The trucking business is profitable yet competitive. As a potential owner-operator, you need to go through some steps to establish your business. The trucking sector plays a role in transporting more than 70% of the freight in the USA. You will find faster growth in this industry in the coming years. But how will you start your trucking business?
Choose the market niche
Selecting the right niche is one of the important steps in establishing your trucking business. Based on your chosen market, you have to decide on-
- Your rates
- Your equipment
- The freight lanes to provide service
However, do not try to compete with large carriers. There are several markets, and you need to choose the less competitive one.
Set the rate per mile
Before calling shippers and selling your service, you have to know the rates. Make sure that the rate set by you will let you earn profit.
Create a business plan
No business can be started without this step. As you like to start a new venture, you must have a set of goals. With a properly written business plan, you can stay organized in your approach to starting a trucking company. Before dealing with it, you have to find answers to some questions
- Which type of vehicles will you purchase?
- How will you hire drivers for your truck?
- How much will you charge from customers?
- Who are the potential customers of your business?
Pro Tip: Start tracking your gas expenses by finding the best fuel card for truckers.
Establish your business legally
You can set up a Limited Liability Company or a structured corporation. Your decision will make a difference in business liabilities and personal assets. In this step, you may consult a criminal lawyer to ensure the protection of your business and personal properties.
To start an LLS/corporation, you have to engage a registered agent who will present the way to communicate with the business entity. Moreover, the agent will deal with state mandates, legal notices, and tax documents. It is important to ensure that your registered agent will be easily accessible.
EIN is another important thing for opening your business bank account. The 9-digit number is similar to a social security number. This number is essential for making tax filings.
Obtain permits and business licenses
Most counties and states have a rule that companies should obtain the right licenses and legal permits before providing services and products. You may need to apply for a number of licenses based on the location of your trucking company.
According to federal law, you must have a commercial driver’s license.
You also need a USDOT number that enables FMCSA to identify the business while conducting audits and inspections.
To take your trucking business to an international level, you have to obtain International Registration Plan credentials.
Calculate the operating costs
While calculating the operating costs, you have to identify the fixed costs. These costs will have no effect regardless of the miles covered by you. For instance, they include owner-operator insurance, truck payments, and permits. Variable cost is the cost of fuel.
Truck business owners need to invest a high amount in buying fuel. Another concern is related to the fuel taxes in the regions where you buy the fuel. You must also pay some taxes as your trucks drive through different states.
Buy the essential equipment
The choice of the right equipment will make a significant difference in your business. Find the answer to some questions before having the equipment-
Can your truck accommodate your cargo needs? You can invest in a refrigerated compartment to transport perishable items.
Should you buy or lease equipment for your trucking business?
Conduct some research and build your network. Speak to truck drivers and compare different options.
Based on the chosen market, you need to invest in fleets. According to the load types and operating categories, the fleets can be of different types. Some common types of load are-
- Package
- Household goods
- General freight
- Tank trucks
- Building Materials
- Petroleum products
- Motorized vehicles
- Refrigerated solids
- Agricultural items
In most cases, trucks are used for carrying machinery.
Track your earnings regularly
You must track the operating costs and income from your business. Some transportation companies receive monthly and weekly payments. You can hire a professional accountant and invest in premium bookkeeping software. It will streamline the way to manage your finances.
Understand your shipping contracts to know how and when you will receive payment for deliveries. You must store your receipts, invoices, and check stubs. You must keep your business and personal finances separate to avoid confusion.
You can now start your trucking business with the right steps. But, make sure that there will be no legal issues in the future. You have to stay compliant with different permits and DOT-regulated items like driver qualification files and electronic logging gadgets.