You have to work on the business first before it works for you.
– Idowu Koyenikan
If you’re about to start your own trucking business from scratch, connecting the dots in your head is a matter of first importance. This article is aimed at helping you out. We’re going to list 10 main things to consider at the very beginning of your trucking path.
But before coming to the point, we’ll slightly remind you that establishing a trucking business requires diligence and a lot of paperwork. Do not hurry and take as much time as you need. Better do it thoroughly, pay attention to the FMCSA requirements, study the laws and complete some market analysis.
If you think you are ready, here are the top 10 things you should be on the lookout for.
Have a business plan
Trucking can be a complicated industry to navigate at first, so it’s easy to get bogged down and lose sight of why you started and what you intended to do with the investment of your time and money.
Having the things composed in a plan allows you to see the situation both on a large scale and in detail. It doesn’t need to be elaborate but putting your vision to paper, breaking down the practical needs of the details, anticipating setbacks, having a growth strategy, and setting timelines to goals gives you a framework to keep your business on track.
Decide on the type of freight you want to haul
The type of freight defines your business strategy and the services you can offer to the clients. It’s not only about money, you should also take into consideration the geographical region you’re going to work in, required truck accessories, the number of qualified drivers who are able to haul such freight, and many other things.
In the US, the most popular freight types are flatbeds, dry vans, reefers, tankers, etc.
To drive or to hire a driver?
To answer this question, there are two things to keep in mind: the process of getting a CDL and insurance rates for the newbies in trucking.
- A CDL can be obtained within 6 months on average and includes completing a driving school, passing exams, and getting a medical statement.
- Speaking about insurance rates, well, they could be quite high for those who’re new to the industry.
Despite the fact it may seem counter-intuitive, sometimes hiring a reliable driver might be a better financial decision based on your location and driving experience.
Define your growth plans
Whether you want to remain a small business, an owner-operator, or scale up, well-planned operational setups can allow you to draw a strategy that fits your both short and long terms goals. This will give you clarity on what resources you would require to achieve your goals.
For smaller businesses or owner-operators, if efficiently handled, there are multiple facets apart from driving that need a structure for smooth operations, profitability, and longevity of your business. Accounting and finance, dispatch, documents and receipt filings, taxes, payroll, maintenance schedules, and insurance, are just a few aspects that demand constant attention.
Attention to operations:
The trucking business is all about constantly handling operations in a way that allows you to minimize possible setbacks. That’s where various TMS and accounting software can come in handy and help small and mid-scale businesses to organize their operational tasks.
However, if you intend to scale up operations, then delegating and outsourcing some of the crucial tasks such as dispatch, a CPA for accounting and a lawyer for employee and business contracts might be in your best interest.
To rent, lease, or to buy a truck?
All of them are great options to choose from and what’s best for you depends on your budget and business goals. Renting is a great option to test waters without sinking a major chunk of capital in buying a truck. Although buying a truck is quite costly, it gives you more freedom in taking actions and can be even profitable if you decide to sell it at the right time. Leasing is more of a commitment since the standard terms for a lease can range anywhere from 2 to 5 years. However, leasing is cheaper than renting a truck. Leasing and rental companies also take care of maintenance and even replace a truck in the event of a breakdown, so leasing and rental certainly take the edge off a few operational factors as you start your business.
Bear in mind that new MC authorities and CDL holders may find it hard to lease a truck or if they do lease, the terms can often be overbearing.
Insurance
For a new trucking business, insurance is one of the first and most costly operating expenses. Finding good insurance may take time but it’s possible. We suggest working with brokerages so that they can handle your file and provide you with multiple quotes from various insurance providers. On a side note, there are only a handful of insurance companies that provide good rates to new entrants.
Maintenance Schedule
Having a maintenance schedule for your vehicles is imperative to the longevity of your business and of course, your vehicle. Build a habit to check your trucks regularly and meet the FMCSA pre-defined standards for commercial vehicles not to get fined. As violations tend to result in higher insurance rates and lower rankings on the Internal Carrier Ranking Systems, keeping your vehicle well maintained is not only the safer option but also the more sensible financial decision. Most established trucking companies have bonuses for drivers that take care of their vehicles and pass inspections, and demerits or fines for drivers that do not.
Fuel Management
Fuel management is crucial as it helps you control and allocate your budget as well as save money and plan your routes. This is where Fuel Cards come in handy, and there are many offerings on the market that allow you and your drivers to save at different truck stops and fueling stations across the nation. TruckStaff has its own proprietary fuel card program that helps our partners save a fixed amount at some of the best truckstops in America, including Love’s and many others.
To incorporate or not?
We also advise new entrants to incorporate their business through their own state. Incorporating allows for a more flexible approach to business since you can keep business expenses and personal expenses separate. From a legal standpoint incorporating also makes great sense, as it allows the owners to take full advantage of many industry solutions available for businesses including lines of credit, leasing, rental, branching out, and so on.
To conclude, getting a trucking business up and running is quite achievable yet it takes time and commitment. Remember that TruckStaff Solutions is here to help you get through all the processes of starting your trucking business. Our expertise has helped thousands of trucking enthusiasts just like yourself to create and run a sustainable and profitable business.
