Starting a Trucking Business: A Step-By-Step Guide
Trucking is a huge industry and there’s a lot of opportunity for profits, but starting any business takes hard work and the knowledge of how to go from your initial idea to a successful company. This guide is designed to simplify the process so you can see the steps you need to take to start your own trucking business.
But first, let’s look at some of the great reasons to open up a trucking venture.
Why Start a Trucking Business?
There are lots of reasons to start a trucking business, but we just wanted to provide an outline of the biggest ones that you will want to consider.
The trucking industry is only getting bigger with estimates by the Department of Transportation at 40% growth by 2045. To put it simply, people need trucks and drivers and that demand is only going to get larger. You can fill the void to make sure that the driver demand and trucking needs are met.
People need stuff even during the deepest recessions. By owning a trucking business, you make sure that essential goods reach stores, warehouses, and people. There is always a need for loads, so you don’t have to worry too much about the economy.
Easy to Start
While no business is truly easy to start, trucking is not too difficult and you won’t need to invest too much into the operation until you start making money. As your demand grows, you can grow your business alongside your profit margins. You can even start as a driver and then as you grow hire more employees so that you are only the owner-operator.
9 Steps to Start a Trucking Business
We will simplify the entire process of starting your own trucking business by outlining 9 steps you should take. From no experience to securing profitable loads, we provide all the information you need to get started.
Get Some Experience
Most owners and operators of trucking businesses have some experience in the business beforehand, often as a driver. Getting truck driving experience can teach you the ins and outs of driving a commercial vehicle and how the process works for delivering a load, invoicing, getting paid, and more.
Having driving experience can give you an idea of potential obstacles that you will have to plan for as an owner like bad weather, accidents, repairs, route changes, and more. All of this experience will influence the decisions you make when starting your own business in the trucking industry.
By starting as a driver with a larger carrier service, you ensure that you get the proper training that you need to be a safe and compliant driver. Plus, mistakes that will barely harm their bottom line would have bankrupt your company if you just started.
During this experience gathering step, we also recommend that you research trade journals, blog posts, social media discussions, and more to get an in-depth look at those who have been in the trucking business for a while.
You can learn tips from owners, solutions from operators, and hazardous mistakes from those who have been there and done it for themselves. Plus, this helps you develop a network of other carriers, drivers, and shippers that can help you out once you launch your own business.
Plan, Plan, Plan
Every business needs a plan and crafting a solid plan can help you avoid failure throughout your journey toward becoming a successful owner. There are tons of things to consider when determining the plan for your business.
When drafting your plan, you will want to create ideas for the next year, 3 years, and 5 years so that you know where you’re going and when. This also sets goal posts for you to strive for. A business plan will usually include certain elements like:
- Executive Summary and Company Description: A brief discussion of your businesses, purpose, mission, vision, and goals. You should briefly mention how you will reach those goals as well. Try to identify what will set you apart..including your niche, which in this industry is usually the type of truck (flatbed, tanker, dry van, etc.) or type of load. You also need to decide if you will be nationwide or only in certain states, which will influence licensing and endorsements.
- Management and Operations: Includes all aspects of running the business and toward the beginning this will also include permits, endorsements (bulk liquids, hazardous materials, etc.), CDL licensing, regulations, and other legalities to consider. This is also how your company runs including the technology you use, how many employees you have, and where your main offices are located.
- Finances: Finances should be outlined in depth from any loans you may need, how much cash flow is necessary for operations, and how your invoicing will work. You also want to research repair and maintenance costs for the type of truck you will work with and develop a budget for the entire operation.
- Sales and Marketing: Look at the market that you want to enter into and see if there is a niche that you can fill. Is there room for another business? Room for growth? Also, you need to figure out how you will entice customers with advertising campaigns.
Become Established and Licensed
There are many regulations for trucking and transportation delivery, both in your state and federal governments. This involves a lot of paperwork, applications, and procedures.
You will want to establish your business as an LLC, LLP, or Inc. This is important because it involves legal and tax issues. This officially makes you a business, not just an individual claiming to be one.
You will determine your business name and set up an EIN with the IRS, which acts like a social security number for your trucking operation. You can easily find articles about the different types of businesses that you can apply for and the best one for you will depend on several factors.
Getting licensed is another necessary step when beginning your business. This includes plates, permites, license, and endorsements. You obviously need a CDL for yourself and any drivers you plan to employ, but may also have to get a USDOT number, BOC-3 filing, and endorsements for the type of cargo you will be carrying.
Finally, it is critical that you get motor carrier operating authority either by getting it yourself or driving under another company's motor carrier authority. The first option, obtaining it yourself, can cost a little bit with filing fees starting at $300. Nauvus can match you to a dispatcher or dispatching company that allows drivers to operate under their MC authority to make this step just that much simpler.
If you don’t already have equipment, then you have to have some way to pay for it. Unless you already have the money to buy a commercial vehicle and pay for other business expenses, then you will have to get funding via a loan.
It costs quite a bit to start a trucking company and while you can quickly make profits, a commercial truck costs around $80,000 alone. Add in maintenance, technology, employee pay, permits, and other necessities and you are looking at a pretty big chunk of change.
To get funding, you can look into:
- SBA Loans
- Business Credit Cards
- Commercial Truck Financing
- Small Business Term Loans
Get All the Equipment
Now you can buy the truck, trailer, and other equipment that you need for your operating plan. You need to make sure that you buy a truck that can carry the loads you plan on transporting and you can consider buying or leasing the truck depending on your needs, goals, and funds.
Older trucks and equipment can be more affordable in upfront costs, but they can be more expensive for repairs and general maintenance. Still, to start making a profit, buying an older truck may not be a bad idea. However, you will want to find a truck manufacturer and model that is reputable for fuel performance, maintenance and part costs, and sturdiness and durability.
If you got experience as outlined in step one, then you probably have a good idea about the type of truck and equipment you need. However, research is always your friend so don’t skimp because your equipment will be your bread and butter.
Acquire Insurance Coverage
You and your drivers must be insured before heading out on the route to deliver a load. There are specific types of insurance and it is important that you choose the one that is superior for your own business and personal needs. Here are some of the types to keep in mind:
- Primary Liability: Covers damages and injuries when you or your driver are at fault, but not in other situations
- Physical Damage: Covers physical damages when it isn’t you or your driver’s fault
- Cargo: Coverage for damage to cargo as well as theft of loads or cargo that was on your truck
- Passenger Accident: Covers injuries of the passengers in your truck
Start Securing Loads
If you’ve made it this far, then give yourself a pat on the back because now you get to start actually delivering loads and generating revenue! There are a few options for finding loads that you will want to utilize to discover the most profitable options.
- Load Boards: Load boards are full of shippers and brokers who are looking for carriers just like you. Check out load boards for lists of possible loads for your business and pick the ones that fit your niche, schedule, truck availability, and more. To simplify this process and find and secure the most profitable loads, use Nauvus Connect. Plus, it also includes access to your own dispatcher and ensures you always get paid within 24 hours of POD.
- Networking: If you got plenty of experience during step one, then you may have built relationships with shippers that need you to carry a load for them. However, this option for securing loads will grow along with your business as you network more and build more relationships with potential clients.
- Freight Brokers: Brokers can secure loads for you, which is great. The problem is that they charge a significant percentage of your revenue, up to 50% in some cases.
Manage and Maintain Your Business
Trucking business management is critical for blooming into a highly reputable and profitable business. You need to have smooth operations, proper cash flow, and regular loads. There are some things you can do to make the whole process of management easier on you.
Budget everything and track all your income, expenses, repairs, fuel costs, and anything else you spend business funds on. Only borrow money when you absolutely need to, otherwise pay with money you already have.
To determine whether a load is profitable, you will want to consider every cost from factoring fees to fuel, taxes, tolls, and more. You must know how profitable each load is before securing it and then budgeting it correctly even after POD.
Does this sound stressful and complicated? Well, you can use Nauvus Connect to track revenue and expenses, secure loads, and ensure smooth operations all the time. Our dispatchers can help you find loads and manage routes and schedules to take a lot of the stress off your mind and leave you with a lighter load of your own.
You will have to stay compliant with all state and federal regulations in order to be successful in the long term. Just because you completed all the steps initially doesn’t mean you are good to go without checking licensing and endorsements. Rules change and permits expire. Insurance coverage may run out and you may have to sign new contracts. All of this is critical for your business to run properly.
This also means that your trucking operations follow service regulations like hours of operation rules, weight limits, and safety guidelines. If you don’t do this, then you can receive a poor CSA safety school that restricts your ability to secure loads for some shippers.
In addition, you can receive fines that can be very expensive, especially for a new business. Always review legal documentation and regulations regularly to ensure you always remain compliant.
We Can Help You Get Started and Grow
With Nauvus Connect, you simplify your trucking operations, maximize revenue, boost growth, and get various tools that can help you get started and grow into a bigger, better trucking business.
Not only do we make securing the best loads easy, but also provide you with an experienced dispatcher, business management tools, and fast payment for better cash flow. Click here to learn more.
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