In the United States, the trucking industry is a profitable business for many. It gives elevated possibilities for expansion and earning as well. If a trucking business is working within an identified structure, it has a higher chance of being successful. If you are just starting in this business and want to build a name, you can’t just do it right away. There are some factors you have to consider. You need to look for the right guidance to get everything done.
You are not just after the latest technology in the trucking industry today, but you are looking for the possibility of opening your own trucking company even if you have little experience in the business.
To become successful, with a little knowledge of the trucking industry, you need to build some useful skills. And the most important thing, you must have the capital. Whether you want to be a sole owner or an owner-operator, you still need to drive and hire qualified drivers. In the last few years, it’s been a normal situation to have truck driver shortages. And according to ATA or American Trucking Associations, driver and owner or operator services have been a demand in the industry. It means there are major profits and revenues awaits for you.
So, where to start in this business?
Creating a successful new company and knowing the possibility of getting into this business are two different things. There are various processes you have to consider before you get into the board of profitability. The good thing is there are many associations and companies are willing to help you on your way to success. From your startup business fund to important regulatory requirements, you’ll be getting a lot of help. You have to ensure that you wouldn’t miss any single and vital steps for the success of your new business venture.
Yes, there is no easy way to success, and there’s no perfect path to follow. But, part of every company’s success is having a good eye for details. You cannot miss anything. And to help you out, there are basic steps to ensure that trucking owner-operators will have a positive outcome in this business.
Let’s define what an owner-operator is first.
Owner-operator is another form to consider if you want to build your own trucking company. It is a person who owns the trucking business, and at the same time, runs the day-to-day operations of the company. This term is commonly used in different industries, but most of the time refers to the trucking business.
If you believe that you have enough knowledge of the trucking industry, you can be an owner-operator. You will have an option to be behind the wheels or run your company’s whole operation. It comes with freedom and autonomy, but of course, it needs more business skills and responsibilities.
Here are the most important steps to take so you can start a trucking business:
1. Evaluate Your Weaknesses And Strengths
It is the first and most important step if you want to open any business, including trucking. It needs an honest self-assessment if you could rightfully do it. Certainly, you already have an idea or first-hand experience of how this kind of business operates upon starting it. But that doesn’t mean that inexperience individuals cannot do it in this industry. You just have to realize that if you don’t have any experience, there can be more disadvantages than strengths. Even if you smell an opportunity in this business, but you don’t know the difference between a trailer and a tractor, then think twice before investing in it.
Given the effort and time, you will learn a lot of ideas in the trucking business, especially those you don’t have experience at. But before that, be honest with yourself and try to assess if your capabilities and talents are what it takes to build a trucking business. If you put a lot of time and effort, you’ll understand everything about it. It’s always a great idea to sit down with people who can also give you an honest opinion and assessment of where you can stand in the trucking business before you go on with the next step of becoming your own boss.
2. Draft a business plan
Start your new trucking business with a structured plan. It is just like finding a new job with a set of goals and a fresh perspective. It will serve as your main map to success and help your business grows. It’s a big factor in identifying your goals, organizing things, knowing possible obstacles, and presenting value proposition on this business venture.
3. Establish your company legally
Being active with your trucking business operation as to how it is rightfully organized will set the boundaries between the business liabilities and your personal assets. It will also protect your own properties as a business owner, your taxes, other business advantages, and several legal transactions. You can use the business startup wizard in deciding which organization is the best fit for the new trucking business.
4. Acquire applicable permits and licenses
Most local governments, states, and countries need businesses to comply with the right permits and licenses before they open for business. Take note that 150,000 jurisdictions are filed across the country, and each has independent requirements for it. Depending on where you operate your trucking business and your service, any number of permits and licenses must be complied for the business.
The trucking business is also regulated. Before you start operating, you have to acquire and understand the needed licenses, legal documentations, and truck permits to open a trucking company. Below are some of the required documents for your reference.
- Motor/Vehicle Carrier Number
- CDL or Commercial Driver’s License
- USDOT Number
5. Buy the right equipment
Getting the right equipment can make or break your business. It’s a significant factor to consider that will measure the success or failure of your trucking company. In selecting the proper equipment, take note of the following items below.
- Can the truck or motor carrier accommodate the required amount of the cargo? For example, if you are about to transport perishable goods, you should consider a refrigerated compartment.
- Is leasing or buying new equipment for your start-up business a good option? Are there any alternatives before you get started with the business operation?
6. Choose the right insurance coverage
Insurance for your vehicle or truck is vital. That’s why it’s another initial step to set up before you start with the business operation. As an owner or operator of your company, you have to get business insurance for the new truckers company, whether it’s a semi trucking company or a commercial trucking business. The best way to secure the premium options for the trucker company is to communicate with a few trusted agents. Below are the possible options before deciding on the policies to get.
- Primary liability insurance
- Passenger accident insurance
- Cargo insurance
- 7. Secure Trucking Company Financing
- Physical damage insurance
The lifeblood of most trucking companies is financing, just like any other business. Trucking, by definition, is mostly reliant on equipment. It is just an addition to different other company expenses like payroll, office supplies, company vehicles, which has an average of $80,000 every truck. Whether you finance or lease your motor carrier or truck, you still need the truck financing option. Besides that, you need extra funds for multiple items critical for the day-to-day business operation, such as insurance, maintenance, operating authority, business fees, and employee benefits. In general, equipment serves a good purpose for the daily success of a trucking company.
7. Put up your fleet
Trucking companies cannot run their business without trucks. So once you secure the financing, you need to purchase a fleet, whether one, two, or a hundred more. As an owner/operator, your truck is the key to the whole business operation, aside from the insurance and financing opportunities necessary for your trucking company. Without trucks, you have no source of profit and revenue.
The important thing here is for owners to get their chances of success. The trucks to get must be the exact match to the kind of trucking company you wish to operate. The successfully you can match the truck to your structured business plan, the more efficient you can manage your business.
8. Find your market or set of customers
As a business that is just starting in the industry, it’s hard to get a good reputation to win large accounts. But, it is not impossible as well. A lot of trucking companies start by using their local contracts. They try to attend different trade shows to create a client base. If you have previously worked on some clients, you can ask for reviews and recommendations as well.
9. Know and track your finances, expenses, and credits
Given that you have years of experience in the trucking business, but with spotless driving records, you cannot run and start a trucking company all by yourself. And even if you plan to be an owner/operator and drive your own motor carrier, it’s still impossible to do successfully manage the office and do all the heavy lifting at the same time. It might work for a short time if you have fewer customers, but if you have bigger clients, you need to set up a new formula and need more people.
To grow and maintain your trucking company, you need someone to book jobs, answer the phones, and maintain all your company’s records. It includes the business’ limited liability, fuel tax, operating authority expenses, employee’s pay and benefits, and a lot more. You can outsource some of these through a financial, legal tax advisor, but in the long run, you need the right people to help you with your business growth. In some cases, even if you choose to be an owner/operator of your trucking company, you need to get additional drivers to swap with during your time off. Usually, it is the driver you need to hire first.
Financing is the blood of any trucking companies, but credits, on the other hand, are considered the lifeblood of financing. When you apply for a fund and have a bad credit history, it’s quite difficult or costly to access initial capital. So if ever you get a financing option, make sure not to miss any payment to maintain good credit. If ever you take a hit, it will impact your chances to get new financing or will require you to pay a higher interest rate for the loan. You don’t want to imagine how much it can hurt your business, especially if you are just planning to start a trucking company.
10. Stay in compliance
Operating and owning a company means staying updated and complying requirements on time, from IFTA’s tax returns to the multiple years of renewals for the CDLs. If you fail to submit the requirements will result in paying penalties and loss of good business standing. It’s important to comply with the state’s reporting of corporate requirements. Again, if you fail to do so may cause the state to cancel your company’s LLC’s existence.
11. Never stop learning
It is not just enough to start a trucking business, then run or operates. You must never stop learning how to make your business grows. After all, no human has all the answers to all business’ queries, especially when it’s about the trucking industry. There are several points to create money as an owner/operator as long as you don’t limit what you can learn from this industry. If you are starting a trucking business, you can always learn how to operate efficiently by exploring the markets. You just have to remain humble and always be on the lookout for all other details on how to be successful in this business.
So, how much does it cost to start in the trucking business?
Now that all vital information has been laid out, the question is, how much money you need in starting a trucking company? The right answer is, ‘it depends.’ The scope, scale, and size of your company influence the total amount to start a trucking company. There are other definable costs you’ll be ready with, and it’s all explained below.
- Formation and Registration Documents: $500 and Up
- Heavy Vehicle Taxes: $0 to $550
- IRP Plates: $300e
- Truck Prices: $15,000 to $175,000
- Driver Salary: $43,680 Average Cost
- Insurance: $10,000 and Up
- US DOT Number: $300
- CDL Endorsements: $142.25
- Customer and Marketing Acquisition: $5,000 and Up
- Unified Carrier Registration: $76 and Up
These costs are estimated only and may vary depending on the company’s goals, the enactment of your recent legislation, and the state. Most likely, for startup, you need a budget of $10,000 to $20,000, plus an additional cost for a truck, maintenance costs, driver salaries, and ongoing office expenses and insurance.
The trucking industry’s competitiveness today makes the startup trucking company challenging to maintain. As you consistently complete the jobs and comply with all the requirements, there’s an excellent chance for business opportunities to increase and grow your market.