front of the individuals who have done what you are looking to do or who are currently doing what you are trying to achieve. So you can take that information, apply it, utilize it, and see a meaningful difference in your business every single day. I feel like I nailed it, right?
You absolutely got it, man. Let's go. Let's go. Talk about the day and age of a deep fake, man. You got it down. You got the orange polo on the. The backwards hat. You got everything, man. I love it.
I know. I was going to start shouting out random people on YouTube. I was going like, hey, shout out Eric Orange gang. TGIf. Corey, what's up, man?
How you doing, dude? You can take that over, man. We can do that now. You know what's funny is I actually, you know, I saw this photo a while ago and I'm like, this is literally Sean and I right here. And it's Will Ferrell and the Drummer of the Red Hot Chili peppers.
I even grew my beard out a little bit more so that I could really be full into it.
Dude, this is. This is it, man. Like, this is doppelganger central right now. And I'm here for it, man. I'm here for it.
We're totally crushing it 100%. What's.
What's going on, man? Chad Smith. Yeah, that's right. It is. Chad Smith and Will Ferrell, aka fucking Sean and Chris. Back at it. Oh. Oh, man. Let's go. Go.
I know now that I already did your intro. What are you even going to say? Where are you at right now?
I think, you know. You know, Sean, I'm glad, you know. I appreciate you having me on today. Sean. It, you know, it's been crazy out there, man. The market is wild right now in the sense of, like, there's a lot of opportunity that's coming about. Really, when it boils down to it. I mean, there's always opportunity that's there. But, you know, we're coming, you know, we're 1819 months in and, you know, we're having our biggest month ever starting things out right now, so.
And I'll tell you right now, Chris, I'm here to build an empire, and that's what I'm on this show for. And we're going to be big and great. And I'm hitting the phones every single day because that's what I'm here to do. And I'm here to motivate you and the rest of the listeners out there to get out there and crush it.
I love it, too. You might as well just take over, dude. Now I, now I know who I can call in when. When I'm not feeling up to parental.
I was sending my wife, like, jolly memes, and it's, the community is too niche. She doesn't get it.
So I'm glad that she's like, that guy sounds like a psychopath.
Why are you talking to him?
Oh, man. So, dude, financial Fridays, though, I love that, man. This is one of my, if not my favorite segment to talk about because I think it's, you know, it's always so easy to sit here and talk about, oh, we got a crush in sales or, oh, we got to get this piece of technology or that piece of technology. But I think everybody overlooks the financial side of business. I really do. Right, because it's like you're so engulfed in, like, I just got to get revenue. I got to get revenue and. But, like, what revenue do you even chase? How do you even go after it?
And then, you know, on top of the, you know, managing your finances, your cash flow, keeping that stuff up, that is way more important than revenue, I think, at times, and I understand the chicken of the egg analogy, that you could go with it, but, like, at the end of the day, if you. I would argue more people fail in business, and I'm sure there's some statistics out there, more people fail in business because of mismanagement of finances than they do of lack of opportunity for revenue.
Totally. And like, when it comes down to it, finance, a lot of it is like a resources allocation decision. Right? And so financial resources, human capital resources, like, all of this kind of the finance arena is about how you are smart about your resources. And so a lot of people think that, like, the finance world is about, you know, if you've got a great accountant and you're using quickbooks and you're, like, set to go, but there's a lot bigger, broader and more consequential set of strategy decisions that you need to make about your business that have a very heavy lean towards how you think about your finances. And so we've got our time today. I've got a little bit of a different twist on our typical finance topics.
Yeah, no, let's do it, man. Let's dive right in. What's on your mind?
Okay, so we did a show and tell version today. So I brought you, I sent you a file before the show. You haven't seen it. This is totally new information, so we're going to go with it together and you can follow along with me and the rest of the listeners. The topic that I've got, we touched on a bit of it a month ago, for those of you that joined, is around market sizing. And market sizing is, for the faint of heart, kind of an intimidating topic. Maybe they only really do it in business school. I'm not really interested in making a business plan. I'm just trying to hear to move some freight. It's kind of like a little too academic y. And so what I've got for us to go through today is a quick and dirty market sizing exercise for freight brokers.
I picked a random industry that we could do together so that you can get a sense for who your customers are that are out there, how much they're spending on freight, and whether or not this is a worthwhile endeavor for you as a financial allocator, as the CEO of your business, of your brokerage, to be able to spend time in. So I'll show you some good things. I'll show you some not so good things, some things to look for, maybe, and then we can take it from there. Sound good?
Yeah, 100%, man. Share your screen. Let's do it.
All right, here we go. Let me, let me rip it here. So a couple of things for people to know. For one, this is something that we will, we're going to put on our blog so that you can see it on the denim side and you can download it later. But I'll throw it up in front of everybody so that we can see it together. So this is my first time sharing on the Vidyard or streamyard. So nobody freak out.
No.
How's my zoom? Am I doing all right?
We're doing good. We're doing good, freight coach.
Okay. So I'm going to avoid as much of the crazy excel formula sheets for everybody as possible, and we're going to kind of get right to the meat here. So what is market sizing? Why do I want to spend time on it? What could I learn, you know, et cetera. Really quick highlights. For one, market sizing helps you be a smarter resource allocator as the CEO of your business so that you can make the right strategy choice with the right information that you have available and use data to make decisions as opposed to feelings or vibes or copying somebody else. Right. It's like this is your way to be able to make data driven decisions. And so coming out of market sizing, you can have a better sense of, is this market big enough? Do I have enough Runway for me to get into?
Maybe. Is it too crowded? Are there too many people that are attracted to it? How are my clients or customers different? How are they similar? How should I think about them? And are there ways that I should think about my current allocation differently? So you can spend weeks on this stuff making a perfect spreadsheet that the Wharton business school would be really proud of, or you could spend a couple hours and just get what you need to out of it and move on with your life. Make sense so far?
Yeah, absolutely.
Okay. Here's how we're going to do it. We're going to figure out what our market segments are. This is a hypothesis, right? We're not, we don't know anything yet, so we're just kind of feeling it out. We're taking some guesses. We're going to try and find some data that we can anchor. In our analysis, the exact data is not the point. The point is to be able to get something that feels roughly what we need and feels roughly orders of magnitude to what we want. And then we want to put a quick model together, tweak some of our assumptions, and then draw some conclusions out of it. So if you're looking to take from this analysis a revenue plan and your p and l, you're at the wrong place. This is, we're playing color in the lines here. So let's jump right in.
So first, identify your market segments. Here are some examples, some things to think about. The one that I did was furniture and home goods. So let's try and move freight. For these sorts of companies. Furniture is homegoods. I'm a broker. You're a broker. You know, I run the morning show, the freight coach morning show. So this is how I'm thinking about my market. I took furniture as an example. I'll tell you at the end that I tried a few and I wasn't a big fan of the numbers I coming from and I'll tell you why that is.
Okay.
But after I got into furniture and home goods, I needed to go scour the Internet. You can use Google, you can use, what is it? Perplexity, kind of the gen AI tool. There's a bunch of things that you can use to be able to get in front of the data that you need. A couple of good ones. The census, the government has a ton of data on this stuff. And so if you can find your way to the right Internet site on the census government website, you can get to a couple of really good spots. So I'll show you some pieces on furniture and home goods so that you can get a sense for what I came across. So for one, this is the annual retail trade survey. They do it every couple of years.
Looks like they're doing another one that they started in March. And there's a ton of data that comes from this. Now let me show you. I already downloaded it so we don't have to all do it together. It looks like this. So we've got a NAICS code, which I'll tell you what that is in a second. It's very important, the kind of business it is. And then based on this survey, they're giving you different pieces of information like expenses and what percentage of their total expenses they are, how to think about how these businesses run. A lot of people look at this stuff like how do they, what do they spend on health insurance? You know, how many people provide benefits, stuff like that. We are looking at this, look at that. Purchase, transportation, shipping and warehousing services.
So this is all too bad. Was this all on the government website that you had there?
Yes, exactly right. And they do a sampling every few years. The data is typically old, but you get directionally. Right. We're talking about orders of magnitude here.
Yeah, for sure.
So now I get dollar estimates in millions for people in this industry. So I'm going to go down to my department store down here. I was playing around with automotive parts before, but I'll go down to my personals I'm trying not to make everybody dizzy. So I've got 1000 million. Right, which is basically what this is because we're in millions for this particular segment. And then it gives us this code right here, this NAICS code. For those of you that don't know what NAICS codes are, I don't know why you would. NAICS codes are. Yeah, no, what it's, this is not useful information to bring up at a party. You know, this is not cocktail party conversation. NAICs codes are for every business in the United States.
When they file, they just specify what type of business they are, what type of work that they do. And so this NAICS code gives you a sense of how to categorize companies. And then the government uses that NAICS code to then report on all these different things. There's a lot of really interesting stuff around things like what businesses are founded or have CEO's that are first generation Americans or which are female, which are male. There's a lot of really interesting census information, but there's also really interesting company count and total sales, total revenue information.
Holy shit.
So here's my department stores NAICS code that we just looked at, right? There are 3600 establishments for these department stores. Now, I think of these, like, big box stores. So those you maybe you shopped at, like at home. They have up here, like these giant warehouse stores that do home furnishings and stuff. And so of these companies, they have around $10 billion in payroll. And then they've got around $66 billion in sales. And that's across the whole industry. So this is perfect for us. This is exactly what we need. Also, in case you're interested, we've got some really interesting charts here to give you a little heat map on where these establishments might be located. Like, okay, pretty interesting.
So this stuff, you can see how we're sort of painting around the edges here of how we can get into what people are spending on freight. So let's flip back to our sheet here. So I pulled from this sheet 3648 establishments. I also like to link the source here because sometimes I forget where I got stuff from.
Hey, man, you clearly went to college because you cited your sources. There is zero plagiarism on this show chat.
GPT baby. No, just kidding. So now I've got my, first of all, look at how small this is. Yeah, this is like, you don't need a masters in finance to do this. Here's the establishments. Right here is the annual revenues. Same thing. Pulled it from this sheet. Here is the annual sales per establishment. This is math. Look out. I just did a divide. So then I want to get total cost of logistics as a percent of sales. This was in this sheet we just did. Yeah, right down here, 2.5. That was the one that we just pulled from. So I pulled my 2.5 right here. And then I looked at total cost of logistics per establishment. Not crazy. And now I said, okay, what cost of transportation is a percent of logistics? And so Armstrong has done some stuff on this.
I won't click you into a source, but I got it right here if.
You want to check it. Okay.
Sorry. If you want to check it out later. So then I got two hundred twenty nine k of annual logistics spend per establishment. Now let's turn that into freight that we can move.
Yeah.
So if we're assuming $1,700 a truckload, being conservative is typically better in these situations, because it's better to be surprised maybe, than not. And so that is 135 shipments per establishment. Let's assume we're taking 15%. Tough market out there. Maybe we'll get a 30% ripper every once in a while. But let's assume 15 for now. So that means we're taking dollar 255 per load. So per customer, we can expect around $35,000 per year, right?
Yeah.
If we want to be a $250,000 a year annual revenue brokerage, we need eight customers. This is not crazy math here, friends. And so what is eight customers for us? That is 0.2% of the total market for this number of establishments out there. So let's say. Shoot.
That's just in one segment.
This is one tiny sliver.
One fraction of one segment.
Right. One tiny sliver of the US economy.
Exactly.
And so we are at a. .2% that's not 2%. That's 0.2%.
Yeah.
Penetration of that market. If we get our eight customers, which hit our revenue goal of. So if we're trying to get a hold of 20 a week, we're going to be busy for about three and a half years.
Yeah.
Right. There's a lot out there. And so this, to me now, these are my assumptions, right, that I make. And I, again, because I'm an overachiever, I highlighted these in blue so I know which ones I made up and which ones I'm doing math on, so that I can back into the ones that make sense for me. But then this is where I. This is where you kind of get this information and you get to the good part. You say, okay, overall, this appears to be a niche. Right. Like less than 5000 targets is less than 10,000 targets even is considered a niche market. That's like a good rule of thumb. You know, the gross revenue per customer can be large enough to start, but it's not going to be enough to make our target. Right.
So, like, we're not going to be able to be a one and done land and expand kind of strategy here. We need to be able to keep working. And so we have some open questions, though, that we need to validate.
Yes.
How much of this stuff is full truckload? How much of this stuff is brokered freight as opposed to things that they might be shipping internally? Now, is there an open question on size range? So this might be a situation where the market's upside down, 20% of the market does 80% of the freight and vice versa. So that's probably something I would want to figure out. I would also want to know, is there a benefit to thinking about these establishments? All the same, if I am a big box department store freight moving expert, is that of value to the next department store that I go and talk to. Right. So can I parlay these conversations together? I think in your world, Chris. Right. If you're moving large equipment, you have a really specific understanding of how that equipment is moved.
What sort of safety requirements are there? What sorts of equipment requirements are there? What sort of carriers are you able to work with? Do I get the same benefit of the niche in this type of industry as well? This is like my quick take on how you'd think about what a market would look like for you and how you'd want to bounce up against it. Can I show you one that I screwed up on that is probably interesting. Okay. So I did this work for furniture and home goods. I originally did it for automotive parts because, like, okay, this seems like something niche enough that I don't hear a lot of people talking about automotive parts, shipping on freight, LinkedIn. Right. Everybody wants to talk about everything on, and this isn't one of them.
So I was like, all right, this could be a low key, cool thing. So I looked up this naics code with this amount of spending, and it came out. I'll save you the whole math, but it came out to something like one shipment a month because there were so many establishments that's splitting up what is a large amount of spend? But if you're splitting it up amongst 100,000 establishments out there's just not enough freight that goes around to make sense to be able to justify the investment. And so I was kind of doing this. I was like, oh, this is probably what someone else is going to do, right? They're like trying this industry. They're doing some of the sizing and they took a ten minute exercise and they said, this stinks. I'm going on and doing something else. No customer calls.
I didn't have to buy anything for anybody. Didn't have to take anybody out to lunch. I just looked at the situation. I said, this doesn't really make a ton of sense for me. It moved on.
I personally loved all of that like that. You know, not only, I've never done anything like that, right? Like, I've never even thought about doing anything like you just did there, but you brought up a, a ton of value, a lot to unpack that I don't think we're going to be able to unpack in nine minutes. But what it boils down to me is, is all of that data that Sean just put out there, you guys, is free, all right? You don't, you don't need to pay for any of this stuff. You don't need to do anything outside of go to their website and check out their blog and it's all broken down for you.
But what you brought up there though, man, is it's like, I mean, it aligns with a lot of everything that I talk about on the show for so many people. You know, you need to start somewhere. You need to choose one thing and do that repeatedly because you can't just call people for the sake of calling. If you don't have 1415 years experience in this industry where you've moved multiple modes and you have in depth experience, you shouldn't be going out there and getting yourself into some of these situations. You need to choose one thing because like, dude, that data, that is extremely valuable for a company, you know, for you to go out there and put that together and for you to go out there and start prospecting based on that, like that's a lot of opportunity, right?
You know, eight, that's all you need to find is eight. And that was a very low estimate of making five cold calls a day. And you could do that in three and a half years was your projection is where you could get up to $250,000 in profit. Is that what that was?
It was in margin, no, three and a half years for you to get all 4000. So we're talking be a top 100 brokerage if you can keep that going.
Yeah, yeah.
So this is these eight. If you can get them in a couple of months, call it. Right. Like this is. We want to set monthly and quarterly goals. If you set annual goal, it's hard to be able to think about that in March. Right. So set near term goals for yourself and use something like this to create a snowball.
Right.
Build your way through it.
Yeah, no, I. Dude, in, you know, it's so funny that because, like, to be fully transparent, everybody, I didn't know Sean was going this angle with the show today. Right? Like, I had the topic that were going to talk about, but this was very much different. Like, I didn't think that were going to go there. But I love that you did, man. Because like, I, you know, I put a post out there this morning about that people need to do less investment in like, technology and automation and more investment in like, actually teaching people about the industry and training and development because otherwise you're just automating shitty processes at that point. Like, I would argue, because I would argue most people don't have any plan like that you put out there. Some people do, but not everybody.
And that's a very basic free approach that anybody can go out there and choose a segment, see where some of these market sizes are actually at by commodity. Right. Because it's like, oh, you hear, oh, it's a $200 billion freight market available to freight brokers. Yeah, that sounds very appealing, but exactly.
You know, do I take a number? What's the. I get my share of the 250.
Yeah, that's exactly it. Right? Because like, you know, and again, when you choose your niche and go down there like you just had department stores. Right? Okay, perfect. You learned about that. Is that going to be full truckload? Is that going to be lTl? Is that going to be Sprinter van? Is there going to be lift gates associated with that? Then you can go in and break down that niche and you're going to have such a better time talking to your prospects when you're going in there from that. Right? Because again, you got to start with one. You got to get that experience. And then you know what to say. And then you talk to one of those shippers and then you go to the next one. Right?
Like, it's funny because a really good buddy of mine is the transportation manager for a very large retail chain. And he talks about that. He's like, yeah, man, literally 99.9% of the outreach that I get clearly have no idea what we actually do. That's why they're not getting responded to. He's like, if you come at me with some of the stuff that you have experience with, retail deliveries, lift gates, local sprinter van, stuff like that, he's like, you have my attention, I'll listen at that point. But he's like, the reality is 99.9% of the people just reach out for the sake of reaching out. I am a very highly specialized commodity. I'm very high value freight. I'm not just like, my stuff's not worth $50, you know? So he's like, right.
If I drop somebody's custom couch that took him six months for them to create at the furniture factory, it's going to be a really tough time.
Correct. You're going to have a bad time, as I say, in South park. And it's, you know, it's one of those things where it's like, just imagine the different conversations that you will start having when you talk to somebody and, you know, there's another guy on LinkedIn, I don't want to mention his name because I know he's a shipper. I don't want to mention his name because I don't want people to start blowing up his DM's. But he had said, he's like, the fact is most people, when they're making calls, if I answer, he's like, why I don't answer my phone most times is every single time that I have answered, people are so surprised that I actually answered the phone, they don't know.
Yeah, that, I mean, I get it. And if you're dying, if you're making 120 blind auto dialer calls a day, it's really hard to be able to get into the groove each time the phone is free because you just get numb to it because you hit voicemails all day.
Yeah, correct. And I, you know, again, you guys, a little tip. I break everything down by commodity, all right? So if I'm going to call certain shippers in a day, it's going to be, I'm only going to call food. I'm only going to call dry van. I'm only going to call flatbed. And then I'll even break it down and niche it down a little bit more on that, right? Like, hey, these guys are going to only be refrigerated. These guys are going to be dry. These guys are going to be over dimensional. These guys are going to need tarps. And it's just going to be based off of commodity and everything like that. But again, I think like in its most simple form, the way you broke that down, that is where most people just need to start right there.
Like all of that data is out there and they can go out there and just start dialing in that right again. You don't need lead generation software. You really don't. You, could you google that? What was it? Household goods.
Yeah. Furniture, department stores. That was it. Yeah.
Google that in your hometown or wherever you're located and start there and it's all free. Right? Like you don't need Legion software, you don't need robo dialers, you don't need any of that stuff. What you need to do is instead of just ripping the band aid off and jumping in, which there's a time and a place for that, but you need to prepare for this stuff. You can go out there, you can research all of this information. That heat map that was on there too, man. Dude, I would just call that wild. Yeah.
Government's great. People got to know where to look for stuff.
It's, I know. You know, and that's exactly it, man. Call Texas and California, you'll have more opportunities between those two states. You, that's probably two years worth of dialing right there. Just in California and Texas.
And I would say there is a, there's a, as you said, there's a time and a place. Don't let perfect be the enemy of good. When you start to do this stuff right, time, box it, spend 2 hours, get into a rhythm and be done or else you're never going to get out onto the phone if you're just locked in a spreadsheet all day too. So there, this works the wrong way too. So just be careful, I guess is what I would tell people.
No, for sure. And then set up parameters and build up off of them. Right. Maybe it's, you know what, maybe it's as simple as this. You guys, you guys just make one cold call a day. Make one cold call a day for a week, then increase it to four cold calls or five cold calls a day and then increase it to ten and so on and so forth. You know, like, again, it's intimidating when you're starting stuff out. It's intimidating to think like you got to make 120 calls a day if you've never done it before. But if you're in this situation, you guys start build a process and all right. Because that's what it is. Everything's a system. All right. I don't write shit down, but I have systems in my life that I follow, all right? I do.
I built a system around my day. I do the exact same things at the exact same times, day in and day out to build that system up to make sure I hold myself accountable. And you know what? I don't make a hundred calls in a day, all right? There's some days where I only get five calls in a day or there's some days that I only get my 50 emails out in a day, then that's all I can get done. But again, I'm getting my work done because I will set those processes out and those systems out and I will just execute upon that day in and day out. Dude, I love this show, man. This, this might have been one of my favorite ones. And you were the host, too. You let us in. You got it.
I don't even like, I don't even have a job anymore now.
I switched you up on the show and tell. It's like, you know who's driving?
You really did. I don't even have a job anymore now. I think I'm, I think I'm out. The new freight coach is here. Freight coach 2.0.
The freight finance coach. Count me in.
Yeah, I love it, man. Well, hey, Sean, thank you so much for joining me today. And I was, you guys, we got some big announcements that are going to be coming out here next week for the show and how we're doing things moving forward. I think you guys are really going to like it out there. But as always, if you guys got value, share the show. You guys subscribe to it, get it out there, because if you see value, your network's going to see value as well. I appreciate you guys. I love you guys. And we'll be talking to you soon. Sean, next time you got to end the show, too. I think.