Starting a trucking business can be a lucrative opportunity, and is appealing to many because of the simple nature at its root. Described in the most basic terms, trucking companies make money by moving goods from point A to point B.
While it is true that the business model is fairly simple, it doesn’t mean that it is easy. You may be a great truck driver, but that doesn’t necessarily mean you’ll be a good business owner. This guide is designed to teach you everything you need to know to transform you from a truck driver into a business owner and prepare you to start your own trucking business.
The best way to start your journey to owning transportation business is to work for someone else first. Gaining exposure to the industry without the risks of being a business owner will be the most effective way to give you a solid baseline knowledge of how it all works. You don’t want to be making costly mistakes on your own dime.
You’ll also have a steady paycheck to prepare you and help you save because running a trucking business isn’t cheap. Many truckers make the plunge to becoming an owner-operator or small fleet owner after 2-3 years of working as a company driver. This provides enough exposure to the industry to experience most any issues that are commonplace in trucking.
In this time you’ll learn many important things such as:
- Hours of service laws and driver regulations
- How loads are booked, picked up, and delivered
- What lanes are popular, and which are higher paying
- How long it takes to get from point to point
- The reality of breakdowns and repairs; what really goes on out there on the road
- What drivers go through, and what the traits of good and bad trucking companies are
Create a Plan
After you gain some exposure to the industry, it is important to create a plan before your start a trucking business. Writing it down is a good practice, and you should cover every aspect of the business in detail.
Some initial questions you will want to answer are:
- What type of equipment will you run? (dry van, reefer, flatbed etc.)
- What territory/lanes will you run? (regional, specific lanes, all over the country, etc.)
- How will you find freight? (direct shippers, freight brokers, load boards, etc.)
- How will you finance your business? (equipment loans, factoring, etc.)
- How much operating capital will you need to have on hand for expenses, fuel, and repairs?
- How will you manage the business aspect of your trucking company? Will your spouse back home be able to handle it, or will you use a dispatch service?
There are many aspects to running a successful transportation business, so you should be prepared to have an answer for everything. This will ensure that you know exactly how you will map your success.
Determine Your Cost of Operation
You should make sure that you know exactly how much it will cost you to operate your truck. You’ll have to take into account all of your fixed costs such as truck payments, insurance, and compliance in addition to variable costs such as fuel and repairs.
Calculating your per-mile cost of operation is the most effective way to ensure that your new trucking business is profitable from the start.
Apply for Operating Authority
In the United States, Motor Carriers that are in the business of transportation freight on the behalf of other entities are regulated by the FMCSA and DOT. Trucking companies are identified by Motor Carrier Numbers (MC Number) and DOT Numbers. The application fee is $300, and it can be done completely online. There are services that can help you obtain your authority, but it is simple enough to be done on your own.
To obtain and maintain legal operating authority, you must comply with all regulations set by both agencies. These include:
- Insurance requirements
- Vehicle and equipment standards
- Driver qualifications/Drug and alcohol testing
Buy A Truck
You can’t run a trucking business without a truck! Buying a truck is the most obvious requirement, but there’s a lot that goes into it. Are you going to buy a new or used truck? How big do you need the sleeper to be? How much horsepower? What about transmissions and axle ratios?
In addition to buying a truck with the right specifications, you’ve got to actually find one in your price range. New trucks can cost $150,000 or more, but you can get a used truck that will serve you well for half that.
Most will purchase a used truck at first due to the cost. As you grow your business, the benefits and reliability that new trucks provide become more apparent. But if you do your proper due diligence before buying a used truck, you’ll be in good shape.
Get Some Customers
Getting customers are what new business owners will struggle with the most. And to expand on that statement, finding high paying freight is even more difficult. You should determine how you’ll go about finding loads that will pay the bills and then some.
Most will immediately turn to the load boards, but you won’t make much money if you rely on them solely. You should try to establish relationships with freight brokers and shippers directly. It’s a fact that pretty much all of the high paying freight never makes it to a load board. Creating and maintaining relationships is vital.
To foster a good business relationship with a freight broker or direct shipper, you should be focused on providing the best service possible when hauling their freight. Effective and prompt communication, in addition to on-time delivery are key here. It may cost a bit in upfront profits, but the long lasting relationship will provide enough revenue to offset this small cost.
Manage Your Business Well
You can be an expert truck driver, but you won’t be in business long if you can’t manage the administrative aspect of a trucking business. Tasks such as invoicing customers, collecting payments, maintaining compliance, and ensuring profitability are what will make or break you.
Some owner-operators are able to manage their business from the road, but it’s difficult. It also takes away from your driving time which is what actually makes you money. If you’re lucky, you can have a spouse or other trusted person back home take care of the back office while you’re on the road. Others choose to utilize a truck dispatching service.
Dispatching services charge a small monthly or per load fee to book freight, negotiate rates, file paperwork, and handle other administrative tasks on your trucking businesses behalf. The fee is usually pretty reasonable, and they can utilize their connections to help you find higher paying freight. Your personal needs and situation will determine which route you go for this part.
Starting your own trucking business is a great opportunity for company drivers and those with similar logistics related experience. The business model is simple, and there will always be freight to be moved. If you have any advice for other newbies, leave them in the comments below!