When we talk about growing businesses in the US economy, then trucking doesn’t come to mind. You should ask drivers that drive interstate, they would tell you about the demand for trucking. The movement of approximately more than 70% of the freight happens through trucks, which shows the growing demand for trucks. Today, we’ll discuss how to start a trucking business.
Reasons to Start a Trucking Business
Shortage of Drivers
There is a forecast that the trucking industry would round about 100,000 drivers in the future. Companies are recruiting more drivers to avoid the upcoming shortage. However, if you’re entering into this industry, it would give you a competitive edge.
Innovation in Industry
Every industry welcomes innovation and creativity, and the trucking industry is no exception. The innovation would bring efficiency, finding new routes to reduce fuel consumption, and logistics would add value to the customer service. It offers you a competitive advantage and stabilizes your position in the long term.
The trucking business is the backbone of a country’s economy. You play a significant role in transporting goods to warehouses and stores across the country. However, it doesn’t matter whatever the economic situation is, businesses would need to transport their products all over the country.
How to Start a Trucking Business –steps
Let’s discuss how to start a trucking business; some of the main steps are as follows;
Writing a Business Plan
The operations of the trucking business would seem straight, and you’d think that you don’t have to write a business plan. The written business plan would help you to focus on the main elements of your business. It discusses the reason why you’ve established the company, strategic detail, cost versus profit, and the capital required to start the business.
A written business plan would help you to stay on track while establishing your company. Most importantly, when you’ll apply for a business loan or send an investment request to the potential investors, then your investors and the bank would require a proper business plan with all the operational details.
The next step after writing the business plan is to get your business registered. You’ll have to register it with the office of local or state government as per requirements.
There are different types of business entities available, and you should check them out before submitting the paperwork. Every business entity offers a different ownership structure, taxation policies, personal liability protection, and other technical differences.
If you’re launching the company by yourself, then you should establish it as a sole proprietorship. If you’re starting it with partners, then consider LLC (limited liability company). However, there are other business entity options that are also available, but it is better if you stick with these two.
The incorporating process of your business is very simple and easy. It requires a general business agreement, tax identification number, relevant documents about the company’s founder and principal amount, and material evidence that how soon you’ll become a company.
The other important element of the business registration process is selecting the name of your business. The thing that makes the first impression on the customer is your brand name, and make sure that your business name connects with them personally. After choosing the business name, you should check the availability of the name with the secretary of the state office.
In order to make sure that your business is running its operations legally, you should have all the licenses and permits.
The liabilities and challenges of the trucking companies are unique and different. It is difficult to comply with all the insurance and license policies of the state where you’re operating your business. The state government would require you to have a business license where you’re setting up your headquarter. You should have a license before your truck gets on the road for the first shipment.
The “International Registration Plan” is the next license that you should get. It allows your truck to move across all the states of the US and some provinces of Canada. However, the regulations and policies vary from state to state, and you should do exactly whatever the state requirements say.
Different types of business insurance that your trucking company should obtain are physical damage insurance, bobtail, cargo insurance, and public liability insurance. If don’t know whether you’re complying with the regulations and policies of the relevant, it is advisable that you should discuss it with your business attorney.
Selecting the Right Truck
The purchase of the commercial truck would require a significant amount of capital. It’s important that you should select the right vehicle and mode of transportation for your business. Some of the factors that you should keep in mind are as follows;
- Going on the long distances or operating locally
- Used vs. new
- Weight limit
- Have got various dealerships across the US
- Weather resistance
- Preferred cab style
- Comfort level
- Price range
In order to narrow down your truck brand options, the trucks of Peterbilt, Freightliner, and Kenworth are some of the best brands and they accommodate the needs of many.
I-Buy vs. Lease
Both options offer advantages and disadvantages. For instance, when you purchase a truck outright, then you don’t have to worry about the monthly payments. When you lease the truck, then you don’t have the ownership of the vehicle, and you have to pay regular installments. You have to follow the specific regulations and mileage restrictions, and maintain its condition. The lesser would cover your maintenance expense.
Purchase of the truck requires a huge amount of capital along with running expenses. You can easily lift your company off the ground if you can secure the funding. The average cost of a commercial truck is roundabout 80,000 dollars, and trucking companies usually acquire a loan of approximately 106,000 dollars. Some of the main loan options available to your startup are as follows;
- SBA Loans: it’s very hard to get this loan, and it guarantees 85% of the total loan if the borrower can’t make the repayment,
- Commercial Truck Financing: the lender would offer you the loan as per your request, and you’ll have to pay a fixed amount plus the interest. You have to put your truck on leverage to the lender in case you don’t make the payment, the truck would be collateral
- Small Business Loan: it’s easier to get this type of loan, but the interest rate is much higher, and you’ll have to make a quick payment.
Conclusion: How to Start a Trucking Business
After an in-depth study of how to start a trucking business; we have realized that launching the trucking company requires a lot of capital. If you’re planning to launch such an enterprise, then you should keep in mind the abovementioned guidelines for raising funds for your company.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.