Trucking transport makes about 70 percent of all freight needs in the US. It means more than $700 billion worth of goods are transported through trucking annually. It sounds like an excellent time to start your own trucking business.
But there are challenges that you have to tackle if you are serious about pursuing this path.
There are driver shortages, increasing freight rates, and rising demand for freight services. Thus, developing a trucking business plan is extremely important before diving into this industry.
Like any other business endeavor, you have to make a truck transport business plan for your semi trucking or trucker company. This plan should incorporate all the details you need to start, the operation phase, and how you can sustain it. Likewise, starting and running a business like this will require funding.
Are you ready to start your plan?
To help you, we have a comprehensive guide on creating a trucking business plan so you can start and succeed in your trucking business.
Why Do I Need a Trucking Business Plan?
When starting a trucking company, a business plan is essential for financing. Besides the financial aspect, a comprehensive truck driving business plan provides a critical guide to all the steps you need to take when starting your trucking company.
Steps to Take Before Writing a Business Plan
Before you create a truck business plan, you need to take a few important steps:
- Register your trucking company: There are several ways to register your trucking business, including a sole proprietorship, an LLC, a C Corp, or an S Corp
- Get an employer identification number (EIN) from the IRS: You can apply to get your EIN online
- Apply for a motor vehicle carrier number (MC)
- File a BOC-3 with the Federal Motor Carrier Safety Administration
- Get the apportioned plates
- Set up an International Registration Plan
- Set up an International Fuel Tax Agreement (IFTA)
- Get a Unified Carrier Registration
- Get truck insurance: You can talk to an experienced insurance representative to create a policy according to your specific needs.
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Steps to Create a Trucking Business Plan
A business plan for a trucking company is a document that includes your financial goals and explains in detail how you plan to achieve them. Here is what a trucking business plan should include:
Create an Executive Summary
This is the first step to creating a business plan for a transportation company. It should include a mission statement of your trucking business, a short description of your services, and a detailed summary of your financial growth plans.
Write a Company Description
A trucking company description should include the following information:
- Business registered name
- Business location
- Most important people in your team
- Business structure (sole proprietorship, partnership, or corporation)
Perform a Business Financial Analysis
If you already have a business, you will probably want to include income statements, balance sheets with your assets and debts, and cash flow statements that show how much money comes into and goes out of your trucking company. You can use charts and graphs to make this section readable and easy to understand.
Business Goals
This very important section explains what you want to achieve long-term and short-term. Business goals can be helpful if you are looking for a business loan as it explains why you need the funds and how this financing can help you grow your business further.
Products and Services Description
In this section, you should describe in detail the products and services you plan to offer. Try to explain how your products work, how much you plan to charge for them, who is your target group and what are your sales and distribution strategies.
Marketing and Sales Plan
Describe how you plan to advertise your services to your target market. In this section, you should also focus on how you will develop customer loyalty.
Write Financial Projections
If you seek investors, this is one of the most important steps in preparing your trucking business plan. This section summarizes how your trucking business will create enough profit to repay the loans or how you plan to return the investments. Include monthly or quarterly sales, expenses, and profit estimates for at least three years. Finally, it would be best if you were as accurate as possible, so make sure you carefully analyze your numbers.
Create Appendix
The appendix lists any additional information or materials you couldn’t fit anywhere else, for example, key employees’ resumes, licenses, permits, patents, receipts, bank statements, and personal and business credit history.
Read more: How much does it cost to start a trucking company?
The Most Common Mistakes People Make When Creating a Business Plan for a Trucking Company
- Misspellings: Don’t hurry when creating a trucking business plan. Remember that everything must be written correctly, including the business name, address, and EIN.
- Ignoring the business basics: Remember, you are the boss now. That means that your trucking business plan should include detailed information about how you plan to start and develop your business from scratch.
- Wanting too much: If you are looking to be a dispatcher, a carrier, and a brokerage at once, you might be taking on too many responsibilities at once. A trucking business plan that includes too much information can become confusing and ineffective. Companies that build slowly have a bigger chance to succeed, so focus on fewer things to accomplish in the beginning.
Trucking Business Plan Examples
Creating business plans for trucking companies can be confusing, but it’s not that hard when you have all the necessary information. Here is a useful example of a trucking business plan you can use when starting a trucking company:
Download Your Free Trucking Business Plan Template
Read more: The 10 Best Trucking Companies To Work For
Trucking Business Plan FAQ
What is the Target Market for Trucking?
While each trucking company has specific services, they offer to different target groups. Typically, when writing a trucking business plan, you can focus on three target markets:
- Companies that need your freight
- Delivery services
- Drivers
Is Starting a Trucking Company a Good Idea?
Starting a trucking company is always a lucrative business. The trucking industry is one of the most profitable sectors in the US because of the country’s robust infrastructure of major roads and highways. This makes trucking the best option for freight transportation, regardless of the current situation in the economy.
How Do I Make My Trucking Company Successful?
Although the trucking business is profitable, it can also be very competitive. Therefore, knowing how to run and grow a trucking company is crucial. Here are a few ways to make your trucking business successful:
- Support the right target market
- Determine the right rates (per mile)
- Determine your business costs
- Work directly with shippers
- Avoid cash flow problems
How Long Should My Trucking Company Business Plan Be?
While there are no general rules regarding how long your semi truck business plan should be, one of the best options is to keep it between 30 and 50 pages.
Will I Have to Attach Expenses and Budgets to My Trucking Company Business Plan?
Yes. This information should be included in the Appendix section of your trucking business plan.
How Much Does It Cost to Start a Trucking Company?
The initial costs for starting a trucking company are around $6000 to $15000. This conservative estimate does not include the equipment that you will use. The start-up costs will cover the registration and documentation requirements. This will be around $900 to $1500, while each plate for your trucks can range from $500 to $3000.
You will also need permits and tax payments for Heavy Vehicle use which can go up to $600 per truck. There may also be state-specific tax applied to your vehicles. On average, this costs about $500.
In terms of start-up costs, it is favorable for smaller operators who can start quickly using a low investment. Large-scale trucking businesses may need millions in capital to start running. So if you want, you can start with a single unit. This will trim down your capital to a manageable level until you start earning.
Fixed and Variable Costs
Typically, start-up business costs are separated into fixed and variable costs. When you tag them as fixed costs in your business plan, it includes the prices of your truck unit, yearly permits, insurance costs, taxes, and regular maintenance expenses. Variable expenses, on the other hand, pertain to repair costs, fines, and fuel costs. On average, these variables will cover about 60 to 70 percent of your operating costs.
US DOT Number and Business Registration
Another essential you must prepare for when you want to know how to start a trucking company is to get a US DOT number. This can cost around $300. Likewise, business registration costs for new business owners can range around $500. It can vary from one state to another.
UCR or the Unified Carrier Registration is another expense you must foresee when you want to start a trucking business. For two vehicles, the cost is around $69, but for three to five, it is $206. You may visit their website to know more about registration fees and requirements.
Buying Equipment
In terms of buying equipment, carefully choose units in excellent condition. Even if you pay a premium for them, it will entail lower maintenance costs in the long run. Its maintenance record should be mint and accurate if you need to acquire used units. Second-hand but road-worthy units may also give you the advantage of lower yearly insurance, thus giving you more for your new business plan.
Ideally, rigs should be around five years or younger with less than 600,000 miles on record. If it has better specs, it will give you more or less 10 years of worry-free operations sans costly repair expenses.
Trucks for such a business can cost around $15,000 to $75,000. You may also need to pay the downpayment for each unit, depending on the vehicle you choose. All of these should be considered when preparing your financial projections once you write a business plan for your trucking company.
Insurance
Commercial truck insurance is one of a trucking business plan’s most important fixed expenditures. There are several considerations to come up with total coverage. One main aspect to consider is the age of the equipment, its location, and the commodities that need hauling. Insurance companies will consider all of these when calculating your insurance premiums.
Depending on the equipment or trucks’ condition, the cost of premiums for your annual insurance is around $10,000 for each. The figures can change depending on the type of coverage, year and condition of vehicle, model, make, and the experience of your drivers. Ideally, you can get an FMCSA-compliant logging device to reduce the cost of your premiums.
Read more: Tax deductions for truck drivers
What is the Easiest Way to Complete My Trucking Business Plan?
Every business requires some form of capital to start operating. You can start a trucking business plan while you are still building up your capital to buy more equipment and expand your small trucking business. Here are some tips for your trucking business plan.
Preparation and Planning Phase
Although it may not involve as much cash, a small trucking company still needs a lot of planning and preparation to ensure it starts on the right foot. The best way to start is through the owner-operator approach. You will have trucks, but you will also be involved in the operations. Some new owners also start as drivers, but if you don’t have industry experience, you have to study and understand all the requirements of running this business. Regardless of the structure you want in your company, it is essential to prepare and plan everything.
Choosing a Plan Format
You can pursue two types of business plans in a trucking business. The traditional format is comprehensive and will involve various details such as company description, executive summary, market analysis, sales strategy, personnel plan, and others. The other one is the lean startup format which is more flexible and requires fewer details than the traditional plan. A startup business plan format may include an executive summary, marketing, financial projections, and others.
Legal Requirements
The FMCSA requires different requirements depending on the type of operations you are interested in engaging in. You will need a CDL if you will be driving your equipment too. Some legal requirements you need to comply with are the US Department of Transportation Number, International Fuel Tax Agreement stickers, International Registration Plan, and Motor Carrier Number.
Funding Your Business
Financial projections are crucial in any business plan, especially in the trucking industry. To start a trucking company’s operations, you may need around $10,000 to $30,000. It will cover the cost of the vehicle down payments, insurance, and other state-specific compliances.
Even if you do not have enough capital, there are many ways for you to finance your new business. With good credit records, you can find reasonable funding through a bank loan or a home equity credit. You can also use your savings or dispose of some of your properties to build up funding for your new business.
Buying Assets
If funds are available, it is always best to purchase your assets and, ideally, always go for quality when it is for commercial use. A new truck means fewer maintenance expenses, repairs, insurance coverage, and downtime. If you are considering second-hand units, make sure they are well-maintained and come from known manufacturers. This forms part of the executive summary of your business plan, including your plan to grow your business.
Preparing Trucks for the Road
Before you can start freight movements, you must have all the requirements for you to roll out. Ensure you comply with all insurance premium coverage, USDOT numbers, and registrations. There should also be RFID tags on your windshield and your International Registration Plates if you will move across different states. These should be one of the plans you have in your truck owner operator business plans.
Hiring of Drivers
One of the most challenging parts of running a trucking industry is hiring and retaining good drivers. The industry has a high turnover rate, even more, prevalent in small carriers. The best strategies for driver retention should start with an effective recruitment process. Take note of the applicant’s crash data and roadside inspections for the last three to five years. Make sure to plan and focus your offers on the employee’s happiness and fulfillment, not just cash-based incentives. Hiring and keeping good drivers is one of the keys to success in a trucking business.
Growing a Client Base
For your truckers company to grow, you need a steady stream of clients, not just long-term ones. Make sure that one client will not cover more than 20 percent of your revenue. Thus, keep at least five clients for a constant supply of transporting jobs. Attract more clients using a website, social media presence, or online freight boards. Marketing is a crucial part of growing your business. Make sure to have a business plan for marketing your services and your trucking company.
Use the Right Tools
Fortunately for new owner-operators today, there are now apps and tools that will help you increase productivity and run your company successfully, such as the Electronic Logging Device. Modern ELDs also have better fleet management features such as idle time tracking, IFTA calculations, and vehicle diagnostics. It is also easier to develop a business plan for a logistics company, including all the marketing and social media exposure with the help of innovative tools.
Conclusions
The US trucking business remains one of the most challenging yet rewarding ventures that interested owner-operators can explore. If you do the right research, plan, and prepare appropriately, you can boost your operations, marketing, and funding and make your company run smoothly.
Are you still confused about trucking business plans and insurance? Or do you want an insurance quote on your future trucking business? Contact us today and get all the information you need fast and for free!
