Trucking is an exciting and lucrative industry with plenty of opportunities for business owners. However, in such a competitive and relevant field, business owners need to follow certain steps when starting a trucking business. Whether you’re establishing a new brand or buying an existing company, consider the following steps and learn about how to get into the trucking business.
5 Steps to Getting Into Your Trucking Business
These steps outline the most essential and helpful elements for getting your trucking business started. Though other tasks or challenges may arise throughout this process, these basic principles offer long-term security and preparation.
Step 1: Update Your Business Plan
Having a reliable and educated business plan is the first and most important step. You aren’t going to be able to manage everything perfectly with endless funds, so it’s best to be intentional with your time and money. Consider your priorities when creating your plan:
- What must happen to make a profit?
- What is going to yield immediate results versus long-term results?
- In what ways do you plan to grow and how are you prepared to support that growth?
- What processes, services, or policies need to be developed and perfected as soon as possible?
- If you’re buying an existing business, how will you maintain current projects?
- What ineffective practices need to be done away with and what new practices need to be implemented?
A good business plan helps you stick to your objectives and guides decision-making for the future. Here’s a quick reminder of the topics to include in a trucking business plan to clearly outline your expenses and revenue:
- Executive Summary
- Company Description
- Market Analysis
- Organization and Management
- Products and Services
- Marketing and Sales
- Financial Projections
- Supporting Documents
Revisit and update your business plan once a year and reference it often. The economy and the market can be unpredictable, so of course you must be flexible; however, having an active and intentional plan will help prevent negative contingencies.
Step 2: Check Business Compliance
The next step is to make sure your business plan complies with federal and state government regulations. The last thing you need is an unexpected or preventable fee while you’re trying to establish a business. Keep in mind that the following list isn’t comprehensive. Make sure you look closely at federal and local requirements, safety regulations, truck standards, etc.
- USDOT Number. The U.S. Department of Transportation (DOT) requires all carriers to have a unique and identifying number to monitor safety and compliance practices.
- Operating Authority. If you are a for-hire carrier, you also must get authorization from the DOT that determines what kind of cargo you can legally carry.
- Heavy Vehicle Use Tax. There is an annual federal tax for trucks that exceed 55,000 pounds that helps fund highway programs.
- International Registration Plan (IRP). There are certain registration fees that vary depending on the distance traveled in a state.
- International Fuel Tax Agreement. To simplify reporting on fuel for states and Canadian provinces, there is a tax agreement that allows carriers to file a quarterly fuel tax that is distributed to participating states.
Carriers need a registered or process agent that processes legal documentation and other records, specifically with BOC-3 filing. Wherever you have an office, you need a designated agent in that state. This is one of the main steps to legally establishing your company.
Step 3: Check Driver Compliance
Not only does your business need to be compliant, but so do the drivers you hire. All drivers need to have a commercial driver’s license (CDL) and any necessary endorsements for certain types of unique carriers.
Step 4: Verify/Get Insurance
If you’re buying an existing business, be sure to confirm that the company is insured properly. Similarly, if you’re starting your own business, you must get the right kind of insurance for a trucking company. It can be a big expense, but it’s legally required for freight. Such insurance includes:
- Primary liability: If you (or your drivers) are in an accident where it’s the fault of your company, then primary insurance helps cover the costs and damage. This amount is usually between $750,000-1 million dollars in liability coverage.
- Cargo: This type of insurance covers damage to the cargo or theft. $100,000 is a fairly typical price, but the type of cargo or coverage you need can make the price vary.
- Physical damage: This helps cover truck damage if there’s an accident where your driver is not responsible.
- Non-trucking use: If a driver is liable for an accident but they are not hauling cargo for a third party, then this insurance helps cover those damages.
Step 5: Understand How to Increase Profitability
At the end of the day, you need a profitable trucking business to be sustainable. If you’re starting from scratch, you need to be able to make money as quickly as possible to start generating revenue. If you’re buying a trucking business, you need to optimize everything to prevent losing (or regaining) revenue. Some of the ways you can do that are to:
- Optimize loaded miles. Every mile load needs to be bringing in money for your business. You can maximize truckloads, especially if you hire a broker or utilize loan boards. You can also look for more specialized or niche markets.
- Increase fleet size. If you can, add more vehicles and drivers to your fleet. It’s one of the best ways to get more business, expand your company, and establish a brand. National Funding offers commercial truck loans to trucking business owners to help supplement those expenses.
- Be competitive. You can attract drivers despite the driver shortage if you have compelling and competitive perks. Offering competitive solutions for your employees also means you can offer competitive solutions for consumers. Also, set a competitive rate for your business; consider what competitors are doing and make sure you aren’t falling behind.
We are prepared to help with your business
Now that you know how to start a trucking company, you need the resources. No matter how prepared you are, having enough funds can be a challenge for everybody. Buying or leasing the right equipment is one way to create or adopt a sustainable business, which is just one of the many monetary concerns for new business owners. National Funding has experience with trucking loans and is ready to offer you all the support you need.
Whether you need money to hire and retain reliable drivers, to cover administrative expenses, or expand your fleet, National Funding has the right type of small business loan for you.
Ready to get started? Talk to a loan specialist to learn more or apply to get funding now for your trucking business!