Want to run a successful trucking business? Step 1: Start a trucking business. Step 2: Check out this ultimate starting a trucking business checklist.
In 2017, the US trucking industry contributed revenue of $700 billion, which is 79.3% of the total freight revenue in the country. With increasing shipping needs, the trucking industry has continued to thrive. Starting a trucking company is one of the investments that can guarantee you returns in the long run.
The trucking industry has onerous regulations that can discourage potential businesspersons. Besides, the trucking business has several logistics issues that one needs to understand. But the entry barriers shouldn’t deter you from joining this lucrative sector.
If you want to run a successful trucking business, you’re in luck. Check out this comprehensive starting a trucking business checklist.
1. Create a Business Plan
Delving into the trucking business without a business plan will lead to failure sooner than you can imagine. You’ll need to plan the management of the fleet of vehicles, goods, and the workforce. The logistical considerations are also tenable when there’s a plan in place.
A business plan will help you to develop a practical operational strategy. The business plan should summarize all anticipated company activities. The program will help you to address essential concerns even before you actualize the business.
Some of the elements that make up a traditional business plan include the services or products, market analysis, operations, and a financial strategy. A lean startup format is slightly different from a conventional business plan. You’ll need an all-inclusive business plan for you to get business partners or investors.
2. Establish Your Company Legally
Registering your trucking company as a Limited Liability Company should be a priority. The move will protect your assets in case of any business liabilities. Additionally, you’ll benefit from the business advantages and legal tax offers.
If you want to form an LLC, work with a registered agent. The agent is the negotiating party between the state and the business entity. You will also need to get an employer identification number to open your business bank account.
While an LLC is the most popular legal structure, don’t feel limited. You can consider a partnership or a sole proprietorship. Check out your state’s requirements for the type of structure you choose.
Starting a trucking business checklist isn’t complete without mentioning permits and licenses. You will need several documents to prove that you’ve met the minimum requirements to operate the business. A commercial driver’s license is one of those documents.
Apply for your Motor Carrier Authority and USDOT numbers. The numbers will enable you to register for other permits. With the right documents, you can start your truck company without fear of legal hurdles.
3. Funding
Like with most other businesses, funding is a critical component when starting your trucking business. It would be best if you prepared your financing options well in advance before venturing into the business. Considering that you may require between $10,000 and $30,000, it would be critical to have a clear roadmap so that your business does not stall halfway into operations.
One of the main costs is insurance. You may also be required to make motor vehicle down payments beforehand. Other state-specific expenses could apply depending on the business and legal landscapes in your location of choice.
You can opt to approach your local banks for a loan when starting. Private lenders may also be a feasible alternative when venturing out. Considering the capital intensive nature of this business, personal savings might not suffice.
4. Consider Fleet Insurance
In 2016, traffic-related deaths totaled 1.35 million. Road accidents are becoming more prevalent and fatal, particularly for large commercial trucks. Getting the right insurance will protect your truck business in case of accidents and other financial burdens.
For a new trucking company, a serious lawsuit with a Lakeland personal injury attorney representing the injured party can be a disaster. If you didn’t have insurance, that could leave your business paying for the expenses, at a time when you may have few profits to spend.
Liability and auto insurance are two of the most common types of commercial vehicle coverage. Ensuring your business isn’t an option; it’s a prerequisite. In fact, different states have outlined insurance requirements for commercial vehicles.
5. Get the Right Equipment
Purchasing the equipment for a trucking business can be overwhelming. Transport trucks are by no means cheap. Yet, they are the main equipment in this venture.
Depending on your financial position, you can buy one or a small fleet and expand over time. Alternatively, you can lease the trucks. But before making these significant decisions, you’ll need to execute thorough research.
Truck drivers who have been in the industry for years and become owner-operators are resourceful with such information. Making informed purchasing decisions will save you an unanticipated business failure.
When purchasing assets for your trucking business, quality should override price. If you can afford new trucks, go for it.
That’s not to mean that used trucks can’t ideal for a business. Reputable manufacturers have great deals for second-hand units. Inspect the body, mileage, oil change history, and tire tread before settling for a truck.
6. Address the Driver Recruitment and Retention Concern
The American Trucking Association notes that the driver turnover rate stood at 94% in the year 2018. This statistic is worrying, but it reveals the underlying dynamics when it comes to recruiting and retaining drivers. You may need to devise a well-thought-out driver retention strategy as part of your business plan.
One such approach would be the use of the pre-employment screening approach. This program would offer you the perfect opportunity to vet and scrutinize your prospective employees in a comprehensive process.
It would help if you also had a retention strategy to ensure that your drivers develop a sense of loyalty to your business.
7. Growing Your Business
When you have established your truck company, how to increase hauling income is probably your biggest concern. One way to increase your income is through networking. Join different industry associations and learn the trends. Interact with potential collaborators and know your competitors.
You might also want to source for freight brokers to connect you to shippers. Cold-pitching can also increase your customer base. Establish a social media presence and market your services.
It would help to have at least five loyal customers. Having one or two clients can destabilize your business if they bail out on you.
Follow This Starting a Trucking Business Checklist
Starting a trucking company can be challenging. But starting a trucking business checklist is indeed possible. The requirements shouldn’t hinder you from this promising venture.
Before you can make any investment in the trucking industry, research and conduct your due diligence. The initial capital can be quite high, and investing without the right information can cost you. The checklist should complement individual research.
Liability and auto insurance are two of the most common types of commercial vehicle coverage. Ensuring your business isn’t an option; it’s a prerequisite. In fact, different states have outlined insurance requirements for commercial vehicles. You should look for a reputable company that offers cheap semi truck insurance to start with.
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