With today’s growing freight industry, many individuals and families are interested in launching their own trucking company. Although trucking can be a highly competitive market, new trucking businesses are finding success all over the country. Follow these steps from the U.S. Small Business Administration and other resources before you get started:
- Research how you would start any company. Understand first the business basics of traditional business start-ups and then focus on trucking. Study how much working capital will be needed and investigate funding sources.
- Develop your business plan. Decide on the type of company you want. Look at the pros and cons of hiring your own drivers or contracting with drivers.
- Acquire the needed licenses, forms, and permits. Apply for your DOT and MC Authority numbers at the Federal Motor Carrier Safety Authority (FMCSA) Visit your state’s transportation site to obtain your IFTA (International Fuel Tax Agreement) decal. Visit the IRS site to learn about taxes related to heavy use of roads. Study the insurance requirements that will apply to your business. Ensure your drivers have a valid Commercial Driver’s License (CDL) and are legally qualified to drive large trucks.
- Get to know the regulations. The Frequently Asked Questions on the FMCSA site is a good place to start. Also visit the U.S. Labor Department Occupational Safety and Health Administration site for the trucking industry.
- Locate and buy or lease the right equipment. If you will have your own drivers, look into the types of power units and trailers you’ll be needing to buy or lease. Evaluate your budget and refine your business plan as you decide whether to buy or lease.
- Build a network of customers. Many trucking companies start small with local business contacts, local manufacturers and shippers for loads. With persistence, strong sales calls, and a firm commitment to customer service and on-time deliveries, that network can grow.
- Find loads on free load boards. Sign up with a no-cost freight-matching load board to help you stay loaded. You will begin to develop relationships with brokers and shippers and build a reputation for reliability and service.
Among the most valuable resources for start-up trucking companies is FreeFreightSearch.com. As the world’s largest FREE load board, this site lists thousands of available loads every day for motor carriers to choose. Registration is fast and easy and you will never be asked for a credit card number: the site is completely free.
How will your trucking company operate?
Trucking companies operate in two ways:
- You can sub-contract with drivers not employed by your company. You obtain the contracts and run the business, but your drivers remain independent. The downside: you have less control of drivers and take less profit.
- You can hire permanent drivers and run a privately-owned business. You will need to buy your own equipment and pay insurance, but this business model gives you total control and higher profit margins. The downside: you will need more start-up capital and face higher operating costs. This can lead to cash flow issues, so a good idea will be to start factoring your freight bills with a good invoice factoring company
What kind of licenses and permits does a trucking business need?
Apart from the usual general federal and state requirements for motor carriers there are tax, license, and permit regulations that apply depending on the type of trucking business you plan to be. A number of these are listed in a related SBA article at https://www.sba.gov/blogs/starting-trucking-business-0.To ensure that you fully comply with requirements, hire a compliance professional specializing in the trucking business.
What sort of equipment should you buy?
This is aimed at those who have chosen to take the private fleet path. First choose” horses for courses.” Depending on the freight you will carry, choose the type of truck suitable for that cargo. Secondly, the size of your fleet will relate to the size of your start-up capital. If you need more start-up capital for equipment, you can finance your operation through invoice factoring as you complete your contracts.
Buying or leasing a truck?
Whether you decide to buy or lease a truck will depend on the amount of capital you have at your disposal and the goals you have for your trucking business. If you want to start your business with your own trucks, then get in touch with a few truck dealers who may be able to offer you a truck or a number of trucks at a discounted price. If your goal is to lower your initial expenses, then consider lease-to-own or other leasing agreements.
How to choose truck insurance?
To obtain licenses from the Department of Transportation, you will need truck insurance. There are many different insurance options available for new trucking companies. Get in touch with an insurance company that specializes in commercial insurance lines to discuss the various insurance options that are available to you. You need to feel comfortable that the commercial trucking insurance policy you choose will protect your company, your truck and the cargo you are transporting.
Because you are responsible for the safety and operation of commercial vehicles on public highways, trucking company liability and accident insurance is costly and strictly regulated. Work with a good broker within your area and ensure they fully cover the type of insurance you specifically need. Your business must be fully protected, so make sure you understand your policy, including all the small print.
Financing your truck
Many trucking companies need to secure a line of credit to purchase their trucks, rigs, equipment as well as cover all the start-up expenses related to starting a business. While various financing options are available to you, it is wise to try to save up enough money to carry you through the first few months of business. Some of the financing available for trucks include lease-purchase plans, terminal rental adjustment clauses leases and operating (full-service) leases.
Where can I find freight for my trucking business?
For many new companies, the first step to starting a trucking business is to begin with smaller contracts obtained from friends and existing business contacts in their local area. To find more loads as your business grows, you can visit the free freight search website. Free load boards can help you find freight in the locations of your vehicles – and you’ll never have to pay subscription fees. Some sites also list great advice on launching a trucking business. So, get started today!