Starting a trucking business is no easy task. Like every other business, you need to plan well ahead and prepare accordingly so that you have a greater chance of success. One thing is for certain, though, there will always be a high demand for trucking businesses because a lot of goods need transportation all over the world.
However, a lot of entrepreneurs who want to start such an endeavor are worried about whether or not they’ll have everything they need to succeed. Don’t worry. 70% of all freight in the US is transported by trucking companies.
Moreover, 91% of those companies operate with six or fewer trucks in their fleet, which means small carriers are running the show. In other words, aside from careful planning, you won’t need a large amount of capital to launch your business. With that in mind, here are a few ways to start and operate a successful trucking company.
Create a business plan
Every new company needs a business plan. This is basically a document that outlines how you describe your objectives and how you plan to achieve your goals.
This plan will guide you on your way to success so make sure you give it enough attention and detail. That said, here are a few factors that should be included in your business plan:
- Executive summary
- Business description
- Market analysis and research
- Competitive analysis
- Marketing and sales plan
- Equipment and vehicle procurement plan
- Management and ownership plan
- Operating plan
- Financial plan
As you can see, you’ll need to cover every aspect of your business in great detail. Once that is done, you can officially begin preparations for launching your business.
Choose a business structure
As you may already know, there are legal and administrative obligations you have to fulfill to start a trucking company. One of those obligations is choosing a business structure. A business structure will determine the amount of paperwork, licenses, taxes, permits, etc., you’ll have to file so that you can register your company.
It’s recommended that you choose an LLC (Limited Liability Company) as your business structure. This structure isn’t expensive to set up and you, as an owner, are not personally liable for the company’s liability or debts, for instance.
On the other hand, a sole proprietorship is the cheapest structure to set up, but the owner is solely responsible, i.e. carries all the liability for its company’s actions and debts. Furthermore, you need a business structure so that you can register a name for your company and obtain EIN (Employer Identification Number) to open a bank account, as well.
Set up your fleet
As mentioned before, the majority of trucking companies in the US operate with six or fewer trucks. That means that you can start with just one and work your way up if the need arises. Needless to say, you have two options before you: you can either buy a new truck or a used one.
Used vehicles require maintenance and replacement parts, so the costs may go up the longer the vehicle is in use. A new truck, on the other hand, is a more expensive investment but requires less maintenance. It’s also important to equip your vehicles with the right technology and tools to make them more efficient.
For example, an RV camera system can help with navigation, and it can record everything that happens on the road. Should your driver get involved in an accident, you’ll have the recording of the events, which can help when filing an insurance claim.
Obtain licenses and insurances for your company
Every company needs specific licenses and permits to operate legally. Moreover, insurance is often desirable yet optional, but some states may require you to obtain certain insurance as a mandatory obligation for starting your company. That said, here are some of the licenses, permits and insurance policies you might need to start a trucking company:
- A commercial driver’s license (CDL) – This is for drivers of your vehicles.
- A USDOT number – The Federal Motor Carrier Safety Administration (FMCSA) uses this number to identify a company when they conduct audits, inspections and investigations. Also, you need this number to gain a safety permit if you plan on transporting hazardous materials.
- International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA) – These are required if your trucking company offers its services across different states.
- General liability insurance – This insurance is a must-have for all businesses. It protects you and your company from any legal claims made against you.
- Workers compensation insurance – Another must if you have employees. This insurance protects employees in case of an accident. They have medical bills and lost pay coverage, while they forfeit their right to sue your company.
- Cargo and vehicle insurance – Again, in case of an accident or a disaster, you want to insure both the cargo you transport and your vehicles so that you’re adequately compensated for your losses.
Starting and running a successful trucking business is a complex but achievable endeavor. If you plan everything accordingly and prepare in advance, you’ll be able to enjoy the fruit of your labor.