This is the appropriate trucking business company for you if you are enthusiastic about becoming your boss and have a deep interest in transportation. But think twice before making a decision. When you run your own company, you may choose the loads you carry, the people you work with, and the hours you work, but you no longer get a regular salary. Instead, your competence as a company owner and commitment to success determine how much money you make.
Continue reading to discover the nine stages to success if you want to establish a trucking business with only one truck.
Why would you start your own trucking business?
Over-the-road (OTR) business drivers earn an average wage that is more than three times that of owner-operators. However, to calculate the owner-operator’s profit, all costs must be subtracted from this pay. The two most crucial things to manage are cash flow and spending. Starting a trucking business and becoming an owner-operator provides a number of benefits for people with business acumen, driving expertise, and the ambition to be their boss, including:
- Owner-operators are more autonomous and can be adaptable and operate according to their schedules.
- If you own your trucking firm, you may expand it to generate more revenue.
- Your income will greatly improve, and your company will advance if you hire additional trucks and drivers. At this point, a lot of business owners give up driving and switch to managing the firm from a home office or fleet yard.
- The nine stages outlined here will help you follow a tried-and-true route to success as you learn how to establish a trucking business.
Nine steps to launching a trucking business
1. acquire expertise
The first thing you need, if you still need to become a driver, is experience! Nothing can better prepare you for discovering how to launch a trucking business than actual on-the-road experience. It could seem like stating the obvious, but it’s still important to say.
You must first get a commercial driver’s license (CDL) before beginning to gain experience on the roads. You may enroll in a training program offered by a trucking firm or enroll in a private truck driving school. Many owner-operators start as company drivers to develop their driving abilities, get on-the-road experience, and figure out how to launch a trucking business.
2. Select a company structure.
Registering your new firm as a business entity is the next stage in the process of starting a trucking company. Be sure you comprehend which choice is the ideal match for your organisation since there are lots of them, each offering different personal responsibility protections, taxation strategies, ownership structures, and other technical variations. Look into limited liability corporations (LLCs) if you’re beginning a self-owned trucking business since they safeguard your personal property as a business owner and provide a number of tax benefits.
When you create an LLC, the majority of states demand that you name a registered agent. Legal papers are received and sent on your behalf by a registered agent. Additionally, they will be the state’s primary point of contact and get information on taxes and compliance.
You’ll learn the importance of getting an EIN (employment identification number) for your LLC as you continue learning how to launch a trucking business. Opening a business bank account is only one of the numerous operations that need an EIN, which is essential for your company.
3. Select a company name
Being memorable is a key component of how to launch a successful trucking business. Legal requirements are needed for a distinctive company name, but picking a name that is memorable and different is crucial for marketing reasons as well.
Consider how you want people to see your company. Write down terms related to your company on pieces of paper, then combine them in various ways to come up with innovative ideas. Make sure the name you choose has anything to do with transportation, is short, and can be translated.
There cannot be two legal business names in the same sector or region. Use the computerised search function on the USPTO website to check whether the name you’re considering is available.
4. Register your company
The documentation required to satisfy many of the FMCSA standards will prove to be the most time-consuming aspect of starting a trucking business. The good news is that although it may take some time, it’s luckily easy to finish.
Before you begin hauling, your firm must adhere to the majority, if not all, of the following requirements, depending on the kind of business you run:
Utilised to gather and track data on safety, inspections, accident investigations, etc.
The sort of operation and the permitted cargo your trucking firm may conduct are determined by its operating authority.
- A yearly federal tax on trucks weighing more than 55,000 pounds, called the “Heavy Vehicle Use Tax” (Form 2290), helps pay for highway projects and upgrades.
- Unified Carrier Registration (UCR) is a system created to verify that your trucking firm has proper insurance in each state where it does business.
- The International Registration Plan (IRP) is a license that enables your trucking business to operate throughout all U.S. states, the District of Columbia, and Canadian provinces.
- The International Gasoline Tax Agreement (IFTA) is a reciprocity pact between the provinces of Canada and the contiguous states of the United States that aims to make it easier for drivers to report their gasoline use. Quarterly filings are necessary.
- A BOC-3 filing is a federal document that names a process agent to whom legal documents may be sent in a court case. In each state where you have offices or sign contracts, a process agent must be chosen.
Drug testing and the FMCSA Clearinghouse:
By registering all drivers with the FMCSA Clearinghouse, companies and government organisations may access up-to-the-minute information regarding drivers’ breaches of the drug- and alcohol abuse program. To fulfil insurance and licensing obligations, this data is utilised.
Verify that you have all the necessary licenses and licenses before learning how to establish a trucking firm. Depending on the services you provide and where you operate, other registrations may be needed in addition to those already mentioned. Contact a qualified FMCSA filer who can efficiently and affordably guide you through the labyrinth of filing regulations to speed up the process.
5. Plan your business.
If you don’t approach it in an orderly way, starting your own trucking business might be difficult. Work on creating a strong business strategy when your licenses and permissions are being provided.
A solid strategy will guide you through every step of launching and running your trucking company, including how to set up, manage, and expand your new enterprise. The essential components of a well-structured business strategy are as follows:
- Business Overview
- Sector Analysis
- Customer Research
- Competitive Research
- Marketing Strategy
- Plan of Operations
- Team Management
- Budgetary Plan
Download a free trucking business plan.
As you get immersed in the chaos of running a business on a daily basis, the value of having a plan will quickly become clear since it will keep you focused on developing your company in accordance with a blueprint. Your company strategy will include money as a vital component. Plan how much you will make over a certain period in your financial plan before deciding how much you will spend, save, and borrow. Next, find short-term financing solutions to give a consistent cash flow and long-term finance sources for your capital assets, such as trucks and trailers. Lack of operating capital and inadequate cash flow management are two of the main reasons why small companies fail. Be aware of and plan for the significant operating expenses associated with moving freight.
6. Obtain startup capital
As your trucking business takes off, it will become clear that it operates in a capital-intensive sector with significant starting and ongoing operating costs. Depending on the type, model, and features, the price of a new commercial vehicle starts well over $100,000 and may rise to about $200,000. Depending on interest and amortisation, leasing expenses might vary from $2,500 or more per month for a used truck to more than $3,500 per month for a new tractor. By looking into government financing alternatives and alternative lenders like freight factoring businesses, you may learn how to launch a trucking business with little to no money. Here is a brief explanation of a few possibilities for you to consider:
Loans from the Small Business Administration (SBA)
SBA loans are a highly sought-after source of capital because of their low interest rates and accommodating payback schedules. If you are eligible, these loans are an excellent alternative for starting your trucking business. To qualify for an SBA loan, you must have a strong credit history and score.
loans for small businesses
In this financing arrangement, the lender gives the borrower a quantity of money that must be paid back over time, often considerably more quickly than with a traditional loan. Compared to SBA loans, eligibility is simpler, but interest rates are higher and might be fixed or variable. This kind of financing arrangement needs to be revised for long-term planning when looking at finance possibilities for how to establish a trucking business.
finance for commercial trucks
Loans for equipment financing are a fantastic way to get money to buy new or old vehicles. In that, the truck serves as collateral for the loan, a truck loan is similar to a standard car loan. Monthly payments are required, and approval is based on the borrower’s financial situation.
Freight hedging
Freight factoring is a very common means of financing for trucking businesses at any level of growth. It is a different kind of financing utilized to quicken cash flow and provide continuous working capital access. Truck business owners have a consistent supply of revenue by selling accounts receivable invoices at a discount in return for quick payment, which helps them cover operating expenses, pay bills, pay the wages of their drivers, and pay taxes on time. Each factoring invoice serves as security for advance money, removing the possibility of losing higher-valued assets, as can happen if a business fails on a bank loan.
The two main advantages of freight factoring are the simplicity of qualifying for both new and experienced trucking firms, as well as the expansion of credit limits as your company expands. eCapital increases the bar for freight factoring services in the market. We provide more money than competitive lenders can, faster, and with less fuss. To reassure potential customers that your business will benefit from our flexible terms and committed customer care, we offer a free 90-day trial period. Give notice and end the agreement without penalty if, for any reason, you are not pleased with our quick financing, committed customer service, or back-office assistance.
7. Stay in line
The business of freight transportation is highly regulated. For activities to continue, safety and legal requirements must be met. Keep up with time-sensitive filing obligations, such as CDL multi-year renewals and IFTA’s quarterly tax filings. Loss of good standing or severe fines may come from failure to comply with these standards. You may keep current with the aid of an FMCSA-registered filer.
8. Create a fleet management procedure.
Understanding how to handle vehicle maintenance, legal and safety compliance, fuel management, and driver supervision is a part of learning how to establish a trucking business. As your business expands and your fleet grows with additional vehicles, managing these products gets more difficult. Utilize fleet management software to simplify the management of your fleet. To handle gasoline expenses and reporting effectively, use eCapital’s fuel card service. The following is what the program offers:
- Significant savings compared to the list price
- Credit conditions for gasoline purchases
- Money transfers
- total command over card use and security
- Capabilities for simple fuel reporting
9. Develop your company
The whole success of your new business depends on your ability to launch a trucking company and create long-term sustainability from day one. To guarantee resiliency throughout time, diversify and expand your clientele. The greatest guideline is to avoid letting any one client account for more than 20% of your income. Be assertive and persistent in searching for fresh sources of freight.
The sources and strategies that are advised for increasing loads and expanding your clientele are as follows:
board loads
Transport brokers
commercial networking
Referrals
partnerships for cooperation with other airlines
media exposure
using social media
Superior customer service is the key to growing your company and keeping clients. To increase customer service levels, use a transportation management system (TMS). To meet or exceed customer expectations, plan, carry out, and optimize the shipping of products, then advise customers of the specific location of their shipments and track on-time performance. That is how to start a trucking business with the potential to expand!
FAQs
Many worries may surface while learning how to launch a trucking firm for the first time. The following are the principal inquiries and responses that operators should be familiar with straight away:
How can I get money for my trucking company?
Small firms may no longer get operational lines of credit from commercial banks due to their credit restrictions. Seek alternative lenders with experience in funding the transportation industry. For new businesses, expanding fleets, and organizations going through a change, a freight factoring firm is the perfect financial partner. The high advance rates and minimal fees of eCapital are preferred by truck business operators who are concerned with effective cost control.
How can a small business get a loan for a truck?
Look for alternative lenders’ equipment financing or ABL (asset-based lending) options. When compared to typical bank loans, the terms and eligibility conditions are much more favorable.
Is running a trucking company successful?
Yes, if you focus on controlling costs, maximising equipment utilization, and charging a competitive yet high enough rate. Use these four tools regularly to maximize financial performance:
Cost-per-mile calculator – this tool is used to compute the total cost to operate your business on a per-mile basis.
Profit and loss calculator – know your profit margin for each load before you haul.
Credit check tool – verify your customers’ ability to pay before you haul.
Five Star Load Board – find loads and monitor freight rates.
Why do trucking companies fail?
The main reason contributing to the failure of many trucking companies is that they undercapitalise their business. Ensure your trucking company has efficient processes to maintain positive cash flow and the financial resources to access working capital. eCapital’s unsurpassed speed of funding is your ticket to uninterrupted financial support.
Is running a trucking company hard?
Trucking involves long hauls, long days, and extended time away from home. For independent-minded entrepreneurs who can work hard and provide outstanding service, it’s an opportunity to shape your financial success.
Can I start a trucking company without driving?
Yes, but you will need to employ CDL drivers rather than operate alone. You are the best person to establish your company’s brand as a reliable service provider. Build your reputation and grow the business before you step out of the driver’s seat.
How much money do you need to start a trucking company?
Startup costs can range from about $10,000 to $20,000 (not including your equipment). This includes obtaining all licensing, permits, and insurance.
How do I get loads for my truck?
See Step 9: Build your business.
How do I get trucking contracts?
Prospect and build a referral network to connect with targeted shippers best suited for the lanes you run. Use brokers and dispatching services to expand your reach.
What credit score do you need to buy a semi-truck?
Lenders generally require a minimum credit score of 600 to buy a semi-truck. Better rates and terms are available to business owners with a score of 640 and higher. If you’re in the 700s, your rates, terms, and options will be even better.
How much does insurance cost for semi-trucks?
Your needs, driving history, credit, and other factors determine the amount of your owner-operator insurance premium. The policy should include motor truck liability (also known as public or primary liability) and physical damage coverage. An owner-operator with new authorities can expect to pay about $16,000 per truck per year for a commercial truck policy.
Check Also:
Dropshipping: How to start a dropshipping business with no money
How to Approach Local Business for Sponsorship: A Comprehensive Guide