How To Start A Trucking Company
You've been in the trucking industry for years and know the ins and outs of the industry, but you're interested in becoming your own boss or want to avoid the politics of the work environment. Perhaps you just crave a little more freedom and want to drive on your own terms. However you've arrived at the idea, you're interested in learning how to start a trucking business of your own, get your own trucking contracts, and write up a trucking business plan.
While starting a trucking company of your own is a lot of work, there’s lots of information out there to make your job easier. We've tracked down all the info you need to start a trucking business step-by-step and compiled it so you know how to run a trucking business. So what are you waiting for? Hit the ground running and learn how to start a trucking company today.
If you already have a considerable amount of driving experience behind you, you’ll be better equipped to understand what some of the challenges to your new trucking business will look like. Taking the jump from driver to company owner (even if you run a one-truck operation) will be considerably more challenging, especially during the first year out on your own, and the first year is when a lot of companies will either make it or abandon the business altogether.
While there are considerable benefits to being your own boss like making more money, avoiding company politics, and choosing your loads, the first year can also present both expected and unexpected challenges. During the first year it's important to be realistic with your out-of-pocket expenses, find reliable drivers, set up an emergency fund, build your company's credit, build customer relationships, gain some accounting knowledge, learn how to stay ahead of the competition, and still maintain your health on top of all that. Sound challenging? It can be, but the rewards of being your own boss can be great.
Finally, don’t forget to sit down and outline your trucking business plan in detail. Put together an executive summary, a company description, a market analysis, and profit projection for the year, and outline what services and products you will provide. Having a detailed plan of what market your trucking company will target and how you will achieve your goals will help you avoid pitfalls during your first year in business.
When considering how to run a trucking business, one of your primary concerns is probably how much money it will cost you to start your business. When it comes to the cost of starting a trucking company, there is no one answer as to how much it will cost. Your cost will depend on several factors, including what state you’re in, how many trucks you plan to have, whether you currently have your own truck and insurance, whether you’ll haul interstate or intrastate, and more. On average, owners usually pay around $10,000 to $20,000 to get their business up and running.
Here's a breakdown of necessary costs to get you started:
Taking the time to plan out your business expenses will help you make sure you are prepared to cover the costs of running your own trucking company.
Most trucking companies are not nearly as large as you think. In fact, most companies operate with less than 6 trucks, and starting a trucking company with one truck is not uncommon. The steps for setting up a trucking company with one truck or several are essentially the same—you will need your documentation, forms, and paperwork set up to get started. In order to set up your company correctly, you will need to:
Although getting together all your paperwork can be time-consuming, it's well worth the effort because it will prevent serious issues with compliance down the road. If you face an audit without the proper documentation in place, it can easily crush your budding trucking company.
Once you've worked out the initial expense to start your own trucking company, you'll need to consider what costs you will need to account for before you turn any kind of profit. There are two main kinds of costs to consider: fixed costs and variable costs.
Once you’ve calculated your fixed and variable costs, you should set aside funds for 3-6 months of business expenses in case of an emergency and to help you get started. The first several months may be slower for your business than you might have anticipated, and an extra cushion of funding will give you time to build up your business without financial stress. Anticipating your fixed and variable costs will also help you calculate your minimum cost per mile so you never accept too low of a rate for a load and avoid deadheading. The average cost per mile usually falls around $1.59. After a few months of operating, you should be able to calculate your cost per mile.
Although the initial cost of learning how to run a trucking business can be pricey, there are many financing options available to help new business owners. The type of loan or financing you choose should be based on what you need the financing for. Do you need a new piece of equipment? Funds for regular or recurring purchases? Do you want to earn rewards on the money you spend? There's a financing option for each of these. Here are some of the main financing solutions for starting your own trucking company.
Take the time to find the right business loans for you, and don’t feel rushed by a loan officer. Make sure the terms and interest rate are the best you can find. While a 1% change in interest may not sound like a lot at signing, it can literally mean thousands of dollars over the course of your loan.
Your trucking company is only as profitable as your ability to run your business. Preparation, cash flow, avoiding deadhead miles, and more are all part of making your business as profitable as possible. However, even with all of this preparation and work, the average profit margins for trucking companies are very slim and average around only 7% of the gross annual income of the company. This means if your company makes $250,000 per year, you will only see $17,500 in profit per truck.
Learning how to start a trucking business is hard work, and only about 15% of companies make it through their first year in business. Maximizing profit, calculating your expenses, and proper planning can help make sure your company continues to grow and see success and profit. There are some ways to help your company become more profitable, including:
In the end, keeping your company profitable involves careful planning, scheduling, and making sure you only take loads that meet your minimum cost per mile.
With all this talk of how to start a trucking company and start getting some cash flow into your pocket so you can cover your expenses, when exactly will you get paid? Unfortunately, it's not uncommon for customers to make payments later than you would like. You may not turn a significant profit for the first several months as you get your business established. This is part of why having your 3-6 months of savings set aside is so important. Be prepared and have funds set aside if you are not paid in a timely manner.
The cost of your vehicle depends on a few key aspects such as age, condition, features, and mileage. A brand-new truck will set you back anywhere from $100,000 to $260,000 or more, whereas used trucks run $15,000 to $100,000 or more on average. As you can see, there is a massive range of prices depending on what kind of truck you purchase.
18-Wheelers won't just cost you the initial purchase price. Maintenance costs average at about $15,000 per year, and new tires average around $4,000 per year to maintain and replace. Keeping these expenses in mind will help you evaluate the overall cost of purchasing your vehicles. It's also important to remember that a new truck might set you back more initially, but a used truck will likely cost more in repairs over the course of the year.
The amount of money an owner-operator makes depends largely on the amount of experience they have in the industry. The more experience they have, the more money they can make. The low-end salary for an owner-operator is usually around $35,000 per year, and the high end can be upwards of $100,000 per year. While this might sound like a lot, keep in mind that most owner-operators actually make about $50,000 per year, and are responsible for providing their own truck, insurance, maintenance, and fuel.
Fuel is easily one of the biggest expenses for anyone who runs their own trucking company. On average, fuel costs end up being around $1,000 per week or $4,000+ per month. It's not cheap, but it's certainly a necessary expense to keep your business operating smoothly. As a trucking company, you will typically pay for all fuel expenses, maintenance, equipment, insurance, and payroll for your drivers. Your drivers typically cover the cost of their food and lodging while they're on the road.
The trucking industry has a lot of regulations you must meet before you can ever put a truck out on the road. Although meeting all the licensing and regulatory requirements can be tedious, it’s incredibly important to make sure you're in compliance before you open your doors, or you risk losing your business altogether. Here are the licenses you need to get before you start your trucking company.
While complying with all regulations and getting all of your licensing set is a job all on its own, it’s the first step towards running a successful and profitable trucking company.
As you’re learning how to start a trucking business, you’ll need to make sure you get your DOT Number. The average price for a DOT Number is around $499. If your company plans to haul cargo or passengers interstate, or plans to transport hazardous materials intrastate, you will need to register for a DOT Number. Your DOT Number is very important because it is required for identifying vehicles in the case of audits, investigations after a crash, vehicle inspections, and compliance reviews for your company. Failure to obtain a DOT Number can land you in some hot water, so make sure you prioritize getting your DOT.
Although your DOT number registration gets processed right away, you typically won't receive your DOT Number for about four to six weeks. If your application was sent by mail and isn't legible, you will need to redo your DOT application.
The process for getting a DOT Number is simple, if not slightly time-consuming. Gathering the necessary information before you sit down to fill out your DOT application will save you time and frustration. Make sure you have the following information available when you fill out your application:
Once you've compiled all your information you’ll need to find the correct DOT application form for your type of business. There are three main forms for a DOT, including:
1. MCS-150: This form is applicable for most trucking companies and carriers.
2. MCS-150B: If you haul HazMat cargo, this form combines your DOT Number with a HazMat application.
3. MCS-150C: This application includes an Intermodal Equipment Provider application with your DOT application.
You can fill out your DOT application throughout the FMCSA (Federal Motor Carrier Safety Administration) website. The site is designed to help you choose the right DOT application for your company's needs. You can file your DOT application online, or print and mail it to: FMCSA Attention: USDOT Number Application 1200 New Jersey Avenue SE Washington, DC 20590.
Once you receive your DOT Number it must be clearly displayed and placed on both sides of your trucks. You DOT Number must be clearly legible from up to 50 feet away. Many companies post the DOT Number to the doors of the vehicle because it is visible and has enough space for all of the DOT information.
Whether you need a DOT number for personal use really depends on several factors. Here are the types of motor carriers that are required to register for a DOT:
If your business does not fall into this category or your personal use does not qualify, you don't need to obtain a DOT. However, you must still register your vehicle with your local or state office. If you only operate interstate you will need to register for an MC number instead of a DOT. Keep in mind that some states require a DOT number whether you meet the above requirements or not. Check with your state regulations to see if you are required to have a DOT Number.
Before you get too excited and jump into hiring employees and signing contracts, make sure you lay out a detailed trucking business plan. Think about how long you anticipate operating your business, and what kind of profit you anticipate making from the resources you have. Ask yourself how you will finance your initial business expenses and where you will go to find trucking contracts.
Some of the best ways to find more trucking contracts to keep your business profitable are using dispatch services, searching load boards, hiring freight brokers, registering with the government as a contractor, networking for more loads, and even researching the shippers in your area and making sales yourself.
Make sure you do a little market research to find out what shipping needs are in your area so you can make a list of equipment you'll need to properly meet the needs of your industry. Once you have clients, focus on keeping them. Provide excellent customer service, but don't operate under your minimum requirements for cost per mile. Finally, don’t forget the power of active marketing and word of mouth to attract new clients.
There are many ways to look for and hire truck drivers for your company, but you want to attract the right drivers that will be with your company for years. Here are a few great ideas for finding qualified, competent truck drivers that will help you as you’re starting a trucking company.
Post Jobs on Call-to-Action Channels: This includes online job boards, recruitment flyers, media resources, and newspaper ads.
Network to Find New Employees: Check with people you know like business associates, family, friends, and other employees in your company to see if they know anyone who is interested in driving for your company. Make sure they still meet your position requirements before hiring them.
Use the Internet: There are lots of creative ways to find people online such as:
White Papers: Write on relevant topics that drivers are interested in to target your audience, and then provide them with an invitation to contact your company. The more specific your content is, the better.
Social Media: Taking the time to build a social media presence can help you generate interest in your company and attract the right kinds of drivers when you need them.
Contact Potential Drivers: There are many job boards where truckers can post their resume and wait for potential job opportunities, so be sure to reach out to them.
When you post your job listings you should make sure to include the driver’s responsibilities and requirements such as the necessary training or skills needed to excel as a driver for your company. During the hiring process you should also assess the driver’s knowledge of the company, driving record, education and experience, ensure they are properly licensed, and ask questions relating to the following:
Taking these steps when hiring will help you choose qualified, professional candidates who will be with your company for years to come.
While truck driving might be a male-dominated profession, there are plenty of women who have chosen to adopt life on the road. Truck driving is a great profession for women, and pay is based on how much you work, so there's no bias for women in the industry when getting paid. The flip side is that it can be challenging for women to break into this male-dominated field because there is less work-life balance and unfortunately, some male drivers might not be as accepting of women in the industry.
Female truck drivers need tough skin and a great attitude to get the job done, but are ideal candidates for a career that requires patience, self-motivation, and communication skills to effectively carry out their day-to-day duties. There are even several trucking companies led by women including Garner Trucking Inc., Rush Trucking, and All America Transportation. Trucking companies should seek to hire qualified women and men and promote a women-friendly environment in the trucking industry.
Now that you know how to start a trucking company and outline a trucking business plan, you can take control of your career and make it your own. If you're interested in seeing how CDL.com can help you when starting a trucking business step-by-step, we have a wide range of partnership opportunities to check out. Learn more by contacting us and get started creating your own trucking business today.