How Much Does It Cost To Start A Trucking Company?

How Much Does It Cost To Start A Trucking Company?

How Much Does It Cost To Start A Trucking Company?

Many industries rely heavily on trucking to transport goods to various destinations on almost all continents. Regardless of the market stability, the trucking industry will definitely be around for a long time. This presents a great business opportunity.

Starting a trucking business can be very lucrative once the company is running. However, not everyone has enough money to start it. How much does it cost to start a trucking company anyway? Here’s everything you need to know. 

How Can I Start a Trucking Business With No Money?

Trucking is one of the major industries in the U.S. But most people would say that a trucking company to get started operating needs a lot of money. However, the reality is you can start your company even though you are short of funds. As long as you know the ropes, you can be on your way to making a good income. Below are the options you can choose to start your trucking company, even if you are short of money.

Financing Options

Of course, aside from learning how much does it cost to start a trucking company, you also need to prepare a lot of money, but if you cannot provide it, someone else can help you. Although some people may have thousands of dollars to spend, most don’t. Fortunately, there are different funding options that one can choose from.

Commercial Truck Loans

A loan is one of the best resorts you can choose if you don’t have thousands of dollars set aside to use in starting your trucking company. Loans have different rules and terms, so you should consider comparing loans using monthly payment, down payment, and every detail. To qualify for a loan with a food interest rate, you need to have good credit and work history.

Consider Renting

Trucks and other equipment can cost much, and to avoid paying for these pricey items, consider renting them instead of buying them. Use an equipment lender instead of paying a large sum of money and paying them on installment. Renting equipment can be an easier way than searching for the right financial institution.

Lease To Own

If you don’t want to spend money on a rental, you can consider the lease-to-own option. Any money you pay for rent will later turn toward you buying it. Once you are done paying for the lease, the truck will be yours.

Buy Used

If you have a little money set aside, you can consider buying one that is used. A used vehicle that was well taken care of is a great option. Used trucks cost less than buying new ones.

You can consider these options if you don’t have any cash to start with. Some loans don’t require a down payment and others even allow poor credit. Many companies specifically finance truck loans; all you have to do is a little research. Explore these options and find out what works best for your situation. 

Is Owning a Trucking Company Profitable?

Owning and knowing how to start a trucking company can be challenging. The cost of operation can vary with the price of fuel. Dump trucks usually consume 5 to 6 miles per gallon of fuel so, any change in the fuel’s price can affect the company’s cost of operation. The dump truck service is a $19 billion industry expected to rise by 1.8% every year for the next five years. Hence, operating a dump truck company needs money and several startup costs.

Trucking Company Startup Costs

Typically, it will cost you around $50,000 to start a trucking company. Depending on the number of drivers and trucks you choose to begin with, you can create a trucking company for as little as $25,000 and go to $1 million.

There are different types of costs you need to have in mind when starting a trucking business. There are variable costs such as fuel, tires, repair, labor, and maintenance, and there are fixed costs such as equipment costs, taxes, license, insurance, and management. 

How much does it cost to start a trucking business infographic

Equipment Costs

When starting a trucking business, you need to have at least one truck. On average, a used rig will cost you $25,000 – $100,000, while a new rig will cost $300,000. Remember that you need a reliable rig because you don’t want to make repairs every day. 

Training Expenses 

Of course, if you haven’t driven a truck before, you will need some training. Getting a basic CDL license can cost you $2,500 – $10,000

 

Finding Office Space

Depending on the technology and space you need, setting up a basic home office can cost $300 – $2000. However, as you take on employees, you may need an office outside of your home that will typically cost you $700 – $2000 per month. 

Driver Salaries

Usually, first-year truck drivers make anywhere from \$35,000 – \$45,000, depending on their experience. Also, you can expect to have additional costs such as employee compensation. Employee compensation can cost between $50,000 – $75,000 a year per employee. 

Insurance Expenses

It’s always a good idea to insure your trucking company if you have many clients. Insurance brokers can help you get the best deals on the specific type of policy you need. There are, however, certain costs such as premiums, licenses, and other payments you need to fit into your budget. Depending on the type of policy, the average cost of insurance for trucking companies is around \$3000 – \$7500 per year. 

Maintenance Costs

Your trucking business will also need to pay for regular maintenance, including:

    • Tires: $300 – $700
  • Fuel: around $1.20 – $2 per mile
  • Oil Change: $100 – $300

Is it Worth Starting a Trucking Company?

The trucking industry is very important for the US economy. Without trucking companies, the economy would come to a standstill. That said, starting a trucking company is a profitable business with the potential to make a lot of money. 

How Do I Get Loads for my Trucking Business?

One of the most important parts of setting up a trucking business is learning how to find loads. Here are some of the best ways to do it:

  • Find a freight broker
  • Negotiate directly with the shipper
  • Become a government contractor
  • Use a truckload board

How Much Can You Make Owning a Semi-Truck?

On average, an owner-operator takes home around $2000 – $5000 per week, while investors can make a profit of $500 – $2000 per truck weekly. 

Going From One Truck to More

Usually, a dump truck service travels less than 150 miles a day, which means that most business contracts are from your state or local areas. If your city has a lot of construction projects going on, you have to make sure that you are able to meet the demands of your locality. Expanding your fleet by acquiring more trucks is a smart decision.

Getting Contracts

Experienced and reliable operators are difficult to find, so advertising your company as a good operator would attract and likely get the contract signed. Big companies are expert advertisers and deliver more jobs. You can reach out to them and ask if you can be their sub-contractor. It may not pay as much as a direct contract, but every little helps for a company that is just starting.

Some of the contracts’ resources are the Department of Transportation for your state, local government officials, and local business owners who need trucking services. Distribute business cards to potential customers or find an association of dump truck owner operators that you can join.

Technology Tools

The trucking business belongs to a highly competitive market, and having the right technology tools such as telematics and dispatching software can give you an advantage over more antiquated business models. Besides that, these tools can make your life easier your operations will be more efficient. 

Industry Forecast

Due to the increasing economic growth, there are high demands for commercial goods and products that need to be transported from one location to another. The trucking industry relies on the orders of residential and commercial construction and vice-versa. Infrastructure improvement is positive evidence that there will be high demands for the dump truck business. The market size of the trucking industry is expected to reach $20.64 billion in 2025.

Profit Margins for Trucking Companies on the Rise

Before the pandemic, profit margins in 2017 nearly doubled and were anticipated to climb higher. The U.S. trucking companies have shown a huge improvement in their sales growth and profitability. The net profit margin excludes use tax and includes owner/operator compensation over their market-rate wages. The adjustments made are common to private companies to accurately perceive the company’s operational performance.

The private freight trucking companies expanded their sales in 2017 by as much as 14.9%, and their profit margins expanded to 6% from 2.4% to 4% from the last six years. It is the strongest sales growth recorded since 2014, where sales increased by about 17%. 

According to the Census Bureau, the freight trucking companies in the U.S. have less than 20 employees, considering their small businesses. Although there might be positive and negative impacts on small businesses, the business size can be a good advantage for quickly adjusting to market needs.

The cost of starting a trucking company differs from company to company and state to state. Startup costs also vary based on the nature of the trucking company that you want to get started, including motor carrier, the cargo you want to haul, the operation you will run, insurance coverage, and more.

Whether your company operates with only one truck, semi trucking, a motor carrier, or a big company, ensuring your vehicles and all business-related resources is recommended. Starting your company can be expensive, including authority insurance

The type of trucking authority you want to purchase will depend not only on the number of trucks you are operating but also on the kind of truck, a motor carrier, the quantity, and the nature of the cargo. 

After you have acquired your authority, you need to consider the operational costs. Learning how much does it cost to start a trucking company will help you anticipate expenses and set a budget that you needed for your business.

Starting a trucking company is not a small investment and may be costly. It is essential to find the key factors that can influence your profitability. Managing a million-dollar investment is not for everyone but, if you have the right knowledge and tools, you will realize that starting a trucking business is a good idea after all.

If you liked this article, you might like to know more about tax deductions for truck drivers.

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