Haven’t you dreamed about running a trucking company in the USA one day?
We all know how crucial trucking is in the USA It’s basically a driving force of the States that is responsible for transporting 70% of all goods across the country. Without the trucking industry, US factories will have to shut down their operations as well as retail stores will have to close doors. It would severely affect even the most important facilities like hospitals, power plants, military establishments, and many others. It’s also true that with each year trucking becomes increasingly more attractive for those who are eager to set up their own company as this industry is indeed profitable and very promising, as it is an essential service required by all americans.
Yet it’s not that easy to become a trucking business owner as this environment is one of the most competitive in the USA and it takes time, dedication, and patience to get used to its permanent ups and downs.
But consider yourself lucky, as TruckStaff Solutions is here to put you at ease and help you every step of the way to your dream of owning a trucking company. We will discuss some of the key points that you will need to understand prior to investing your time and hard-earned money into this lucrative yet volatile industry:
1.Knowledge/Understanding of Compliance
As with any other industry, trucking has its own complex set of rules and regulations.
To make commercial transportation safer, the FMCSA (Federal Motor Carrier Safety Administration) has laid down several pre-defined standards that a trucker must meet. Becoming adept with these guidelines and familiarizing yourself with the internal, external, primary, secondary, and even tertiary aspects of trucking allows a trucker to avoid monetary liability and, most importantly, protect their business and carrier reputation. For a trucking business, a clean safety history can be considered the most defining factor that provides a strong foundation for sustained business growth.
Beyond FMCSA regulations, it’s essential to stay informed about state-specific regulations and any updates or changes in federal laws. Compliance extends to maintaining accurate records, adhering to Hours of Service (HOS) regulations, ensuring vehicles pass regular inspections, and understanding hazardous material handling if applicable. Implementing a robust compliance management system can help streamline these processes and ensure your business remains in good standing with regulatory bodies. Regular training for drivers and staff on compliance and safety protocols is also crucial in maintaining high standards and minimizing risks.
2.Understanding the Relationship Between Safety History and Filings on Insurance Premiums and Hauling Rates
One of the most significant recurring expenses in trucking is insurance. Indeed, insurance rates constitute a major portion of the operational costs for any trucking business. High violations lead to higher insurance rates, eating away at profits. Furthermore, your safety record dictates your carrier’s rank on the Internal Carrier Ranking Systems that brokerages use to offer loads. A clean safety record can also impact a business’s ability to secure corporate contracts and loads. For instance, a safety score of B+ (96%) is required to secure loads from Amazon Relay. Although Amazon uses its own safety scoring system, it is broadly based on the CRS that we highlighted earlier. Therefore, maintaining a stellar safety record is imperative for lowering operational costs and increasing earning potential. Being on top of safety can reap significant dividends that compound over the lifetime of a trucking business.
From an organizational standpoint, the FMCSA requires regular documentation filings from trucking businesses. Failure to comply can result in the revocation of the MC-DOT authority, severely impacting your operations. For instance, one of the most common reasons MC authorities get revoked is failing to update the MCS-150 Form, a biennial update required by the FMCSA. A revocation can temporarily impair a carrier’s ability to operate, leading to significant losses through opportunity costs. Moreover, a revocation can negatively impact insurance rates. Insurance companies look for continuous activity on MC authorities, and a temporary suspension can revert your rates to higher, pre-revocation levels. It can take a considerable amount of time to regain favorable insurance rates and savings, hindering your business’s progress.
To avoid these pitfalls, it is crucial to implement a robust system for tracking and maintaining compliance documentation, regularly train staff on safety and regulatory updates, and actively monitor your safety scores and carrier rankings. By doing so, you ensure smoother operations, lower costs, and better opportunities for high-value contracts and loads.
3.Keeping on Top of Insurance Updates with FMCSA to Avoid Revocation
One prevalent reason MC authorities get revoked, as noted by many business owners on trucking-related forums, is incorrect updates from insurance companies to the FMCSA. This can happen when insurance companies erroneously report your insurance status as canceled. While it’s best to leave such updates to your insurance broker, it’s crucial to follow up diligently. Brokers or insurance companies may occasionally miss filing deadlines due to internal bottlenecks, leading to revocation and loss of income.
To mitigate this risk, business owners should verify insurance updates personally through the FMCSA online portal. Regularly checking ensures that your status is accurately reflected and helps avoid any unforeseen cancellations. Rectifying errors caused by insurance companies can be challenging and time-consuming, and it’s often difficult to get legal compensation for such mistakes. By proactively monitoring insurance updates with the FMCSA, you can save significant money, time, and avoid stressful remediation.
In summary, a revoked authority can lead to substantial operational setbacks and increased costs. Staying vigilant about your insurance updates and ensuring they are correctly reflected with the FMCSA is crucial for maintaining seamless operations and avoiding unnecessary disruptions to your business.
4.Think Like an Entrepreneur
Starting a logistics business is an ambitious, bold, and exciting decision. However, it lacks the comfort of the usual 9-5 drill, especially in the beginning. Whether you start as an owner-operator, a brokerage, a shipper, or a trucking company, work often doesn’t end with the clock. You’ll need to wear multiple hats, stay present, learn from past experiences, and constantly envision the future of your business, all while adapting to the day-to-day realities of operations.
To thrive, think like an entrepreneur and adopt a proactive approach. Here are some key practices to incorporate:
- Basic Accounting: Understanding your finances is crucial. Track income and expenses diligently, and consider investing in accounting software or hiring a professional accountant.
- Timely Filings: Set up reminders and timelines for essential filings, such as tax returns, compliance forms, and license renewals. This ensures you stay compliant and avoid penalties.
- Fuel Savings Programs: Sign up for fuel savings programs and loyalty cards to reduce fuel costs, which are a significant expense in the trucking industry.
- Regular Maintenance: Establish a routine for regular vehicle maintenance to prevent breakdowns and ensure your fleet is always road-ready. This minimizes downtime and extends the lifespan of your trucks.
- Networking: Build relationships within the industry. Networking can lead to new opportunities, partnerships, and valuable insights that can help your business grow.
- Continuous Learning: Stay updated on industry trends, regulations, and new technologies. Attend workshops, webinars, and conferences to enhance your knowledge and skills.
By integrating these practices, you can improve the longevity and health of your trucking business, setting it up for sustained success. Remember, thinking like an entrepreneur means being adaptable, forward-thinking, and always ready to tackle challenges head-on.
5.Root Expectations in Reality
Any search engine, online forum, or social media page about trucking will quickly show an aspiring trucker that the industry is challenging. It’s physically and mentally demanding, requiring significant effort and dedication. Despite this wealth of information, many new entrants still find themselves overwhelmed by the workload, especially in the initial stages, leading to many trucking businesses failing within the first year.
Understanding the realities of the industry is crucial for setting achievable expectations. Here are some key points to keep in mind:
Long Hours: Be prepared for long hours on the road and extensive time away from home. This job often requires you to be on the move for weeks at a time, which can take a toll on your personal life and health.
Multiple Roles: As a trucking business owner, you’ll need to wear many hats. From driver to dispatcher, accountant to mechanic, the multifaceted nature of the role requires versatility and resilience.
Initial Overwhelm: The initial stages of running a trucking business can be overwhelming due to the steep learning curve and the need to manage various operational aspects simultaneously. This is normal, and seeking support from industry peers or mentors can help ease the transition.
Non-Linear Path: While there’s tremendous earning potential in trucking, the path to success is not linear. The industry is ever-changing, with fluctuations in demand, regulatory updates, and technological advancements. Staying adaptable and open to learning new strategies is key to long-term success.
Career Development: The trucking industry offers various career paths and opportunities for growth. Whether you want to expand your fleet, transition into logistics management, or specialize in a niche market, understanding the different directions available can help you plan and grow your career over time.
By rooting your expectations in reality, you can better prepare for the challenges ahead and create a sustainable, successful trucking business. Embrace the demanding nature of the industry, stay adaptable, and always be open to learning and evolving.
6.Networking
Remember that any business is about and for people. Without people, it’s all in vain. That’s why building a strong network is essential. Given the ongoing rapid rise of smaller, inexperienced trucking companies/owner-operators, corporate mergers, unethical brokerages, and poor hauling rates, a good network can come to the rescue when traditional channels fail to deliver.
Here are some key strategies for effective networking:
Utilize Technology: Tap into technology to expand your network. Join online forums, social media pages, and professional groups related to the trucking industry. Platforms like LinkedIn, Facebook groups, and industry-specific forums can be invaluable for connecting with like-minded professionals and staying updated on industry trends.
Attend Industry Events: Participate in trucking and logistics conferences, trade shows, and seminars. These events provide excellent opportunities to meet industry experts, potential clients, and business partners face-to-face. Networking in person can help build stronger, more personal relationships.
Engage in Community Activities: Get involved in local community events and initiatives. Supporting local causes and being visible in your community can help you build a positive reputation and create valuable local connections.
Build Relationships with Brokers and Shippers: Establishing good relationships with brokers and shippers can lead to more consistent and lucrative business opportunities. Reliability, professionalism, and good communication can help you stand out and become a preferred partner.
Join Industry Associations: Becoming a member of industry associations such as the American Trucking Associations (ATA) or regional trucking associations can provide access to resources, networking events, and advocacy support. These memberships can also lend credibility to your business.
Seek Mentorship: Finding a mentor within the industry can provide guidance, support, and valuable insights based on their experience. A mentor can help you navigate challenges, avoid common pitfalls, and make more informed decisions.
Building a network is a gradual process, but it is one of the most rewarding and important aspects of securing an edge over other businesses and reducing reliance on crowded income sources. The growth opportunities that a strong network can present can be life-changing. Be mindful of networking and actively seek opportunities to connect with people and build meaningful relationships.
Instead of a conclusion:
Before setting up your own trucking or logistics business, you are to be well-prepared by knowing all about the FMSCA regulations, licenses, and permits you need to obtain, how this business looks like from the inside and what departments you should organize for achieving success. Trucking is hard, but believe us, the perks you can get are worth it.
Leverage our trucking industry experience since with TruckStaff Solutions you’re partnering with a reliable industry expert that will guide you through all the entry barriers and help you launch a successful and sustainable business.