Since the trucking industry makes a significant portion of the American economy, venturing into it is extremely lucrative. It has a great potential for people who do it right. The industry is highly competitive and requires a substantial amount of startup funding.
If you want to get into this business but not sure where to begin, this is the place to start. We won’t delve extensively into every bit of detail here, but this short step-by-step guide will tell you the most basic things about how to start a trucking company and hopefully steer you in the right direction.
Twelve Steps to Start a Trucking Company
We hope these following steps will equip you to launch your own trucking company with the appropriate framework.
Step 1: Figure Out What You Want
The first step is to ask yourself what kind of trucking business you want and what you want to get out of it. Some of the points below will probably help you out in this endeavor.
- Size of the company
- Type of customers to works with
- Type of trucking services
- Unique selling point or the point of difference of your company
Another important task is to decide on the type of business structure you’d like to have. In the US the major four types of business are sole proprietorship, partnership, limited liability company (LLC), and corporation.
Step 2: Formulate a Business Plan
As a roadmap to success, a business plan will help you get organized and identify your goals. A business plan will include details about the goals, finances, employee recruitment, assets, competition, and expected goals for growth.
When you plan out these ideas on paper, it will give you better leverage on working with investors, banks, clients, and employees as well.
Step 3: Establish the Company Legally
The trucking industry is a highly regulated field with plenty of potentials. So you should know, not maintaining appropriate licenses and other legalities will eventually cause problems in compliance.
To establish your company legally, you need to procure the following legal documents.
Form an LLC
There are various ways to structure a business, and operating as a Limited Liability Company (LLC) is one of them. Doing this will set your business liabilities apart from personal assets.
Get a Business License
Depending on your location, any number of licenses and permits might apply to your business. Some of them are commercial driver’s license (CDL), International Registration Plan (IRP) credentials, BOC-3 filing, etc.
Get your CDL
This is necessary for anyone wanting to drive a truck for business. Although there are some states which give CDL without any prerequisite schooling, it is, however, necessary for most of them. You need to pass the exam to get CDL also.
Apply for EIN
An Employee Identification Number is a must after the business is licensed. Unlike CDL, it is completely free and assigned by the IRS. This nine-digit federal identification number will be used to file taxes, income, and expenses in business and establish credit for your company.
Step 4: Secure Funding
Any company needs funding, and a commercial trucking business needs a lot of it. This is one of the most important aspects if you want to start and grow a business. So look for investors or pursue business loan options.
Step 5: Buy or Lease the Right Truck
Once funding is secured, you need to go truck shopping. You can either lease or buy your own truck but make sure the trucks are equipped for your needs. As working in a highly regulated industry, you cannot afford to cut corners with substandard vehicles. Customers’ trust and your service all depend on the right equipment.
Step 6: Secure Insurance
One of the most important aspects of any business is insurance and so you need to obtain it as soon as possible. As with all types of vehicle insurance, you need it for any potential damages incurred. Getting multiple quotes for cargo coverage is also a good idea.
The insurances you need to obtain are as follows:
- Primary liability insurance
- Cargo insurance
- Physical damage insurance
- Passenger accident insurance
The best way is to contact several agents and compare the options before making the decision. And if you are already familiar with shippers and brokers, ask for their recommendations too.
Step 7: Apply for MC & USDOT Numbers
These two license numbers are required for all commercial vehicles operating inside the US. The MC number enables the company to carry regulated commodities across state lines. It costs $300 while the DOT number is free. You can obtain both of them from the Federal Motor Carrier Safety Administration (FMCSA).
Step 8: Apply for Apportioned License Plates
You cannot expect to drive through states, let alone within a state without a license plate. And as for apportioned license plates, any vehicle weighing 26,000 lbs. or more needs it to travel between states. You can obtain them from the International Registration Plan Organization (IRP).
Step 9: Hire a Team
You can’t run a company without a team, and when you have a growing client base, you need people to provide a good service. A trucking company team will usually include
- An executive team,
- Fleet or drivers team
- Administrative team,
- Distributive and liaison team,
- Freight specialists
- A dedicated marketing and sales team
The success of your company will depend upon the full-fledged effort of all the team members working in coherence.
Step 10: Find Customers and Loads
The way your company makes money is by transporting loads and freight. Therefore, you need to find enough freights for the new business to run. Look for them from loads boards, dispatchers, and freight brokers.
You can also try registering as a government contractor, in which case you’ll not have to look for loads to carry yourself. But the best way to earn a profit is by networking which can play a significant role in your future. Build good relationships and familiarize yourself with the current trends.
Step 11: Properly Track Your Finances
Your success in making a profit depends on keeping perfect track of all your income and expenses. Besides, since payments are often received weeks after delivery, it is more crucial in the transportation business. Otherwise, it will become extremely tough to keep track of all the finances.
To keep track of all your income and expenses, subscribe to good bookkeeping software and maintain thorough records of all the finances.
Step 12: Stay in Compliance
In this day and age, every legal ruling is being updated regularly along with human resource laws. It is therefore important to stay up to date on time-sensitive filing requirements like CDL renewals, IFTA’s quarterly tax returns, etc.
Noncompliance with your state’s corporate reporting requirements could mean loss of your good standing in the business. This might also lead to revocation of your company’s existence.
This list is not exhaustive, but it is merely a guide on how to start a trucking company for a beginner. But if you want the process to go much more smoothly, we advise you to hire a professional consultant.
Although it may cost you some extra bucks but consider it as an investment for a smooth beginning of your business and a better chance at success.
Best of luck on the journey!