How to start your trucking business: an 11-step guide
Whether you are a for-hire trucker, owner-operator, or just someone interested in the transportation business – you will inevitably want to start your own company. After all, everyone knows that this kind of business is always in demand. This became especially obvious during 2022 when demand for goods carriage took a sharp rise. Yes, your business may not close due to a lack of work. But there are other factors that may lead to potential bankruptcy. But most of them may be negated by carefully planning the launch of your company and its first “steps” in the market.
To help you succeed, we have made a 11-step ultimate guide on launching your trucking company that will mark every step you should make in the beginning.
Step 1: Create a business plan
There can be no business without a proper business plan. It is an essential step, as it helps grow your business. A proper plan should project at least 3-5 years in the future.
What should your plan include:
You need to write down all the info on you, the company as a whole, the means to achieve your plans and your expectations. Basically, it’s a miniature version of your business plan. It is very handy to give yourself a bit of motivation and to remind yourself of your strategy.
Write down your vision of your business: what makes it special, and how YOU make it special.
What are you planning to haul? Are you going to do something else? Learn the market and plan ahead.
A brief summary of the current state of affairs in the trucking industry. Revisit it from time to time to keep it relevant.
Sales and marketing
How are you planning to attract your customers?
A roadmap to achieving your financial goals. Try to include every minute detail – you will thank yourself later.
Step 2: Get your Commercial driver’s license
Federal Motor Carrier Safety Administration requires all drivers and owner-operators to have a Commercial driver’s license or CDL. So, be sure that you or your drivers have it before launching your trucking business. Working without CDL is a severe violation.
Step 3: Apply for the trucking authority
Every business that works as a hired carrier for vehicles with more than 10,000 gross weight needs to apply for the trucking authority.
To do that, create a unique name for your trucking company, check whether it is available, and file it with your state of operations. After that, complete your application with the FMCSA.
Step 4: Find a process agent
A process agent is a person that deals with court papers for your business. Each new state of operations requires its own process agent. Working without one is illegal, so do not try to skip this step.
Step 5: Choose your business type
As a businessperson, you need to file taxes for IRS. The type of your company determines the amount of taxes you pay. You can choose any of the following types:
- Sole proprietorship
- Partnership business
Each of the business types has its benefits and downsides. If you want to make the right choice – consult a tax accountant.
Step 6: Open a business bank account
You need to have a separate bank account for your business for multiple reasons. Firstly, it will be much easier for accounting. Secondly, you will start with a clean credit history, which will be useful when you will need a bank loan. And you need to obtain a business credit card too!
Step 7: Brush up your legal knowledge
Logistics is a vital industry. That is why it is subject to numerous regulations. Take your time to learn them and do everything to stay compliant with them.
Here are some of the things you need to do:
- Apply for DOT number and Federal authority
- Get the International Fuel Tax Agreement stickers
- File for the UCR permit and get your IRP plates
- Obtain an Employment Identification Number from the IRS
- Get the all the licenses and permits required by your state of operations
Step 8: Get an insurance
Large trucks are often blamed for causing a lot of serious road accidents. Unfortunately, it is true. Such large vessels are hard to control, especially if the trucking company employs inexperienced drivers (which becomes more common with each passing year). So, if you want to protect your business from collapsing under the damage costs you need to acquire proper insurance. Commercial liability, cargo, and physical damage insurance are the most popular options among the trucking business owners.
Take your time and look for the most suitable offers. Remember – you need insurance to protect your business from financial losses, not to cause them. So, be reasonable and calculate your costs.
Step 9: Financing
Most of the up-and-coming companies have to get their starting budget through loans or investors. Even if you have your own funds – your business still need a loan in the future. No one knows what can happen, so we advise you to start preparing an emergency budget in advance.
Banks and credit unions can be good sources of loans. Although banks usually require at least two years of operation. Finding investors can be tricky, but still doable. By the way, our new service will deal with this problem. But we will tell you more about it later.
Lastly, you can ask your friends or relatives for a loan or an investment, but involving them in your trucking business might not be a good idea.
Step 10: Find a truck or a trailer
There can be no trucking business without trucks. When you have all the legal documents, insurance policies, licenses, and registrations – you can start looking for actual trucks. Here are the types of leases most companies use:
This gives you full possession of the vehicle. However, you have to pay for all the permits, taxes, and maintenance. After your lease ends – you need to return it.
An option for low-credit business. In this case, the trucks are financed right away, but the interest becomes bigger.
Terminal Rental Adjustment Clause
You pay a down payment upfront. After the end of the lease, you can pay for the vehicle’s balance or let the leaser sell it, gaining some money after the purchase is complete.
Step 11: Hire staff
Here it is – the final step. Do not underestimate it. Your staff can become a salvation for your business, or cause its downfall.
Let’s start with drivers. Before hiring a potential candidate – check his profile. Look for violations, cases of driving under the influence, work experience, and his previous vehicles. You need professionals who will bring you money, not just someone who drives your trucks and gets your business in trouble.
When you’ve got yourself a team of drivers – time to pay attention to the other workers. For comfortable work, you need to have at least three departments – safety, accounting, and dispatch. They will free you from unnecessary work. And if you spend as much time hiring workers for these departments as you spent hiring drivers – your business will be in good hands.
As you can see, every step of the company’s creation process influences its future. So, it might be a good idea to not take this endeavour all by yourself. You can hire some outside help or you can get an easy start by just buying an already existing business.
TruckStaff Solutions provides you with both of these options, and even adds some additional ones. We can help you to build a company from scratch, sell you an established business with a clean history, sell a company with a 100% Amazon performance rating, outsource safety, accounting, and dispatch departments, and do many other things that will help your business.