The trucking industry is one of the biggest industries in the United States with a total of more than 3.5 million commercial truck drivers transporting more than 10 billion tons of cargo a year. They play a critical role in the country’s economy, and more and more people are joining the industry as new business owners. Are you considering starting your own trucking company? Do you want to enjoy the satisfaction of being your own boss? Here are some guidelines to get you on track:
How to start a trucking company: plan smart, work hard
Like starting any business, the trucking industry requires smart planning and hard work. Before you get too far in the process, talk with as many trucking company owners as you can. If you plan to be a driver, ride along different routes – long highways, urban areas, small towns – with different drivers to find out if the trucking life is right for you. If you plan to manage your own company and hire drivers, ask your contacts about trucking company paperwork or examples, and learn as much as you possibly can.
Drivers must be qualified and demonstrate that they meet high levels of competence in driving big trucks and knowledge of safety measures. Most go to truck driving schools to learn and improve their driving skills. All drivers must have valid commercial driver’s licenses specifically for truck drivers. The typical owner of a trucking company is a former driver who has been a qualified driver and is ready to start a trucking company business proceedings.
Look towards the leaders to help you start a trucking business
To get on the road to success early on, reach out to experts who can guide you. There are a lot of resources out there to help transportation owners to get started. Below is a basic checklist to work through as you research and start your own trucking company.
Getting started with your new trucking business checklist
1. Form your company and file entity documents
2. Register for your DOT, MC, and EIN numbers
3. Sign up for insurance, plates, and permits
4. Locate and finance equipment
5. Connect with our dispatcher network
6. Register on the world’s largest free load board
7. Save money with a free fuel discount card
The trucking finance professionals can get you in touch with people who are experts in different areas on how to start a trucking business. Throughout the process, the focus remains on how you can get up-and-running quickly and succeed.
How much does it cost to start a trucking company?
Some newcomers to the industry wonder how to start a trucking company with no money, but that could be unrealistic. If a potential trucking company owner had a long list of guaranteed customers and tens of thousands of dollars in invoices for loads before he or she even opened their doors, then a freight factoring firm could advance significant funds to that owner, but that scenario is not how a truck start-up typically works. That example puts the cart before the horse.
How the best trucking companies get a handle on their cash flow
If you aspire to be one of the best trucking companies, then you will need to stay on top of your cash flow. In an ideal world, you would start out with enough capital to cover your expenses while you quickly build up a solid client base so that you can start making a profit.
In reality, any new company requires startup expenses, beginning with business documents that need to be filed with the office of your state’s secretary of state. To sign up for your MC and DOT numbers with the FMCSA (Federal Motor Carrier Safety Administration), plus other necessary registrations, expect to pay between $1,000 and $1,500. For instance, you’ll need to complete registration and payment for your BOC-3 (blanket of coverage) filing that designates legal agents who can operate in all 50 states.
Another important filing is the UCR (Unified Carrier Registration) that applies to motor carriers, freight brokers and forwarders and leasing companies. These aren’t just requirements for “top trucking companies” or the industry leaders – it’s the legalities that each and every new start-up in the industry has to be aware of.
In addition to registrations and business formation expenses, you’ll also pay for various permits, including state and local permits and heavy vehicle use tax permits. Expect to pay up to $1,000 for these fees. Your per-truck start-up expenses – including apportioned license plates and insurance down payments – can range from $2,500 to more than $10,000.
To purchase a new semi-truck, plan on spending between $75,000 to $150,000, but good used trucks can run between $25,000 and $40,000. Older, high-mileage trucks could run as low as $10,000. However, with older vehicles, you will in all likelihood need to factor in significant repair bills. Depending on our personal credit history, you could be able to purchase a truck with a down payment as low as 10% with low interest rates. Buyers with less favorable credit scores could expect 25% down payments and higher monthly payments.
Once your equipment is set, you can start to plan for payroll, insurance, fuel, maintenance, and other costs. The American Transportation Research Institute estimates that with all these expenses, it can cost a trucking company around $160,000 to operate each of their trucks each year.
Creating a trucking company business plan
Like any new business, you will need to pay attention to what some call ‘the softer side of business’, such as your name, slogan, office stationery and branding. Here’s a quick list of things that should be in place before you start booking loads and hiring drivers:
- Trucking company names
- Trucking company logos
- Trucking company slogans
- Trucking company business cards
- Trucking company brochures to market your business to surrounding companies
Financial providers who partner with transport companies
Whether you are interested in how to start a trucking business with one truck or you have plans and resources for a number of trucks with the goal of becoming one of the major trucking companies in your area, a first step is to partner with a financial leader in the transportation field. Freight bill funding specialists can speak with you about how to start a trucking company and how to improve your cash flow once you are taking on your first loads.
Freight bill funding or factoring is a solution for everyone from one-man start-ups to some of the largest trucking companies in the country, and these companies often have the same cash flow challenges across the board (even though the numbers can be very different). Like in any business, cash flow is king in trucking.
Many of the trucks you see cruising down the highways depend on factoring companies for fast payment on the loads they are carrying. Factoring companies help trucking companies get paid upfront for freight so that trucking company owners don’t have to wait weeks and months to get paid. With their advances, the owners can keep up with payroll, fuel bills, taxes, insurance, truck payments, and all the other expenses they face each month.
Are you thinking about starting your own trucking company? Do you have questions on getting started, or how to make sure you have steady cash flow? Sign up for a free factoring quote and a representative will talk you through your options.