Starting a Trucking Business: Essential Steps to Success

Are you considering starting a trucking company? Here are some simple steps to get your business going and set yourself up for success. 

Are you thinking about 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, want to increase your fleet, or are just starting out, starting your own business is never easy. Like any other business, the best way to do this is to start with a business plan. 

How to Start a Trucking Business 

A well-thought-out business plan is the key to 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: a top-level summary of its contents 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 labor. 
• 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 financial section of your business plan will be the most important, especially if you are seeking financing to start. 

Form a Legal Entity 

You will need to determine what type of tax structure your trucking business will have, and to do this, you need to form a legal entity. There are four options: 

• Sole proprietorship 
• Corporation 
• Limited Liability Corporation (LLC) 
• Partnership 

Most new trucking businesses are formed as an LLC. This allows you to shift liability to your business while keeping personal assets that may be used for business purposes.  

The tax structure is also more efficient than a sole proprietorship. Consult legal and tax professionals for advice on which type of tax structure is best for your business. 

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 safe vehicles with 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 between $15,000.00 and $175,000.00. You can seek financing, but a down payment of $1,000.00-$15,000.00 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. The following industry standards are required to own and operate a trucking business: 

• US DOT Number: issued by the US Department of Transportation, this number identifies your company. 
• CDL: a commercial driver’s license. All your drivers are required to have a CDL to operate one of your trucks. 
• Motor Carrier Operating Authority Number: issued by the Federal Motor Carrier Administration to companies that transport commodities or passengers. 
• Internal Registration Plan and Fuel Tax Agreement: required if you plan to operate in multiple states or countries. 

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 a Commercial Driver's License 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: 

• Auto insurance 
• 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 the number of trucks in your fleet and numerous other factors. 

• US DOT Number: $300.00 
• Insurance: $10,000.00 per truck per year 
• International Registration Plan: Varies by state/province/country 
• Motor Carrier Operating Authority Number: $300.00 

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

Start-Up Expenses for a Trucking Company 

Starting a trucking company is expensive. There are many costs to cover, including down payments on equipment, license plates, insurance, and license and permit fees. In addition, there are fuel, repairs, parking, technological upgrades, miscellaneous supplies, taxes, and other miscellaneous expenses. 

Funding Your Trucking Business 

As you can see, costs are a challenge when starting a trucking company. Your new business may not qualify for a bank loan, or you may not want to get locked into repayment terms of cash advances or unsecured loans. Many truckers use factoring. This offers the cash-flow cushion you need to avoid running low on cash if your customers take a while to pay. 

Preparing Trucks for the Road 

The last set of requirements you need to prepare for before your trucks can haul cargo is the following: In addition to your US DOT number, your company's registered name decals on your vehicles, and your International Registration Plates, you need your Radio Frequency Identification tags clearly displayed on your windshield. 

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 Maximize 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, "How do I start a trucking business?" Contact us today to learn more about how our fleet management solutions can save you time and money.