A Comprehensive Guide On How to Start a Trucking Company
Are you thinking about starting a trucking business and need to learn how to start a trucking company? Congratulations!
Trucks transport about 70 percent of all freight in the U.S., which means a lot of potential earnings for you! With this kind of rising demand, the trucking industry is serving as an essential industry to keep up with production.
But how do you start a trucking company, and how can you find financing for it?
Keep reading for a comprehensive guide on how to start a trucking company and learn how to be successful in this field!
Learn About the Trucking Industry and How to Start a Trucking Company
Understanding all the moving pieces involved in a trucking business will be important. If you’re involved in the industry already, start driving yourself to get a feel for what an employee’s life is like.
You can also try to shadow an existing trucking company if possible. This will help you understand the business and make decisions about the kind of trucking company you want to have.
There are a lot of moving pieces involved within the trucking industry, and it requires more investment than just buying insurance and a truck. So it’s important to learn about the rules and regulations as well when discovering how to start a trucking company.
Create a Business Plan for How to Start a Trucking Company Successfully
For any new business to be successful, they need to have a business plan. One aspect of that plan should be understanding your target market and analyzing them. This can also inform you what equipment you will need.
For example, if you plan to focus on delivering foods, either to restaurants or grocery stores, you’ll need refrigerated trucks. You’ll need to understand where to find these clients and what their needs are.
While developing your business plan, focus on your competitive advantage. Think about why a client would choose to work with you. Do you have competitive prices and are more reliable?
Creating a business plan before taking any action will help you to pitch your business to any potential investors. Take the time to think things out now before moving forward.
Consider Legal Requirements and Choose a Process Agent
Having a CDL, or Commercial Driver’s License, is only a piece of the legal puzzle. You’ll also need to fulfill other requirements dictated by the FMCSA. Some of the requirements include a Motor Carrier Number, an International Registration Plan, a Department of Transportation Number, and International Fuel Tax stickers.
You will then need a process agent to represent you in court. If you plan to have your trucking company serve multiple states, you’ll need a process agent for each state. The FMCSA has a list of process agents, and that person will be responsible for completing Form BOC-3 on behalf of your business.
Insuring Your Trucking Company
Once you know how to start a trucking company from a legal standpoint, you’ll need to make sure you are properly insured. You will be required to have liability insurance for your trucking business.
This will cover any possible damages or injuries caused by the commercial vehicle that could occur. It’s best to do your research and get several quotes before making a decision on an insurance provider.
Funding Your Trucking Company
One of the biggest questions you’re probably facing is how to actually fund your trucking company. An investment of somewhere around $20,000 can get you started. This would potentially include the cost of insurance, permits, state-specific payments, and a vehicle down payment.
There are a variety of options for finding funding your trucking company, including lenders who specialize in making loans to the trucking industry. Another option is to use a home equity line, sell property, or use your personal savings if these are viable solutions for you.
In order to approach a lender, you should calculate your earning potential. You’ll first need to establish how much you plan on charging your customers. This should be based on miles per thousands of tons of cargo that you will be transporting.
It will be important for you to charge a competitive rate to win over new clients, and your prices should be negotiable. You can also have different price ranges for different types of customers. It’s also important for your prices to be high enough that you can make a profit.
Establishing a Budget is Part of Knowing How to Start a Trucking Company
You need to establish a budget for your trucking company so you can better plan out your expenses and future profits. Think about every possible expense, including office expenses. This can also include things like truck repairs, fuel, cost of work, maintenance, insurance, and truck loan or lease payments.
When working on your budget and if you have financing in place, remember to keep interest rates and future loan payments in mind. You’ll need to make monthly or annual payments on things like registration, truck payments, cost of living on the road, etc.
You should also factor in regular household bills into your budget since you own your own business. This will also come out of your profit. In general, avoid unneeded expenses and always keep track of your fuel usage.
Decide on Your Services and Location
Trucks are not a one size fits all kind of business, so you’ll need to determine what services you’re able to offer since these will depend on you and your trucks. The services you offer might also depend on your location.
Some possible services include moving heavy-duty equipment, agricultural equipment, long-distance trucking, or oil and gas. You may also want to offer your services to the food and beverage industry.
These different services will have different needs, like the refrigerated truck example above, but you may also be able to charge more for those types of services. It will be important for you to determine where you want to be competitive. For example, you could focus on reliability, customer service, speed, price, etc.
Additionally, determine a location for your office. You will need somewhere to park your truck and this might depend on if you’re a solo driver and business owner or if you plan to employ drivers. Also, the more trucks you have, the more difficult it will be to find a space.
Look for a location that leases commercial space with parking available for your vehicles. You should also look for a place that will allow you to perform maintenance and repairs. Consider charging more depending on your location, especially since it’s more difficult to drive a truck through a major city.
Buying or Leasing Your Equipment
Once you have the location to park the trucks, it’s time to either buy or lease your equipment. If you have the funds available to purchase your trucks, consider whether you want to buy a new or used truck. New trucks will likely mean fewer repairs and maintenance.
You might also be able to get a discounted price per vehicle if you plan to buy all of your trucks at the same time. If you plan to lease trucks, you could look into a lease-to-own option as well.
When leasing your trucks, do research to ensure you’re finding the right dealer. Compare options and offers before selecting which dealer to work with.
Hiring Your Drivers
Unless you plan to be a solo carrier, you’ll need to hire drivers and this can sometimes be a challenge. Establish a retention strategy and recruitment process to bring in new drivers.
A trucking company is just like any business, you want to think about the employees and their happiness in order to retain them. Things like performance-based rewards, driver safety scores, efficiency, and life on the road are all important to consider.
Along with drivers, you’ll need an office manager, depending on the size of your business. This could be an office manager who remains at the location and keeps your business open during normal hours.
Promoting Your Business and Growing Your Client Base
In order to both bring in new employees and new clients, you will need to promote and market your business. This should start with your website. Make sure your website is easy to navigate and includes your branding.
It’s also helpful to focus on getting positive reviews from both employees and customers. Sites like Google and Yelp will help you get more customers if they see genuinely positive reviews. Many companies check these kinds of ratings before choosing a supplier.
Also, to stay profitable, it’s in your best interest to diversify your customer base. If a single client is more than 20 percent of your revenue, you could end up in trouble if you lose them. It’s important for you to have a range of clients with consistent loads to drive.
Learning How to Start a Trucking Company is Possible
By following this comprehensive guide, you can learn how to start a trucking company and become a successful business owner. Keep in mind that you’ll need to start with a business plan, financing plan, and overall budget before moving forward with any major purchases.
Also, remember to consider all of the important details including the location, staffing, and marketing for your business.
Contact us today and fill out an application to learn what type of business loan you qualify for!