A basic guide to starting a trucking company

With driver shortages increasing, demand for trucking services will continue to grow. If done right, becoming an owner-operator of a trucking company could be a successful venture. 

Whether you already own a trucking company and want to increase your fleet or are just starting out, starting your own business is never easy. The best way to do this is to start with a business plan, just like any other business. 

How to Start a Trucking Business 

A well-thought-out business plan is essential for starting a successful trucking business. Below are steps and tips for starting one. 

Make a Business Plan 

Starting a trucking company involves more than hiring a few drivers and some trucks. While it may not happen right away, you must prepare for managing drivers, buying vehicles, meeting deadlines, transporting delicate goods, and other logistical challenges that will undoubtedly come up. 

Writing a business plan will give you an operational strategy to guide you as you get your business going. Your business plan should include the following: 

• Executive summary -- top-level summary of what is in the plan. 
• Industry overview -- description and statistics about the trucking industry. 
• Market analysis and competition -- a thorough analysis of the market and your competition. 
• Marketing and sales plan -- describe your service, pricing, and distribution. 
• Ownership and management plan -- describe the legal structure, management, and staffing of your business. 
• Operating plan -- physical requirements, such as office, warehouse, equipment, and labour. 
• Financial plan and forecast -- demonstrate that your business will grow and be profitable. 

Writing a business plan forces you to think things through and address critical questions. It gives you a clear sense of how your trucking company will function, what your staffing needs will be, and how much money you will need. The most important part of your business plan will be the financial section, especially if you are seeking financing to get started. 

Form a Legal Entity 

You will need to form a legal entity to determine the tax structure of your trucking business. Depending on your country's regulations, you have several options. Consult legal and tax professionals for advice on which type of tax structure is best for your business in your specific jurisdiction. 

Purchase Assets (Trucks) 

Transport trucks can be expensive, but you will need them if you plan to offer transport services to distributors and suppliers. You can start with one vehicle, build or purchase a small fleet, and recoup the cost over time. The choice is yours. 

Whether you purchase new or used trucks is also up to you, but keep in mind that you want vehicles that are safe and will have minimal maintenance costs. Consider this as you decide whether to purchase new or used trucks. You may find the sweet spot between brand new and gently used. A truck may cost you between €15,000 and €175,000. You can choose to seek financing, but a down payment of €1,000-€15,000 may often be required. 

Leasing vehicles is another option. It can be more expensive than buying your trucks outright, but it has some benefits. Two of the most appealing factors are no or low down payments and no long-term commitments. Leasing can free up some of your start-up cash flow and leave you with a financial cushion to get your company up and running. 

Comply with Industry Requirements 

Because there are so many safety concerns involved, the trucking industry is highly regulated. Contact your local transport authority for specific requirements, which typically include: 

• Operating licence from your national transport authority 
• Commercial driving qualifications for all drivers 
• Digital tachograph cards and equipment 
• International transport permits if operating across borders 
• Vehicle certification and roadworthiness testing 

Without these certifications, your company may be fined or shut down, so be sure you have all of them before your trucks begin rolling. 

Hiring and Retaining Drivers and Employees 

Unless you plan to be the sole owner, you will need to hire some employees. As your company grows, you may need to hire the following: 

• Drivers 
• Payroll manager 
• Logistics coordinator 
• Dispatch operator 

When you hire drivers, they must have the appropriate commercial driving qualifications and all the necessary safety training to operate a transport truck. You could run into serious liability issues if one of your drivers gets into an accident, so you want all your drivers to be well-qualified to do the job. 

Insurance for Your Fleet 

When starting a trucking company, you can purchase a variety of insurance coverage, such as: 

• Vehicle insurance 
• Liability insurance 
• Goods in transit insurance 
• Employer's liability insurance 

Of course, you hope that an accident doesn't happen, but they sometimes do. You'll need the right coverage to protect your business. 

Initial Costs of Starting a Trucking Company 

There are a range of costs required to start a trucking company. Here are just a few of them. Your costs will depend on how many trucks in your fleet and numerous other factors: 

• Operating licence fees 
• Insurance: Approximately €10,000 per truck per year 
• International permits and registrations 
• Vehicle testing and certification 

On top of this is the cost of equipment, office or warehouse space, and other expenses depending on your business model. 

Growing Your Trucking Business 

Make sure your trucking business is diversified. A good general rule is that no single client accounts for more than 20 percent of revenue. This means you should have five clients or more, sending you a steady stream of loads. To market your business and attract more clients, build a company website, use online freight boards, and establish a social media presence. 

Use Fleet Management Software to Maximise the Efficiency of Your Fleet 

Running a successful fleet isn't easy, but it can be more manageable with the right tools. Fleet management software, for example, offers numerous benefits for owner-operators. Depending on the software you choose, you can take advantage of features such as vehicle diagnostics, idle time tracking, advanced reporting, and more. 

We hope that helps answer your question on “How to start a trucking business?” Contact us to learn more ways Powerfleet's fleet management solutions can save you time and money.