Trucking companies, large and small, require a detailed business plan. We discuss what you need to know to get truckin’ in the right direction.
In an era characterized by ecommerce, high consumer demand, and an increasingly connected supply network, trucking is as important as ever before. In the United States alone, there are an estimated 3.5 million truckers (US Census). This makes trucking one of the most popular professions in the country.
The American Trucking Association predicts that the trucking industry is going to experience even more growth over the next decade, reaching a workforce of approximately 4.6 million (representing a 1.1 million increase, or about 110,000 per year). Clearly, the demand for quality, reliable, and professional truckers is strong, despite some concerns about mass automation.
Starting your own trucking company can be a very lucrative endeavor. However, in an industry that is extremely focused on margins, competitive advantages, logistics, and operations, starting your own company from scratch can often feel overwhelming. To successfully get your trucking company off the ground and running, you will need to begin by developing a carefully crafted business plan.
In this article, we will discuss the most important things you need to know about starting a trucking company. Whether wondering how to start a trucking company with one truck, no trucks, or an entire fleet, we hope to answer some of the industry’s most common questions.
Step One: Write a Business Plan
Writing a business plan will be key for getting your company oriented and ready to begin taking tangible actions. A good business plan should cover every component of your business, including your finances (how do you plan to make a profit?), your capital needs, your long-term growth strategies, and other essential details. Ideally, this plan will be useful to not only you, but also to other parties such as potential lenders or business partners. Your plan also needs to be as actionable as possible—what are the next ten steps you hope to take?
Step Two: Formally Establish Your Company
Legally establishing your business will help provide your enterprise with structure and various financial/legal protections. The “default” business structure is a sole proprietorship—this type of business doesn’t need to file additional paperwork, but your personal finances will be at risk. Due to the risks involved in trucking (accidents, broken equipment, personnel, etc.), you might want to consider creating a business structure with better protection.
Creating a partnership will help spread the risks across multiple parties, but you will still be exposed to myriad liabilities. A limited liability corporation (LLC), enables you to have a separate entity that is legally distinct from your personal finances. LLCs are very popular among new trucking companies; companies operating at a larger scale might also consider creating a corporation (S-Corp or C-Corp). To create an LLC or corporation, you will need to file with the state your company is based out of. Rules can vary by state.
Step Three: Get Your Commercial Driver’s License (CDL)
As described by the Federal Motor Carrier Safety Administration (FMSCA), “Driving a Commercial Motor Vehicle (CMV( requires a higher level of knowledge, experience, skills, and physical ability than that required to drive a non-commercial vehicle. In order to obtain a Commercial Driver’s Licensee (CDL), an applicant must pass both skills and knowledge testing geared to these higher standards.” A CDL will be required for anyone driving your trucks and, naturally, obtaining a CDL will be key to starting a trucking business.
Step Four: Get Insurance for Your Trucking Company
Insurance is extremely important in the trucking industry. Not only are all motor vehicles already required to have insurance, but trucking companies will also need to purchase some additional types of insurance. This can include increased liability insurance, possible health insurance for your employees, general business insurance, and property insurance. Insurance is not an area where aspiring truck companies should try to cut corners.
Step Five: Track your Income and Expenses
One of the most important components of your business plan will be how you plan to track expenses. There are many different key performance indicators you might want to consider using and there will also be many different types of software available to choose from (QuickBooks is especially popular). Some of the most popular KPIs for truckers include cost-per-mile, revenue-per-mile, cost-per-stop, and engine idle time.
Step Six: Buy or Lease a Truck
Buying a truck requires heavier up-front costs but can often save you money over time. Leasing a truck, on the other hand, often increases the total cost but also removes some hassle. Both options are commonly used by aspiring trucking companies. On average, a new semi-truck will cost between $130,000 and $200,000.
Can You Start a Trucking Company with Just One Truck?
There is not a minimum number of trucks needed to create a trucking company. It is, in fact, possible to create a trucking company with just one truck and many people have been successfully able to do so. If you are the sole person in your company, you will have more control over operations, though you might face additional expenses. Regardless, it is still a good idea to formally organize your business (LLC, etc.).
If after reading this it sounds like the trucking industry isn’t for you, that’s okay! There are many industries to chose from. Check out how to open a restaurant or how to start a cleaning business for more options!
Step Six: OPen a Business Bank Account
Step Seven: Open a Business Bank Account
It’s important that you keep your business expenses and personal expenses separate. This will protect your personal assets in case of an audit or other legal concerns. A separate business banking account also makes it much easier to file your business taxes.
We think every business should have a mobile bank account, however this particularly useful for trucking businesses. NorthOne is a completely digital bank. This gives you flexibility to manage your money wherever you are. We have integrations allowing you to connect your favorite business tools to your bank account. This will make the daily operations of your online business much smoother.
Frequently Asked Questions
How Much Does it Cost to Start a Trucking Company?
According to one recent estimate, “An initial cost you can consider when starting your trucking company is about $6,000 to $15,000 (not including your equipment).” Up-front costs include registration and documentation, taxes and permits, IRP plates, and more. If you are planning on hiring additional employees, the average cost per mile is about 30.3 cents. As you begin to scale, your marginal costs will hopefully decrease.
Is Owning a Trucking Company Profitable?
Whether your trucking company is profitable will depend on many factors. But, broadly speaking, owning a trucking company can be very profitable. Currently, there are 1.2 million trucking companies in the United States (many of these companies are owned and operated by just one person). Strategic planning, hard work, and reliable shipping partners will help ensure your trucking company is successful
How Much Do Trucking Company Owners Make?
Owner-operated trucking companies can reliably make more than $100,000 per year, which is well above the national average. The mean annual gross (before taxes) is $141,000. Companies with larger fleets can produce even more.
Trucking can be a very rewarding industry, but you will need to be strategic with your choices. With a well-developed business plan, a good work ethic, and the right financial structure, you might soon be on the road to success.