If you’ve ever dreamed of working for yourself, starting your own trucking company may be an excellent route to take.
The process of starting one is not complicated. However, there are always risks in doing any business, and a trucking company is no exception.
The tremendous amount of freedom, money-making opportunities and ability to get things done as you please is what most people find very attractive in running their own trucking companies.
This article explains how to start a trucking company and some crucial steps you need to take before starting your own trucking business.
Why Start Trucking Company?
Starting a trucking business is an exciting, fulfilling, and potentially lucrative opportunity.
Trucking is one of the most competitive industries around, and there’s still a good number of opportunities left.
A great trucking company can provide you with a career for decades if it’s managed correctly.
Every trucking company has to start somewhere, and many people have made excellent profits starting a new trucking company.
People get into trucking for various reasons, but most do so because they can be their boss and set their hours.
Operating your own business allows you to dictate how your time is spent, which is rewarding in its own right.
With all the available routes, you control where and when to go.
It is also flexible enough to hire people to drive and get back to running your other business operations.
Overall, operating your own business will provide some job satisfaction and make you money in the process.
Because trucking companies offer such substantial potential for profit, it’s no wonder that more and more people are getting into the industry every day.
From both a financial standpoint and personal enjoyment, trucking can be a valuable career opportunity for those who choose to pursue it.
How Much it Cost to Start a Trucking Company
Start your own trucking company? That sounds great, but how much does it cost to start your own trucking company?
While trucking is a profitable and rewarding industry, there are several start-up costs that a new trucking company must take into account before jumping into the business.
These costs differ depending on your location and the type of equipment you choose to operate with.
Determining your upfront costs will depend on a few different factors, including how many employees you hire and if you will be renting or buying office space.
In addition to the upfront costs of starting your own trucking company, you will also have daily expenses, including fuel, maintenance and interest payments.
However, a reliable method for ensuring these costs fit within your budget is by having a business plan before beginning this type of business.
Starting a Trucking Business Checklist
If you’ve decided to start your own trucking business, it’s essential to do your research before making a move.
Get started with this checklist of all the things you’ll need to succeed in the trucking business.
This helpful checklist can assist you in the process by examining everything from legal concerns to choosing insurance options and managing employees.
Pick a Name for Your New Trucking Company
If you’re thinking of starting a trucking business, the chances are that you’re thinking about what to call it as well.
Naming your trucking business is one of the essential steps in your start-up.
Be sure to find the best title for your business by doing your research and making sure no one is using the name you want to use.
You can utilize company name search tools or do an internet trademark search to accomplish this.
Additionally, choose a name that represents what you do, is easy to remember and won’t be confused with other businesses.
It will also play a significant role in marketing your business so take the time to get it right.
Choose a Target Market
Starting a trucking business within the right market is essential for success.
Many new trucking company owners make the mistake of setting their sights on companies that have been in business for decades.
While it is possible to compete with larger, more established carriers, making a realistic assessment of your time and resources can help you avoid potential missteps.
Consider your strengths and weaknesses to determine if a particular target market is right for you.
Identify Your Rates Per Mile
Another critical step in starting a trucking business is determining your rates per mile.
Begin by setting a target rate you are willing to accept, then determine the expenses involved in operating your business weekly.
Here are the steps you should take to figure out your rate per mile:
- Choose the freight lane that is right for you
- Go to the loading board
- Look for a group of vehicles travelling in the same direction.
- Find out what the brokers are paying
- If you’re estimating the price, add 10-15%
- Determine the average
- In reverse order, repeat the steps.
Create a Trucking Business Plan
A trucking business plan is an indispensable part of the process. It’s also a handy guide, which you can use to steer your overall operations, and ensure you remain on the right track.
A business plan will help you make your logistics work more efficiently and bring you greater profits.
To help you get started on the right path, here are two formats to prepare your trucking business plan:
- Traditional Business Plan Format
Traditionally, a business plan consists of the following components:
- Description of the business
- Financial forecasts
- Market research
- Strategies for sales
- Promotions and sales
- Business analysis of services
- Human resources plan
- Organization and management
- Tean Startup Format
Lean startups are a good option for companies anticipating future changes.
In contrast to a traditional business plan, it is more flexible and requires fewer specifics.
Among the contents of a lean startup plan are:
- Activities of key importance
- Significant partnerships
- Important resources
- Segments of customers
- Propositions of value
- Expenses structures
Fund Your Trucking Business
There are many resources to help truckers get funding and begin the process of starting a prosperous new business.
You can borrow money from family and friends who believe in your new business, seek funding from a bank or other financial institution.
Also, you can use a line of credit against your house, sell properties you own and apply the funds toward the cost of buying your new truck and other assets.
Most of the time, an investment of between $10,000 and $30,000 is sufficient to start a trucking business.
This will cover insurance, vehicle down payments, permits, and other state-specific costs.
Buy Assets for Your Trucking Company
The best approach to buying commercial motor vehicles is always to go for quality over price, especially if you have enough funds.
Also, you should consider contacting two or three different suppliers before you finalize your purchase.
This will allow you to compare prices and available options, as well as ask any questions you may have.
Similarly, a second-hand unit that is well-maintained and comes from a reliable manufacturer can also be relied upon.
If you have enough funds and decide to purchase your assets, it’s always better to go for quality over price, especially when it comes to commercial motor vehicles.
Insure Your Assets
Another vital step in starting a trucking business is to protect your assets from unexpected financial burdens.
The best way to do this is by purchasing truck insurance, which covers any damages or injuries caused by road accidents that involve your vehicles.
An insurance policy that specifically covers trucks will also protect you from losses from theft, damage, and other such incidents.
If you are unsure which insurance product to purchase based on your needs, you may consult trucking forums and social media communities.
Recruit and Retain Drivers
Any trucking business, even a startup trucking business, will need to have a complete driver recruitment plan as one of the essential components for its success.
This ensures that you have quality drivers or owner-operators who will eventually be your employees.
However, before hiring a single driver, do your homework and vet each applicant thoroughly.
Use an effective driver recruitment process, including a pre-screening program like Truckingcribs Pre-employment Screening services.
Additionally, to attract and keep good drivers, your new trucking company must offer competitive pay and terms of employment.
Grow Your Customer Base
While you can’t be everywhere at once, having the proper resources and strategies set in place can help grow your customer base. Figure out how to market your service and reach new customers.
Recognizing that you’re a small business and new to trucking, you’ll want to start small, set your goals low, and “build your brand” before expanding into the larger market.
To be successful, you must prioritize marketing, client management, and communication to build a loyal customer base. With a large customer base, your trucking business will continue to thrive.
Establish a Fleet Management Process
A fleet management system is vital to the success of your trucking business. A fleet management system keeps you informed of all your trucks and when they are due back at base.
It allows you to efficiently track trucks and put a plan in place if one of your trucks breaks down.
Establishing a solid plan for your fleet management system will help ensure that you and your drivers run a successful trucking business that is efficient, safe and profitable.
A fleet management system can affect many aspects of your business, including:
- Automobile maintenance
- Safety of the fleet
- Controlling the behaviour and practices of driver
- Controlling fuel consumption
Legal Requirements for Starting a Trucking Business
The FMCSA specifies the number of requirements for truck owners and operators.
Trucking companies need the following permits:
US DOT and Motor Carrier (MC) Authority Numbers
You can track your safety records and regulatory compliance with the USDOT number. Your trucking company’s MC number, also known as your operating authority, determines what you can transport.
Register your firm with the Federal Motor Carrier Safety Administration to receive your USDOT and MC numbers.
Also, you must complete the Motor Carrier Identification Report and the Application for Safety Certification.
After submitting your application, you will get your USDOT and MC numbers, but the FMCSA will still need to consider them.
This will be done by publishing it in the Federal Register for a ten-business-day “mandated dispute period” to solicit any public comment in opposition to your request.
Unified Carrier Registration (UCR)
This system verifies that the trucking company maintains insurance coverage in all states where it operates. Use your USDOT and MC number to register for the program.
Heavy Highway Use Tax Return (Form 2290)
The IRS requires you to pay the Federal Excise Highway Tax or heavy highway vehicle use tax if your company uses trucks weighing at least 55,000 pounds on the highway.
International Fuel Tax Agreement (IFTA) Permit
This regulation allows your company to get a single fuel license and requires you to submit quarterly fuel use tax reports in the state where your business is located.
This federal filing appoints someone to accept legal documents on behalf of a transportation company.
To get interstate operating permission, it is necessary to appoint a process agent. A process agent is a person who can serve legal papers in any state in which your firm operates.
International Registration Plan (IRP) License Plate
IRP plates issued by your state of residence allow you to operate in all states throughout the US, as well as many Canadian provinces. You must pay an annual renewal fee for this license plate.
Standard Carrier Alpha Code (SCAC)
SCAC is a standard, unique and private piece of code that can be used to measure the performance of transportation companies.
It’s essential to have this when transporting government, international, or military products.
Which Insurance is Required to Start a Trucking Company?
Primary Liability Insurance
This type of insurance covers damages or injuries you may suffer if you cause an accident.
However, as many shippers and brokers demand, you must have at least $1 million in primary liability coverage.
In this policy, cargo damage and theft are covered. The most common amount of cargo insurance is $100,000, but it may vary depending on what you are conveying.
If you are not hauling a trailer or other load and your truck is in an accident, this coverage kicks in.
Nevertheless, it is best to speak to an insurance broker to get more information regarding your insurance needs.
Final Thoughts on How to Start a Trucking Company
Starting your trucking company can sound like a daunting task. But once you understand what it entails, the process begins to seem much more straightforward.
The trucking business comes with many benefits, such as excellent flexibility and less stress. But it does also have its hurdles and challenges.
However, understanding your options and preparing with proper research and planning will help you succeed.
Fortunately for you, this article has made the process easy by covering everything you need to know about getting started in the industry.
Don’t let the uncertainty and misconceptions of owning your trucking company scare you away from realizing your dream.
FAQs on How to Start a Trucking Company
Is a trucking company a good investment?
Yes. While trucking may be highly profitable, it is also one of the most competitive industries.
Is it hard to start a trucking company?
It is not difficult to start a trucking company. However, there are several upfront payments that you must make before you may begin operation.
Can I sell my trucking authority?
No, USDOT Identification Numbers are non-transferable. Nevertheless, it is possible to transfer operating authorities (MC numbers).
What size truck requires a DOT number?
When operating in interstate commerce, you generally need a USDOT Number.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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