American Trucking Associations reports that trucks move over 70% of US freight cargo. Meaning the trucking industry is presently lucrative for prospective drivers and owner-operators.
The logistics and transportation sector has excellent potential for people who understand the trade. However, the industry is highly competitive, and you need to consider several factors, such as choosing the right truck, hiring employees, securing financing, and selecting your business entity.
This article looks at the process of setting up your small trucking business and helps you make the right decisions moving forward. The good news is that 91% of trucking companies in the US operate six or fewer trucks, so small carriers dominate the industry.
Get a Commercial Driver’s License
You first need to become a truck driver if you plan to operate as an owner-operator. Once you obtain a commercial driver’s license (CDL), you need to get as much driving experience and endorsements as you can.
Write a Business Plan
Writing a business plan helps you identify and focus on the core aspects of your business. It serves as your roadmap to success that you can refine as your business grows. It also helps you organize, identify goals, and articulate your value proposition. Additionally, it helps you identify your strengths, weaknesses, threats, and opportunities. Finally, a good business plan will help you secure funding for your small business either from investors or a loan.
- Register Your Business
Registering your trucking business with the proper jurisdiction is the next step. Again, it’s best to select a business entity based on personal liability protections, ownership structures, taxation methods, your business plan, and other technical differences.
For example, if you want to start a one-person self-owned trucking business, you can look into limited liability companies (LLC). Still, you will consider LLCs designed for partnerships if it’s a partnership. Finally, although incorporating your business is a relatively straightforward process, ensure your paperwork is on point.
Obtain Your Business Licenses, Permits and Insurance
You will need a unique business name that communicates your brand, personality, and speciality. Then obtain business licenses, permits, and insurance to ensure you operate legally. Here, you may need to hire or consult a startup lawyer.
You’ll need a state business license for where you set up your business headquarters. If your truck is at least 26,000 pounds and crosses state lines, you’ll need an International Registration Plan. Additionally, you may need several types of insurance, including public liability, cargo, physical damage, and bobtail.
Choose the Right Truck
Selecting the right truck for your business and intended cargo will depend on the following:
Price
Comfort level
Weather resistance
Weight limit
New vs used
Whether the truck has multiple dealerships across the country
Cost of maintenance
Whether you intended to operate locally or long distance
You’ll then need to decide whether to buy or lease the truck. Purchasing a truck has higher upfront costs, but you can use the built-in equity down the road in a trade-in deal. On the other hand, leasing is more affordable upfront, but you cannot use the build-in equity later.
Secure Startup Funding
Trucking requires a fair amount of startup capital to cater to your truck’s purchase and other operating expenses, including registration, maintenance fees, accounting software, and business permits and licenses. Fortunately, you have several options for securing financing, including government small business loans, commercial truck financing, or small business term loans.
In Conclusion
Starting your trucking business is relatively straightforward if you have a good business plan, funding, and business licenses. However, once you start your small business in trucking, you will need to understand and track your income and expenses, find loads to grow your business, and remain compliant with industry regulations.
