Trucks move about 71% of the nation’s freight by weight, according to the American Trucking Associations. The trucking industry generated $738.9 billion in gross freight, representing 81.5% of the nation’s freight bill in 2016.
Whether you are an owner-operator looking to start a trucking company, these numbers show this is an industry that offers great potential. It will take hard work and planning, but if you follow these 7 steps you will be on the road to building a successful trucking business.
1. Create a Business Plan
Before you start a trucking company, you will need to know your goals, explain your value proposition, and understand potential challenges. The plan should include a financial budget that lists all expenses, even the smaller ones, like gas, maintenance and repairs, and tolls. Though a plan helps you get organized, it will not stay the same. It is an evolving document, so intend on the refining the plan as you move forward.
2. Get Your Business Legally Designated
Establish your business as a properly structured corporation or Limited Liability Company (LLC). Structuring your business as one or the other protects your personal assets against liabilities, such as lawsuits. Also, there are tax and business advantages to operating as a corporation or LLC.
3. Determine Which Licenses and Permits You Need and Get Them
In many jurisdictions, businesses are required to get licenses and permit before they open. The type of service you offer and where you operate determines what you will need. The costs for licenses and permits vary, so be sure to add their costs in your financial budget. Contact your local, state, and federal entities to find out what you need.
4. Get Insurance Coverage
Owner-operators need insurance to cover their businesses. To get the best coverage at the best rates, contact several companies. Types of insurance you will need may include: liability, cargo, and passenger accident coverage.
5. Lease or Purchase Equipment
Whether you buy new or used, equipment is a major expense. When considering buying used, be sure you also think of potential repair costs. Before you buy, think about the type of items you plan to carry and their sizes. For instance, if you are shipping canned goods, the cargo area won’t require refrigeration.
6. Decide How You Will Monitor and Maintain Income and Expenses
Keep a log about how and when you will get paid, as well as your monthly expenses. Since truck drivers spend much of their time on the road, it can be difficult to keep track of income and expenses. Having a software system or a person designated to take care of this is imperative before you open.
7. Find Customers
Start building relationships and network with potential customers through marketing and social media platforms. Visit potential customers at their businesses, and go to industry group meetings or trade shows to network with other related to the industry.
Expenses really start to add up when you take into account the many moving parts that are needed to get a successful business off the ground. The costs to start a trucking company may seem overwhelming, but it’s not impossible to get there with the right financing.
First American Merchant (FAM) offers business funding solutions, including business loans and working capital loans, that can help you start a trucking company. FAM offers a quick and simple online application and a streamlined process.