How To Start A Trucking Company in 7 Steps
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The trucking industry is full of opportunity—and can be extremely lucrative for people who do it right. But how, exactly, do you do start a trucking company?
Let’s take a look at everything you need to know to build a successful trucking company from the ground up.
Why Start A Trucking Business?
Before we jump into how to start a trucking business, let’s cover why you might want to consider starting a trucking business in the first place. And the biggest reason you should consider getting your foot in the door in the trucking industry? The opportunity.
According to data outlined in Business Insider, 80 percent of all cargo in the United States is transported by trucks—which is four times as much cargo as the next four transportation methods (air, pipeline, rail, and water) combined. And that much cargo being transported by truck offers a huge opportunity for entrepreneurs looking to get into the trucking business; currently, the trucking industry is valued at approximately $726 billion—with freight revenues projected to grow by a whopping 75 percent by 2026.
And it’s not just the business that stands to make large revenues; owner-operators of trucking businesses also pull large paychecks, with the average owner-operator making $141,000 per year.
Clearly, starting a trucking company is a great small business opportunity. But how do you go about starting your own trucking operation?
Step 1: Figure Out What Kind of Trucking Business You Want to Start
The very first step to starting a trucking company? Figuring out what kind of trucking company you want to start. The type of trucking company you want to launch will guide the entire business building process—so it’s important to get clear on your business type from the beginning.
Not sure what kind of trucking enterprise you want to pursue? Here are a few questions you’ll want to ask yourself:
- What size company do I want to build? Building a small, regional trucking company with one or two trucks is a completely different process than building a large-scale national chain with a fleet of trucks—and may require different steps to get there. Before you start building your business, figure out what size you ultimately want your trucking company to be. Keep in mind, you don’t have to settle on a specific size for the long-term; you can start a trucking company with a single truck, hauling cargo and driving the truck yourself—and then build it into a larger operation over time. But knowing what size business you’re going to launch will help you make a plan for starting your business—and a plan for scaling it down the line.
- What kind of customers do I want to work with? As mentioned, 80 percent of cargo in the US travels by truck. That means a lot of customers need to hire trucking companies to move their cargo—and before you launch your business, you’ll want to know which of those customers you’re going to go after. Knowing your target customers from the get-go can help ensure you build a trucking business that’s going to appeal to those customers—and help you land their business.
- What kind of services am I going to offer? Obviously, when you launch a trucking company, you’re going to be offering transportation services. But are you going to get any more niche than that? For example, are you going to specialize in last-minute cross-country freight jobs? Do you want to focus on transporting a specific type of cargo? Defining what services you’re going to offer from day one will help you build a more effective business—and make sure you’re setting yourself up to be able to successfully deliver those services to your clients.
- What’s my point of difference? According to the aforementioned data from Business Insider, there are currently 1.3 million trucking businesses in the US—and if you want your business to succeed, you need to be crystal clear from the beginning about what sets you apart from those businesses. Before you take any steps to actually build your trucking organization, make sure you’re taking the time to think about what makes you different, special, and unique—and make sure to work that point of difference into every part of the business building process.
Step 2: Draft A Plan
Once you’ve figured out what type of trucking company you want to build, it’s time to create a plan for how to build that company—which means drafting a business plan.
To use a trucking analogy, think of your business plan as a roadmap; you’re the driver—and your business plan is going to give you directions on how to get from where you are now (a person with an idea for a trucking organization) to where you want to go (a business owner with a thriving trucking empire).
But what, exactly, do you need to include in that roadmap? Your business plan should include detailed insights into how you plan to start, grow, and manage your business, including:
- Business name. What are you going to name your business—and how does that name represent your business in the market?
- Target market. Who are your ideal customers? What are their trucking/freight needs? What companies are they currently working with to get those needs filled?
- Competitor analysis. Who are your biggest competitors? What kind of influence do they have over your target demographic? How are you going to stand out and differentiate yourself from the competition—and show customers that you’re the truck company they want to do business with?
- Business location. Where is your company going to be based?
- Equipment and supply needs. What kind of trucking equipment do you need to get started? What kind of general business equipment or tools do you need to get your business up and running?
- Start-up budget. What are your startup costs? What are your operational costs? Do you have the capital to get your business off the ground—or will you need to connect investors, lenders, or other outside funding options?
- Pricing structure. What services are you going to offer your trucking customers—and how do you plan to structure your pricing?
- Operational strategy. How are you planning to operate and manage your business? For example, how are you going to schedule your drivers and determine the most effective routes?
- Staffing needs. Who do you need to hire to get your trucking business started—including truck drivers and administrative staff? How do you plan to hire, build, and train your team?
- Marketing strategy. How are you going to market your trucking company and find clients and customers?
- Revenue goals. What are your revenue goals? How much revenue do you need to bring in each month in order to cover your costs and turn a profit?
A business plan takes time, energy, and effort. But it’s an investment in the long-term success of your trucking endeavor—and an absolute must before you launch your business.
Step 3: Take Care of the Legal Side of Starting a Business
Once you have a plan for your trucking organization in place, it’s time to take care of the legal side of starting a business. So, what does that mean? The steps you’ll want to take to legally form and establish your business include:
- Choose your business structure and register your business. There are a variety of ways to structure a business—and you’ll need to figure out which structure is right for you and take the necessary steps to legally register your business through the proper channels. If you decide to form a limited liability company (LLC), you’ll also need to appoint a registered agent to act as a contact between your business and the state—which, depending on your preference, could be you, a partner, or a trusted third-party (like an attorney).
- Secure an EIN. You need a business bank account in order to start financially operating your business—and in order to open a bank account, you’ll need an employer identification number (EIN) from the IRS.
- Open up business bank accounts. Once you have your EIN, you can open your business bank accounts—which you’ll want to do as soon as possible. Mixing personal finances and business finances can lead to compliance issues (and a huge headache when tax time rolls around), so open your business bank account before you officially launch your business so you can keep all your expenses separate.
- Secure insurance. Getting insurance for your business is always important—but it’s especially important when you’re starting a trucking operation. To operate safely, you’ll need to secure liability insurance, cargo insurance, and accident insurance to cover injury and damages.
Step 4: Get the Right Licenses and Permits
In order to start operating your trucking enterprise, there are certain licenses and permits you’ll need to secure, including:
- Commercial Driver’s License (CDL). If you’re going to be driving trucks professionally, you’ll need to secure your CDL.
- MC Number. Your Motor Carrier Operating Authority Number—more commonly referred to as an MC or Motor Carrier Number—dictates what kind of trucking business you run and what kind of cargo you’re authorized to transport. Depending on your business, you may need to secure more than one MC Number.
- USDOT Number. As a trucking company, you’re subject to inspection and audits from the Federal Motor Carrier Safety Administration (FMCSA). Your USDOT Number is a unique number FMCSA uses to identify your company during said inspection and audits—and is a requirement for the majority of trucking companies.
- IRP and IFTA. If you’re planning to operate across state lines, you’ll also need to secure International Registration Plan license plates and International Fuel Tax Agreement Decals for all your trucks.
The licenses and permits you’ll need to operate will depend on your business and location; make sure to research licensure and permitting procedures in your area to ensure you have everything you need to legally get your business up and running
Step 5: Secure Trucks and Any Other Necessary Equipment and Tools
You can’t start a truck business without trucks—so the next step in the process? Getting your trucks.
You can either lease or buy your own trucks (including used trucks)—but make sure that the trucks you secure for your business are equipped for your needs. (For example, if you’re going to be transporting extra-large items, you want to make sure the truck bed has plenty of space to accommodate the cargo).
At this stage, you should also secure any other tools or equipment you need to successfully run your business—for example, office equipment, training materials, or a payroll and workers’ compensation platform.
Step 6: Hire A Team (When You’re Ready)
When you’re just starting your trucking business, you’re probably going to be wearing a lot of hats; for example, you may be driving the truck, managing business development, and tackling all the financial and administrative tasks necessary to keep your business moving forward.
But as you grow, you’re likely going to want to hire a team. Depending on your business/goals, this may include:
Make sure that, when you’re building your business, you hire people that you trust to represent your business and your brand—both on the road and with your customers.
Step 7: Find Customers
You’ve done everything on the backend to get your trucking company ready to go. So the final step in the process? Getting out there and finding customers to work with and cargo to transport.
There are a few different ways to connect with potential customers for your new business venture, including:
- Load boards. Load boards (like 123LOADBOARD or DAT TruckersEdge) are online marketplaces that connect truck owner-operators, shippers, customers, and freight brokers—and can be a great place to find work for your business.
- Marketing. If you know the customers you want to work with, you can take measures to market to them directly—including traditional marketing (like mailers or newspaper ads) and digital marketing (like social media marketing).
- Networking. Your network can be a great place to get referrals—so tell everyone you know, both personally and professional, that you’re starting a business in the trucking industry; that way, if they know of anyone with a need for trucking services, they can send them your way.
What Does It Cost to Start A Trucking Business?
Now that you know the steps to take to start a trucking organization, let’s talk about how much you can expect it to cost you.
According to Keep Truckin, some of the costs you may expect when launching your trucking operation:
- Startup costs (business formation, permits, IRP plates, etc.): $6,000 to $15,000
- Truck down payment: $1,000 to $10,000
- Payroll: approximately $32,000 per driver per year
- Variable costs (fuel costs, repair costs, etc.): 60 to 70 percent of operating costs
- Insurance: Up to $10,000 per truck annually
- Marketing: $5,000
Total potential costs to start a trucking business: $7,000 – $25,000 plus driver salaries, insurance, and operating costs
Keep in mind that your actual business costs will vary; while these numbers give a ballpark for a smaller trucking operation, Keep Truckin estimates that a larger scale operation could need up to $5 million in capital to cover startup and operating costs.
Can You Start A Trucking Business with No Money?
As you can see, there are certain costs associated with starting a trucking company. But what if you don’t have the cash to cover those costs? Can you still start a trucking business?
Unfortunately, no. Like any business, you’ll need some startup capital in order to get your trucking organization off the ground—whether that’s money from investors, a business loan, or your own bank account.
Is Starting A Trucking Business Profitable?
Now that you know how to start a trucking company—and what kind of cash you might need to get the ball rolling (or, in this case, the truck driving—the big question is: is starting a trucking business profitable in the long run?
And the answer is: it certainly can be—but it all depends on you.
Your business’ profitability will depend on how much money you bring in vs. how much money you spend to run your business—or, in other words, how much you spend for every mile you drive vs. how much you charge your customers for each mile. If you’re charging your customers more per mile than it costs to drive, your trucking business will be profitable—but if you’re charging your clients less than your costs, your company is going to be in the red.
It sounds basic, but if you want your trucking organization to make money, make sure your prices more than cover your operating costs; if they do, you’ll become more profitable with every haul. But if not? Every haul will push you further and further into debt.
Get Out There and Launch Your Trucking Empire
The idea of starting a new business can be daunting—and that includes a business in the trucking world. But now that you know exactly how to build a successful trucking/freight business from the ground up, you have everything you need to launch your trucking empire. So what are you waiting for? Get out there and get trucking!
Photo credit: Hourly.io