The trucking industry is one of the most profitable sectors nationwide, and if you’re considering starting a trucking business, you can definitely be profitable.
Statistics show that truckers haul 71% of all the United States’ freight, translating to over $700 billion in shipped products and goods per year. However, there’s still an ongoing driver shortage and rising freight demand.
So, what better time to learn how to start your own 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.
If you have questions about trucking insurance or want to check the current prices, you can contact us today and get all the information you need fast and free!
How to Start a 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. But, before we go into the nitty-gritty, let’s take a better look at the profitability aspect and decide whether it’s even worth starting a trucking business.
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, the trucking industry is incredibly competitive. Usually, the truckers that enter 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 long-term business.
Is Starting a Trucking Business Worth It?
The trucking industry is expanding, with the sector eclipsing over $700 billion in revenue from 2015 to 2020. If you’re considering learning how to open a trucking company, now’s the time. The demand for truckers is growing, and hauling will be essential if consumers need goods.
That said, below is a detailed guide on how to start trucking companies.
How Much Cash Do You Need to Start a Trucking Company?
Starting your own trucking company will cost you between $50,000 and $80,000. Depending on how many drivers and trucks you have to begin with, you can start a trucking business for as little as $25,000. Or you could pay more than $1 million.
Here are different types of costs to have in mind when starting a trucking business:
Starting a Trucking Company: Business Loans Options
It may be difficult for new business owners to start a trucking company. There are several big challenges that new trucking businesses face, including:
- Tight profit margins
- A huge pool of competitors: there are over half a million trucking companies in the US.
- Only 15% of new trucking companies manage to see their second year in business.
However, with some smart financing, new trucking businesses can overcome these challenges.
Types of Business Loans for Trucking Businesses
A truck loan is an amount of funds borrowed by a trucking business to meet its expenses. Truck loans are usually used for:
- Covering the cost of starting a trucking business
- Buying truck insurance
- Leasing or purchasing equipment
- Hiring drivers
- Scaling up business
Here are some of the most common business loans for trucking businesses:
Startup Business Loan
Startup business loans are very helpful if you already have a business plan and are ready to start a trucking business but don’t have the money to put everything in motion.
Business Line of Credit
Numerous costs make financing a trucking business a real headache. And because these costs are constantly changing, trucking companies can rely on a line of credit that gives the trucking business the freedom to borrow as much as they need to.
Trucking companies rely on their equipment. Business equipment loans can help trucking businesses purchase the necessary equipment without having too high debts.
The SBA or US Small Business Administration helps small businesses by covering up to 85% of a business loan amount. This means that your trucking business can be financially funded even if you are not sure you can repay the loan.
Reasons for Starting a Trucking Business
You may have heard of someone who has already started a trucking business and earns good money. These stories are true, and even though starting and running a trucking business isn’t easy, there are many reasons why you should start your own trucking company.
You Get to Travel a Lot
One of the best things about starting a trucking business is that it allows you to travel without limits. Just imagine: you can start driving a truck and travel to new destinations while earning money.
There’s nothing worse than being stuck to a boring job and watching your life slip away day-by-day. On the other hand, starting a trucking business gives you all the flexibility you need while giving you enough space to earn money.
You Don’t Need Education
Having a degree is always a good thing. But when it comes to starting a trucking company, the good news is that you don’t need a fancy degree to run a business successfully. All you need to know is how to drive, and you can start your trucking fleet.
There is No Work Shortage
One of the best things about running a trucking business is that there is enough work for everyone throughout the year. That said, you can start your trucking company anytime you want.
How Hard is it to Start a Trucking Company?
Starting a trucking company is not very difficult. While it’s not cheap, if you follow the steps to starting a trucking company you will find in this article, you will be able to start your own trucking business easily.
Once you start a trucking company, you should consider ways to insure your business assets. You can discuss your specific needs with experienced East Insurance Group representatives anytime you need.
What Do I Need To Start A Trucking Company?
1. 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 paying truck drivers, deadlines, vehicles, goods or products, and other logistical challenges.
That’s why having a business plan is crucial for owners, helping you make an operational strategy and 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 your plans.
- Mission Statement – This will articulate what your business does, its operations, and its goals.
- Trucking Company Goals and Objectives – This should include your business’s specific metrics, including the annual revenue target and the number of clients you can use to measure your business’s progress and success over time.
- Marketing Strategy – Your business plan should define your target demographic and clearly show what your competitors are doing.
- Financial Plan – Every great business plan contains a current balance sheet, break-even analysis, and year-end budget.
2. Name Your Truck Business
Whether you’re an owner-operator or a sole owner, it’s wise if you come up with a catchy business name for your company.
Once you’ve chosen the name, make sure you do the following legal measures:
- Secure the domain name.
- Trademark it.
It’s wise to take the necessary legal measures to avoid conflicts regarding your company’s brand name, ensuring you get all rights reserved.
3. Secure Funding
Generally, starting a trucking company, you can expect to invest around $10,000 to $30,000. This covers the costs of down payments for the trucks, permits, licenses, insurance, salary for the truck drivers, and state-specific fees.
If you’re worried about how to start a trucking company without funds, there are many ways you can secure funding for your new trucking business, including:
- Finding investors – Depending on the business framework you pick, consider selling equity in your company through investors. Funding your company through venture capitalists frees you from paying the money back, like with loans. However, it involves joint ownership, meaning you must consult with investors before making business decisions.
- Applying 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.
Read more: Cost of Starting a Trucking Company
4. Choose a Legal Entity
Like 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 are:
- Sole proprietorship – It means you will be the sole owner and operator of the business with full responsibility concerning funds, debts, assets, and liabilities.
- Corporation – It creates a business entity that protects against possible lawsuits against personal assets.
- Limited Liability Company (LLC) – As the name suggests, it limits liability by setting a boundary between personal assets and the company and offering numerous legal advantages.
- Partnership – It is a legal structure between two or more individuals who join together to carry on the trucking business.
Although the final decision will be up to you, most startup trucking companies choose to start under an LLC structure because it shifts liabilities to your company and offers a more reasonable tax structure.
5. Meet Legal Requirements
Here are the legal requirements that come with knowing how to own a trucking company:
Commercial Driver’s License (CDL)
Everyone will need a valid commercial driver’s license if you run an owner-operator business and plan to operate a heavy truck or hire drivers to drive the vehicle. To get this license, you or your drivers must undergo an extensive background check, training, written exams, and a final driving test.
For truck drivers 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 by picking up a manual at your local DMV office.
U.S. DOT and Motor Carrier Authority Numbers
Both the U.S. Department of Transportation (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 the USDOT and MC numbers by registering your truck business with the FMCSA. To get these numbers, you’ll need to complete an MCS-150 and Safety Certification application. You’ll get the numbers after filing your application.
2290 Tax Forms for Heavy Vehicle Use Tax Regulation
If your truck weighs over 55,000 pounds, you’ll need to pay heavy-highway vehicle use taxes under the heavy use tax regulation. You can pay these fees by completing and filing a 2290 tax form with the IRS annually.
International Fuel Tax Agreement
Governments have established the IFTA agreement to make reporting 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. Moreover, your trucks must have an IFTA decal, which should be renewed annually.
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. 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 Federal Motor Carrier Safety Administration (FMCSA). However, if you want to learn more about the system, you should consult with the nearest 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, which usually requires you to pay registration fees, which vary depending on the distance between the state lines and Canadian provinces.
6. Purchase Your Trucks and Assets
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 vehicles. Purchasing used trucks might seem more economical at first, but soon your startup costs will increase due to needs for repair, maintenance fees, and downtimes.
If you do not have the means to purchase a truck, leasing might be another option. However, its costs will be higher later than owning the trucks you operate.
7. Insure Your Assets
Having trucking insurance protects your business from an unexpected financial crisis and covers risks like vehicular damages or injuries due to accidents. This is where East Insurance Group can help you (click the link for a free quote or to ask questions).
Different trucking companies typically buy various insurance coverage options, but the most common ones include:
- Auto insurance
- Primary liability insurance
- Cargo insurance
- Passenger personal accident insurance
- Collision insurance
8. Hire Employees
Unless you want to run your trucking business following the owner-operator structure, you will have to hire some employees. Positions that you should consider adding to your business include:
- Payroll Managers
- Logistics Coordinators
- Dispatch Operators
9. Market Your Business
Here are some different marketing strategies that will ensure steady income flow:
- Create a professional website with detailed information about your trucking business and services.
- Make marketing materials such as a memorable logo and brochures outlining your services.
- Use online load boards where truck owner-operators, freight brokers, shippers, and carriers can post and search for loads.
- Develop business relationships by attending events and trade shows.
How Do You Find Loads to Haul?
One of the most important things about developing a trucking company is learning how to find loads. While it can be time-consuming, with the right information and tools, mastering this skill can pay off. Here are some of the ways to find loads to haul:
- Find a freight broker
- Negotiate contracts directly with shippers
- Use truck load boards (at the trucks stops and apps)
How Can I Start My Own Trucking Business With No Money?
Wondering how to start a trucking business with no money? Although starting a trucking business isn’t cheap, you can start your own trucking company even if you are short of funds. There are several ways to start a trucking company with no money, including:
- Different financing options
- Commercial truck loans
- Lease to own vehicles
- Buy used vehicles
How Much Does it Cost to Start Trucking?
It usually costs between $50,000 and $80,000 to start a trucking company. In most cases, this cost depends on how many drivers and trucks you have to begin with.
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.
Knowing how to start a trucking company will come as you gain experience. But you’ll need to develop a solid business plan, research, and meet the industry’s many legal requirements. Then, purchase and insure your assets as rigorously as possible.
We hope this checklist helped you understand the industry and has encouraged you to start a trucking business even more. Take advantage of the ample and profitable opportunities the trucking industry offers for a more prosperous, lucrative, and rewarding career.
Do you have questions about how to insure a trucking company? Or do you want a free quote? Contact us today and get all the information you need fast and for free!