Because the United States has such a strong infrastructure of major roads and highways, trucking is still the primary means of transportation for freight. In fact, truckers haul approximately 70% of the nation's freight. For anyone who owns a trucking business or is thinking about starting one, this is good news.
Below you'll find steps and tips for starting a trucking business. You will also find frequently asked questions about the industry, so read on to learn more.
How to Start a Trucking Business:
A step-by-step guide on how to start a trucking business.
Create a business plan.
Create an outline.
In the trucking industry, there are many moving parts (no pun intended). Managing drivers, vehicles, deadlines, delicate goods, and various other logistical challenges can be difficult.
Writing a business plan will help you create an operational strategy to refer to when your business is up and running.
Your trucking company business plan should include the following elements:
- Executive Summary.
- Company Summary.
- Market Analysis.
- Operational Strategy.
- Management Summary.
- Financial Plan and Forecast.
Writing a business plan for your trucking company will force you to address important questions that you need to have answers to before everything is up and running.
Write an executive summary.
An executive summary contains a brief explanation of why you are forming a business and what it will do.
It should include a concise description of the following items:
- Products or services.
- Potential customers.
- Company ownership.
- Company future and projections.
- Financial Plan and Forecast.
Prepare a mission statement.
A mission statement articulates what the business does, how it operates, and why the business does what it does. In addition to the mission statement, you should also define your company philosophy or guiding principles.
Define company goals and objectives.
Create clearly defined goals and objectives. Include specific metrics, such as annual revenue targets and the number of customers, that can be used to measure the progress and success of your business at a later stage.
Do market research.
In your business plan, you should describe who your target market is and provide a clear picture of what the competitive market looks like. This will help you identify what your competitive advantage is and develop a plan to maintain and enhance your competitive edge.
Outline your financial plan.
Your financial plan should contain a current balance sheet, your cash flow budget for one year, and break-even analysis. It should also describe how much financing you need and how it will be spent.
Name your business.
Choose a business name.
Do some research and brainstorm a few name ideas for your business. Start by making a list of keywords that reflect your business values and the character of your business and then combine words to create name ideas or use a name generator like NameSnack.
Trademark the name.
Search the United States Patent and Trademark Office's (USPTO) trademark database to see if any of your top choices and similar names are already trademarked. If it is available, register it as a trademark.
Depending on the business structure you choose, you may consider selling equity in your business. The advantage of funding your business through investors also referred to as venture capitalists, is that you do not have to pay the money back as you would have to when taking a loan.
The primary disadvantage is that it involves sharing ownership, which means you will have to consult with your investors before making business decisions.
Apply for a loan.
There are many different loan products to choose from. Have a look at and compare a variety of lenders and their products, carefully assessing the terms and conditions they offer.
Take care of legal requirements.
Open a business bank account.
Apply for a small business account and a business credit card and use this account when applying for licenses, permits, taxes, and insurance.
Form a legal entity.
As with any new business, you need to determine what kind of legal/tax structure your new trucking company will have. Generally speaking, the four options are:
- Sole Proprietorship.
- Limited Liability Corporation (LLC).
Most entrepreneurs choose to start their trucking business as an LLC. The advantage of creating an LLC is that it can be used to shift liability to your business while allowing you to retain personal assets that may be used for business purposes. The tax structure of an LLC is also more efficient than a sole proprietorship.
To form an LLC for your trucking business, all you need to do is appoint a registered agent - someone who is the State's official contact person for the business. This can be you, the business owner, or someone else who will be working with you.
As an LLC, you'll also need an Employer Identification Number, which you can obtain by filling out the application form on IRS.gov.
Comply with industry regulations and standards.
As you can imagine, the trucking industry is highly regulated because there are so many safety concerns. To own and operate a trucking business, the following industry standards are required:
- U.S. DOT Number: A number from the U.S. Department of Transportation that identifies your business.
- CDL: A CDL is a commercial driver's license. All of your drivers must have a CDL to operate one of your vehicles.
- Motor Carrier Operating Authority Number: Registration number issued by the Federal Motor Carrier Administration to companies that transport passengers or commodities.
- International Registration Plan and Fuel Tax Agreement: Necessary for trucking companies operating in multiple states/countries.
Without these certifications in place, you run the risk of being fined or having your trucking business shut down, so make sure that you have all of them before your trucks hit the road.
Research suppliers of vehicles and equipment that meet your business needs and the type of cargo you intend on transporting. For example, if your business will be transporting perishable items, you may require vehicles with a refrigerated compartment.
Transport trucks are expensive, but they are a must if you want to offer transportation services to suppliers and distributors. Perhaps you are going to start with one truck and build up from there, or maybe part of your plan is to purchase a small fleet right away and recoup the cost over time.
You can purchase new or used trucks, just remember that you want equipment that is safe and will have minimal maintenance costs. It may be tempting to buy an older truck, but in the long run, you may spend just as much money on repairs.
A truck will cost you anywhere between $15,000.00 and $175,000.00, but you can secure a small business loan if you need financing. With financing, a down payment of between $1,000.00 and $15,000.00 will usually still be required.
Purchase insurance for your fleet.
Trucking companies usually purchase a variety of insurance coverage options, including:
- Auto insurance.
- Liability insurance.
Of course, you hope that an accident never happens, but if it does, you should have the right coverage in place to protect your business.
Identify and define positions you need to fill.
Unless you intend to be the sole owner/operator of your trucking business, you will need to hire some employees. Positions that you may want to add within your trucking business include:
- Payroll Manager.
- Logistics Coordinator.
- Dispatch Operator.
You can post job advertisements on industry job boards, reach out to colleagues in the trucking industry for recommendations, or employ a recruitment agency to help you find suitable candidates.
When hiring employees, it is important to verify their employment history and qualifications, especially when you are hiring drivers.
Truck drivers must be qualified. Make sure that they have a Commercial Driver's License and that they have all of the necessary safety training to operate a transport truck. Trucking companies can run into serious liability issues in the event of an accident, so you want drivers who are well qualified to do the job.
Market your business and find loads.
Set your rates.
Determine what rate per mile you will charge to haul a load. Keep in mind that it should be high enough to cover your operating costs and give you a reasonable profit. Refer to the financial plan and budgets you outlined in your business plan to determine what your operating costs are.
Launch a website.
Build a compelling website that provides clients with detailed information about your business and services. This should include the type of services you offer, in which area you operate, a description of your fleet, and your contact details (phone, email, address, and contact form).
Create marketing materials.
There are several different tools you can use to market your business. You will need to create marketing materials, including a great logo and information brochures that outline the services you offer. You should also create a mailing list to connect with your clients and consider running print and online ads in industry publications.
Use load boards.
You can find loads by using online freight-matching services. With a multitude of online load boards available, you'll want to have a good look around and compare services and pricing.
Top load boards to consider include:
Develop business relationships.
Start building relationships with prospective clients by attending networking events and tradeshows. It's a good idea to join an industry association or chamber of commerce. Don't forget to be proactive and reach out to local shippers and set up meetings to introduce your business and services.
Cost of Starting a Trucking Business:
$15,000.00 to $175,000.00
U.S. DOT Number
$10,000.00 per truck per year
International Registration Plan
Varies by state/province
Motor Carrier Operating Authority Number