The trucking industry largely contributes to the United States’ economy, making it one of the most profitable sectors nationwide. That’s because the country boasts a robust infrastructure of major roads and highways, making trucking the best freight transportation. Across the country, thousands of commercial truck companies operate on a local, regional, national, or international scale, transporting billions of products and goods across the world.
Statistics show that truckers haul 70% of all the United States’ freight, roughly translating to over $700 billion in shipped products and goods per year. However, despite this, there’s still an ongoing driver shortage and rising freight demand in the country. So, what better time to start a trucking company than now?
To help you establish your own trucking business, here’s everything you need to know about how to start a trucking company, ensuring long-term growth and success.
How to Start Trucking Company
The trucking industry is heavily regulated, so before you can start your operations, there are several things you need to consider to ensure optimal success.
To help you out, here’s a detailed guide on how to start trucking companies.
Develop a Business Plan
Like most businesses, starting a commercial trucking company requires a lot of planning and preparation to ensure smooth operations and success. Even if it’s a small business, the trucking industry usually involves many ‘moving’ elements, including managing truck drivers, deadlines, vehicles, goods or products, and other logistical challenges.
That’s why having a business plan is crucial for owner-operators or an individual owner or operator, helping you make an operational strategy, ensuring seamless business operations when your trucking business is up and running.
When starting a trucking company business plan, it should include the following elements:
- Executive Summary – This consists of a brief explanation or overview of why you’re forming the trucking business and what your plans for it are. It should contain concise descriptions of the products, services, potential clients, company ownership, company projects, and financial forecasts.
- Mission Statement – This will articulate what your trucking business does, its operations, and its goals. Additionally, this should also define your company’s philosophy or principles.
- Trucking Company Goals and Objectives – This should include your business’s specific metrics, including annual revenue target and the number of clients that you can use to measure your business’s progress and success over time.
- Marketing Strategy – Your business plan should define who your target demographic is and give a clear picture of your competitors are doing things. Doing this helps you determine your competitive advantage, allowing you to develop a strategy to boost your competitive edge.
- Financial Plan – Finally, every great business plan contains a current balance sheet, break-even analysis, and budget for the year. Having this helps you determine how much financing your trucking company needs and how you’re going to spend the funds for its growth.
Whether you’re starting as an owner-operator or hiring other truck drivers for your business, you’ll need to structure your fleet, so having a business plan is essential. It’s your roadmap to success and can be adjusted as your company grows, helping you stay organized and ensure continual growth.
Name Your Truck Business
Whether you’re an owner-operator or a sole owner, it’s wise if you come with a catchy name for your company. You can begin formulating a name by listing the keywords you think reflects your business values and character. If you don’t have the time, you can always use name generators on the internet.
Once you’ve chosen the name, make sure you do the following legal measures:
- Secure the Domain Name – It makes your business look more professional, and it protects your copyrights and trademarks while building credibility, brand awareness, and your search engine ranks online.
- Trademark It – It’s best if you search the USPTO’s trademark database to see if the brand name you like has similar ones or taken, but if it’s available, register it as a trademark at the USPTO website.
It’s wise to do the necessary legal measures to avoid any conflicts regarding your company’s brand name, ensuring you get all rights reserved.
Generally, starting a trucking company, you can expect to invest around $10,000 to $30,000, covering the costs of down payments for the trucks, permits, licenses, insurance, salary for the truck drivers, and state-specific fees.
If you’re worrying on how start a trucking company without funds, there are many ways you can secure funding to your new trucking business, including:
- Find Investors
Depending on the business framework you pick, consider selling equity in your company through investors. Funding your company through venture capitalists free you from having to pay the money back, like with loans. However, it involves joint ownership, meaning you need to consult with investors before making any business decisions.
- Apply for a Reasonable Loan
There are plenty of loan products you can choose from, but make sure you compare quotes from different lenders to see which one suits your business the best.
Besides the options mentioned, you can also use a home equity credit line, sell properties, or use your savings to finance your new trucking company.
Choose a Legal Entity
Like with any new business, you must determine what type of legal or tax structure you want your trucking business to have. The four options you can choose from include:
A sole proprietorship is when you own and are operating a business by yourself. If you have the funds and motivation to open an entire trucking empire on your own, a sole proprietorship is ideal. However, keep in mind that since no individual business entity gets created, you’ll be responsible for all debts, including company/personal assets and liabilities.
When running a trucking company under a corporate structure, the owners double as the shareholders, meaning they’re separate entities. Because of this, third parties can’t directly sue the company itself for personal assets, providing significant protection for trucking companies susceptible to getting lawsuits that may trigger substantial losses.
Limited Liability Corporation (LLC)
This legal structure allows you to operate your trucking business while setting a boundary between personal assets and company liabilities. All profits and losses your company experiences will pass through this framework without you having to pay for corporate taxes. Besides protecting personal properties, an LLC offers numerous legal, tax, and business advantages.
A partnership is a legal structure between two or more individuals who join together to carry on the trucking business. It follows the same principles of the LLC structure, minus the people.
Although the final decision will be up to you, most startup trucking companies choose to start under an LLC structure. That’s because the legal framework allows you to shift liabilities to your company, allowing you to protect personal assets that you may use for business during later operations. Finally, its tax structure is more reasonable than the others, making it an excellent option for small startup trucking companies.
Meet Legal Requirements
Whether establishing trucking companies, you need to get licenses, permits, and other legal requirements and keep them current before you can gain the authority to operate legally in the trucking industry.
Here are the different legal requirements the trucking industry requires startup truck businesses to have:
Commercial Driver’s License
If you run an owner-operator business and plan on operating a heavy truck or hire drivers to drive the vehicle, everyone will need a valid commercial driver’s license. If you want to get this license, you or your drivers will need to undergo an extensive background check, training, take written exams, and a final driving test. For a truck driver to be eligible for a commercial driver’s license, they need to be at least 18 years old for local routes and at least 21 to operate a truck from multiple states.
However, all states have different requirements for this, and the best you can find out what you need to get to obtain the license is picking up a manual at your local DMV office.
U.S. DOT and Motor Carrier Authority Numbers
Both the U.S. DOT and MC numbers are required for a trucking company to transport cargo throughout the United States. The USDOT number keeps track of your business’s safety records and compliance with the legal requirements. Meanwhile, your Motor Carrier number or ‘operating authority’ indicates what type of trucking company you’re operating and what kind of products you’re legally permitted to haul.
You can get both the USDOT and MC numbers by registering your truck business with the FMCSA. For owner-operators, you’ll need to complete an MCS-150 and Safety Certification application to get these numbers. The same goes for hired truck operators or drivers. Although you’ll get the numbers after filing your application, your request will still need to be reviewed by the FMCSA.
2290 Tax Forms for Heavy Use Tax Regulation
If you’re a truck weighing over 55,000 pounds, you’ll need to pay for heavy-highway vehicle use taxes under the heavy use tax regulation. You can pay for these fees by completing and filing a 2290 tax form with the IRS every year.
International Fuel Tax Agreement
Governments have established the IFTA agreement to make the reporting of truck fuel consumption easier across the United States. This agreement allows any legal company in the trucking industry to have a single fuel license that owners need to file quarterly fuel use tax returns in their location.
If you want your truck company to work-for-hire across states or the national borders, you’ll need to get an interstate operating authority. You can achieve this by registering a current BOC-3 form with the FMCSA, allowing you to designate an individual in each state where your business operates, acting as a legally permitted ‘process agent.’
Standard Carrier Alpha Code
If you plan on letting your truck operators or drivers haul high-profile goods such as those classified as military, government, international, and intermodal, you’ll need a SCAC code. You can get this privately controlled code from the NMFTA.
Unified Carrier Registration
The trucking industry created the UCR system to verify active insurance coverage in the states where a motor carrier may operate. For you to register for the UCR, you’ll need to have your USDOT and MC numbers, so make sure you take care of that first with the FMCSA. However, if you want to learn more about the system, it’s wise to consult with your state’s Department of Transportation (DOT).
International Registration Plan
If you want your drivers to operate in all states, you’ll need to get an International Registration Plan (IRP) plate. You can get this plate at your local DOT, and it usually requires you to pay for an annual renewal fee.
Without these legal certifications in place, your trucking business is at risk of getting fined or shut down, so before establishing your company, make sure you have all of them for seamless operations.
Purchasing Your Assets
Now that you have a solid business plan and the right licenses, permits, and other legal requirements, it’s time for you to buy your assets. However, before buying anything, it’s best to research the suppliers of vehicles and other tools that can meet your company’s specific needs and the kind of cargo you intend to haul.
But whatever your needs are, the most critical asset that every trucking business needs are the trucks themselves. However, transport trucks are costly, so it’s best if you start with one truck and expand from there if you’re sticking to a budget, but if you have the means, purchasing a small fleet upfront can also be a great choice.
A single truck can cost you around $15,000 to $175,000. If you have tucked away funds and decide to buy personal assets, it’s always better to settle for quality than quantity — especially when it comes to massive commercial motor vehicles. Purchasing new trucks can mean fewer maintenance fees, repairs, and downtimes, saving your business’s profitability.
Insuring Your Assets
All motor carriers need to have the right insurance policies that cover every scenario possible, as trucking is a dangerous occupation, leaving drivers and the vehicles prone to accidents. Having insurance protects your trucking business from an unexpected financial crisis, covering risks like vehicular damages or injuries due to road accidents made by you or your driver.
Different trucking companies typically buy various insurance coverage options, but the most common ones include:
- Auto insurance
- Primary liability insurance
- Freight insurance
- Passenger personal accident insurance
- Collision insurance
If you’re having trouble choosing the right coverage options for your business, you may consult with local insurance agents in your area. You can also look at trucking forums and social media communities for insurance product recommendations. Although no business owner wants any accidents to happen, having the right coverage can protect everything you’ve worked so hard for.
Unless you want to run your trucking business following the owner-operator structure, you’re going to have to hire some employees. Positions that you should consider adding to your business include:
- Payroll Managers
- Logistics Coordinators
- Dispatch Operators
You can find workers by posting job advertisements on the trucking industry job boards, reaching out to colleagues in the sector for recommendations, or hire a recruitment firm to help you employ the best candidates. Although you can easily find the other workers, recruiting and retaining capable drivers is a massive challenge.
You can secure excellent driver retention by having an efficient driver recruitment process. It’s best if you conduct pre-employment screening programs to have an overview of a potential driver’s crash information for the last five years and roadside inspections they’ve undergone in the previous three years. Besides that, you should also focus on maintaining driver happiness and fulfillment to have excellent driver retention.
Employing capable drivers and retaining them plays a crucial role in your trucking business’s exponential growth, that’s why before hiring any driver, ensure you have a thorough plan or strategy.
Set Your Rates
When you’ve bought everything your trucking business needs and have the right people to help you out, it’s time for you to determine the rates you’re going to be charging. You’re going to have to set prices per mile traveled with the goods. Remember that the fees should be high enough to cover the entire operating costs and can give you a fair profit in the end. A great way you can set reasonable rates is by referring to the financial plans and budgets you included in your business plan.
Market Your Business
Now that you know how to start a trucking business from scratch, you’ll need to consider the final aspect of running it, and that’s marketing it. Although staying loyal to a single client may sound tempting, it won’t be sustainable long-term. That’s why it’s best to diversify your target market to maintain steady profitability regardless of the customers’ financial standings.
An excellent way to maintain a steady income flow is by ensuring one client doesn’t account for over 20% of your entire revenue, meaning, at the very minimum, you should have at least five individuals sending you a constant supply of goods to ship.
Here are the different marketing strategies you can make to start a trucking business successfully and ensure steady income flow:
- Create a Professional Website
With most consumers referring to the internet for their services, you must build a compelling site to provide clients with detailed information about your trucking business and services conveniently. The website should include the kinds of services you’re offering, which areas you’re operating, a brief description of your truck fleet, and your company’s contact details, including phone numbers, email addresses, physical address, and contact forms.
- Make Marketing Materials
There are numerous marketing tools you can use for your trucking business. The most notable ones that you should include are creating a memorable logo and brochures outlining the services you offer. Besides those, take advantage of the online marketing niche and create a mailing list to connect with your clients on a deeper level.
- Use Freight Boards
Load board or freight board is an online freight-matching marketplace where truck owner-operators, brokers, shippers, and carriers can post and search for loads that can keep business going. There are many online load boards you can choose from, allowing you to have an overview of the best services and deals.
- Develop Business Relationships
Expand your trucking business more by building relationships with potential clients. You can achieve this by attending networking events or tradeshows related to trucking. You can also create business relationships by joining an industry associate and commerce chamber, expanding your outreach more. Finally, never stop being proactive and reach out to shippers around your area and set up meetings to market your services.
How Profitable is a Trucking Business?
The trucking industry in the United States is a multi-billion dollar sector that offers lucrative opportunities for aspiring business owners. A clear profit exists for trucking businesses as they can gain over 4.8 cents per operating dollar they spend. However, it’s incredibly competitive, and usually, the truckers that get into the business fail in their first year of operations. So, before you dive into the industry, make sure you have a backup plan with the essentials on board to establish a successful trucking business long-term.
Is Starting a Trucking Business Worth It?
The trucking industry is ever-expanding, with the sector eclipsing over $700 billion in revenue starting from 2015 to 2020, and if you’re considering starting a trucking business, now’s the time. That’s because the demand for truckers is still increasing to this day. They serve as the pillar in keeping things going, and as long as consumers need goods, hauling cargo will be necessary for the next couple of years.
Why You Should Start a Trucking Business
The trucking industry is a $700 billion sector in America alone, and the demands are still increasing. Don’t be intimidated by the bigger trucking businesses and start your company today. However, be warned that to establish a successful trucking firm, you’ll have to prepare yourself for the increasing costs associated with the niche linked with weather-related incidents, heating, idling trucks, renewing registrations, licenses, and other legal requirements.
We hope this checklist helped you understand the industry and encouraged you to start a trucking business even more. Take advantage of the ample and profitable opportunities the trucking industry is offering for a more prosperous, lucrative, and rewarding career.