When breaking into a new industry as a small business owner, it’s important to know that there’s room for you to succeed. You need to be confident that there’s a need you can fill, and that you’re capable of doing so.
The trucking industry is one that has a clear need for people to step up. A driver shortage has weighed down the industry for more than 15 years. Fleets struggle to keep drivers. Replacing them is even harder.
According to an analysis conducted by the American Trucking Associations, the U.S. was short about 48,000 drivers in 2015. By 2024, if nothing changes, the driver shortage will reach 175,000 unfilled positions. To meet the increasing demands on trucking companies, 89,000 new drivers need to come into the field every year for the next 10 years.
Clearly, there is a great need for more commercial drivers in the U.S. As such, beginning or expanding your trucking company now could be an incredibly smart business investment. Before you begin, though, it’s important to understand everything you need to succeed in this market.
Like any other small business, you’ll likely need to take out a loan to get started. There are many investments you’ll need to make upfront. Here are a few ideas of what you can do with your small business loan for trucking:
Educate yourself and your employees
There are many hindrances holding the trucking industry back. Lack of quality education and experience is one of the biggest examples. ATA reported that, in 2012, 88 percent of truck driver applicants were unqualified. When only 12 percent of applicants can legally or safely operate a commercial vehicle, fleets are stuck between a rock and a hard place.
Do they lower hiring standards, compromising safety and accepting higher insurance rates? Or do they continue working with a deficit of drivers?
To ensure that you can contribute to this industry, you must have the right education and training to enter it in the first place. The No. 1 requirement for any driver is to have a Commercial Driver’s License. Additionally, you’ll need to acquire endorsements for the types of freight you plan to transport, The Truckers Report pointed out.
Like many forms of higher education, CDL school can be expensive. According to the R & J Trucker Blog, you can expect to pay between $2,000 and $5,000, depending on which school you choose, whether it’s public or private and what class CDL you shoot for.
Getting your CDL isn’t a one-time thing. You need to renew your license every few years to keep it valid. Additionally, every two years, you’ll need to get a physical to show that you’re healthy for long periods of driving, according to Roadmaster Driving School.
If you’re hiring drivers, it’s important that they have these qualifications as well. If they come into your company lacking a CDL, it’s up to you whether you want to sponsor their education, or if already having an up-to-date license is a requirement for application.
Invest in the right equipment
Depending on what you’re transporting, having the right equipment is crucial. The companies you’re driving goods for depend on your professionalism and expertise to deliver their products on time and in good condition. To ensure this, you need to have the right kind of truck to transport these goods – especially if the products are temperature-sensitive.
According to the Truck Driver Institute, a new cab can cost around $100,000 or more. Additionally, a new flatbed trailer typically sets an owner back $50,000. If you’re planning on entering the food trucking sector, expect to pay more for a refrigerated trailer.
On top of these initial costs are the maintenance and repairs. It’s critical that you keep your rig in top condition. You wouldn’t want to realize you have threadbare tires halfway through a trip. Between brakes, wiring, air hoses and other common areas of regular maintenance, you might spend around $15,000 a year just on tune-ups and small parts replacements.
Tires are one of the most important safety features of any vehicle. With a commercial vehicle, you may be responsible for the upkeep of 18 of them. At around $250 a tire, this isn’t cheap. A typical owner spends as much as $4,000 just on tire maintenance alone – and that’s not even enough to cover all 18 tires.
Get yourself up to code
You’ll also need to adhere to legal requirements, TruckDrivingJobs.com pointed out. Every state is different, but in general, you’ll need:
DOT and Motor Carrier Authority number.
You can obtain these numbers through the Federal Motor Carrier Safety Administration website. Here you can also check out other permits you may need including you:
- Hazardous Materials Safety Permit.
- Operating Authority number.
- Cargo Tank number.
This form is also filed through the FMCSA website and costs a one-time fee of $75. It gives you faster access to the above-stated items.
International Fuel Tax Agreement
Different states have different rules pertaining to this regulation. Be sure you’re aware of your state’s stance on this rule, in addition to those of any other states you’ll be driving through.
International Registration Plan
This is a reciprocity agreement between the 50 U.S. states, the District of Columbia and Canada. It’s meant to encourage the best use of international highways. You can obtain this registration on the IRP website.
Heavy Use Tax Form
Your truck is heavy, and all that weight puts added stress onto U.S. highways. To account for the disproportionate amount of wear and tear on the roads you have compared to the commuters you’ll share the road with, you need to pay a Heavy Use Tax. Get this form through the IRS website.
Starting or expanding your trucking company takes time, dedication and hard work. It can also be pretty pricey when you’re just starting out. However, with the right knowledge and alternative loan, you can get started with a successful trucking endeavor.