One of the business opportunities that continue to thrive even in the middle of the post-pandemic economy is trucking. A vital part of the transport and logistics for many industries, truckers haul a lot of different goods from handheld parcels to other vehicles.
Starting a trucking business doesn’t require a large fleet or a massive parking space. In fact, the industry is made up of mostly small operators. The American Trucking Association estimates that over 91% of trucking businesses in operation have a fleet of six trucks or less. Additionally, projections remain positive as experts see a 27% growth in the following decade despite the economic upheaval from the coronavirus pandemic.
Now, if you’re looking to start your own trucking business, here is a simple five-step checklist you can use as a guide:
We understand the eagerness to see the first trucks heading out to deliver your first batch of shipments. However, as with all things, you need to plan this extensively. Even if you think you already know the ins and outs of the trucking business, you still have to go through the laborious task of developing your business plan. Simply put, a business plan is a document that contains everything about your company. It’s a blueprint that summarizes your dreams, vision, and plans to make your dream company come true.
As the first step in your checklist, a business plan is a concrete tool that will guide all your next steps moving forward. You can’t go around winging every step of the way. As early as now, identify what will be the problems you’ll be facing, as well as every detail of your company. Developing a good business plan can be leveraged to invite investors to fund your company. Additionally, a lot of financial institutions from banks to online lending platforms like 1West will be looking at your business plan–and it will help inform their decision on whether or not they will lend you the funds you need, the interest rates, and even the payment terms.
If you find business plans too challenging, you can always hire a consultant or check out one of the many sample business plan formats on the internet.
You’ve created a business plan and you’ve raised the funds you need. Before you start purchasing parts of what will be your company, make sure to clear your legal and entrepreneurial responsibilities by registering your business. Most experts suggest establishing your trucking business as a corporation, or at the very least, a limited liability company (LLC). This way, you can establish your business as a separate legal entity. It means that whatever happens to your company, your personal finances remain separate and vice versa. Your personal assets won’t be affected to answer for your business liabilities. Also, you get separate credit histories for the business and your personal ones.
As you establish your company, you’ll have your employer identification number (EIN). This acts as the social security number for your trucking business. It is often used as an ID for your company and is required by banks and by the IRS.
Being a formally registered business offers a lot of benefits such as protection under the law and tax options and benefits. At this point, you might be required to appoint a registered agent who will communicate with the government on your behalf. Any concern, notice, or requirement from the federal government will be addressed and answered by them. Registered agents might be a business requirement depending on the state you’re in.
As you formally register your business as a recognized entity, you can now start investing and purchasing the assets you’ll need for your business. This means you’re already halfway toward operating the company full-swing. Depending on what you’ve outlined in your business plan, you might need to rent or purchase a space or an office building. The same goes for office equipment such as a computer that you’ll use for keeping track of your records and financial statements, as well as in developing your website, managing your accounts, and monitoring your would-be fleet.
Of course, the main asset in a trucking business is a truck. Using the business plan as a guide, your chosen niche in the trucking industry will inform you what kind of vehicle to purchase. If you’re looking at perishable goods like food or medicine, a refrigerated truck is ideal. Meanwhile, if you’re looking to transport heavy equipment or machines, a flatbed truck might be suitable.
Also, you have to be aware of how you will have your assets. Whether you’ll be taking them out straight from your raised capital or will you apply for an equipment loan for each of them, you have to find the best way to gain these assets and maximize the profit you will make from each of them.
The business and the trucks are there, you’re already probably looking for the drivers to pair up with them. Before you start, make sure that your business, trucks, and personnel are all compliant with the applicable regulations based on your industry and your locations. Some of the most common requirements for truckers include the CDL, or the Commercial Driver’s License for every driver in your company. This usually includes an extensive background check and a training program, followed by a series of tests before they get a license. Additionally, your business in the transport industry will be uniquely identified through your USDOT and Motor Carrier Authority numbers that are issued to you once you register with the Federal Motor Carrier Safety Administration or FMCSA.
There are other requirements such as the FMCSA Form BOC-3 for the designation of your company’s registered agent, international registration plan documents, international fuel tax agreement decals, and more. Also, there might be specialized requirements depending on your niches such as sanitation and hygiene compliance checks.
Now that you’re all geared for operations, you can now start looking for customers to do business with. For new trucking business owners, they can start by checking out an applicable trucking load board for them. These load boards or freight boards are online platforms where potential customers put up their job orders and trucking companies bid to get the job. The competition today forces companies to drive their prices down just to secure the opportunity. Remember to weigh your options, if your bidding price will leave you with enough profit to continue operating.
Similarly, you can pursue marketing campaigns to let everybody know that there’s a new player in town. Create a website, advertise on social media, give away flyers; there’s a lot of strategies available. You can even use your own trucks as a marketing tool, by putting the company logo on the truck itself.
Once you’ve secured business opportunities, it’s up to you to diversify your client base without sacrificing the working relationship you have with existing customers. Usually, jobs on the trucking load board are project-based or seasonal but if you can provide value to your services, the word of mouth about your company can help pave your way.