Want to learn how to start a trucking business? We’ve got you covered.
First, let’s understand why you should start a trucking company, to begin with.
With trucks moving over 72% of all goods transported in the US, the American trucking industry is worth hundreds of billions of dollars. In 2020 alone, trucking businesses generated $732.3 billion in revenue, which shows that it can be a profitable business idea for you.
What’s more, is that a trucking business is a scalable business where you can simply lease equipment (trucks) rather than buy it. This allows you to quickly and significantly expand your business, as needed.
Additionally, it also provides you with the flexibility to manage your own work schedule and be your own boss as the owner operator of your business.
Wondering how to start a trucking business?
To help you get started, we’ve listed the step-by-step process on how to start a trucking business in the US. Use this guide as your reference and get started with the process right away.
How to Start a Trucking Business: Step-By-Step Process
In this section, you will learn how to start a trucking business in nine simple steps. Follow this exact process to start a trucking business in the US.
Step 1: Conduct Market Research
If you want to start a trucking business, the first step is to conduct preliminary market research to:
- Understand the different types of trucking companies
- Identify the key players, total market size, and market shares of each
- Assess the level of competition and
- Understand the pricing structure and models
- Identify the type of clients and contracts in the industry
- Determine the overall feasibility of your business idea
Before you worry about how to start a trucking business you need to figure out how profitable and feasible it would be if you start one.
Understand the market, get to know the key players, assess the market dynamic, and then move forward with your plan to start a trucking business.
Step 2: Choose Your Trucking Business Niche
Once you’ve done your preliminary market research, you’d be in a better position to decide which type of trucking business you want to start.
A trucking business can operate with clients from different industries and with different requirements
You can choose to transport heavy loads on long routes, deal with perishable items that need cold storage, or anything else. Almost every consumer or industrial good is transported using a truck at some point.
Don’t stretch yourself too thin by trying to cater to different industries. Instead, choose your niche and do well in that. Your earlier market research would help you choose the best niche to start a trucking business.
Step 3. Create a Business Plan to Start Your Trucking Business Successfully
First things first, you need to draft a business plan. Regardless of what type of business you’re starting, it’s important to create an organized business plan right at the onset.
A well-documented business plan can help you turn your vision into reality. You should plan everything from start to finish so that it can act as your roadmap to success.
It should include details such as:
- Your business goals
- Name of your trucking company
- Challenges and potential pitfalls
- Financial details such as investment sources and budget allocation
- Value proposition
- Type of business entity you want to form
- Services you will offer
- Routes you will cover
- The rate at which you will charge customers
- The number of trucks you will start with and how to buy or lease them
- Management process
- Business insurance policy
You will need to revisit this plan and redefine it as your trucking business evolves over time.
One quick tip for choosing a business name is to make it unique and memorable. List a few ideas and then check whether there’s any other business using the same name. You can also choose to change your business name later by filing for doing business as or DBA.
Step 4: Legally Establish Your Trucking Company
You need to form a Corporation or a Limited Liability Company (LLC) to legally operate your trucking business in the United States.
Registering your business with the Secretary of the State is crucial for authorization to conduct business within the state. It also helps you protect your personal assets from business debts and liabilities.
Are you wondering which entity type you should choose for your trucking business?
If you want to start your trucking business with minimal compliance and less paperwork, you should form a Limited Liability Company. Establishing an LLC is the easiest way to start a small business in the U.S. as it offers great flexibility.
However, if you are comfortable doing more paperwork and want to attract investors, you should choose to form a Corporation. Establishing a corporation allows you to sell stocks to others, which makes it easier for you to attract capital investment from outsiders.
Unable to choose the right entity type for your trucking business?
You should take our entity survey to make an informed decision about the right business structure to start a trucking company.
Once you decide which business entity to start a trucking company, you will have to begin with state filing procedures and pay the state administrative fees.
For this, you also need to appoint a Registered Agent or process agent who will send and receive legal papers on your behalf from the Secretary of State’s office. You will also have to obtain a Federal Employer Identification Number (EIN) from the IRS for taxation purposes.
Applying for Corporation/LLC formation and EIN can be time-consuming and frustrating. But the good part is: GovDocFiling’s business formation packages offer a simplified and hassle-free option to do all of this paperwork. Learn more about our pricing and package inclusions.
Step 5: Acquire the Necessary Licences and Permits to Start a Trucking Company
To ensure smooth operations, you should secure all the required licenses and permits to legally start a trucking business within the state.
Though it varies depending on the state you want to start a trucking company in, here are some of the common business licenses and permits you may need:
- A commercial driver’s license (CDL): The Federal law requires drivers of commercial motor vehicles to obtain a CDL. You should contact your state’s licensing agency for more details.
- A USDOT Number: This unique number allows the Federal Motor Carrier Safety Administration (FMCSA) to identify your trucking company. It is your company’s identification number for all inspections, audits, and investigations.
- A Motor Carrier Operating Authority (MC number): Depending on your business operation, you may need to obtain one or more MC numbers to start a trucking company.
- International Registration Plan (IRP) credentials: Trucking companies operating across states need to obtain IRP credentials for their vehicles.
- International Fuel Tax Agreement (IFTA) decal: You also need to obtain IFTA decals for your business vehicles to operate across states.
Step 6: Plan How and When to Purchase Vehicles
Many trucking companies start out with a single commercial truck and gradually grow to become a successful business. But when you’re starting a small business with just one truck, it is important to plan your long-term vehicle purchase strategy.
Planning ahead can help you make informed decisions. It can help you:
- Choose the best vehicles to purchase based on their efficiency, load capacity, and fuel costs.
- Decide on a budget for vehicle purchases, maintenance costs, fuel charges, and other operational costs of your trucking company.
- Consider leasing vehicles to grow your business with minimal investment.
- Choose insurance plans for your vehicles such as physical damage insurance and passenger accident insurance.
- Build a large fleet of trucks and grow your business successfully.
To help small business owners start a trucking company and get their businesses running the right way, we offer a FREE Business Start Up Guide with our packages. It has additional tips on how to start, run, and grow your business the right way.
Step 7: Get an Insurance
If you want to start a trucking business you need to invest in a good insurance plan.
The trucking business is fraught with risk as trucks are prone to accidents and damage over time. To add to that, the trucking business requires a lot of initial investment and you can’t risk losing your assets in an unfortunate event.
So, get your business insured and mitigate any losses, before they occur.
Here are some types of insurance that you should get:
- Vehicle insurance
- Commercial liability insurance
- Cargo insurance
Once you get this done, move to the next step in this process for how to start a trucking business.
Step 8: Secure Funding
The trucking business is an investment-heavy business and requires a significant amount of money to start. So, you’ll need to get some sort of financing to start your new business.
You can choose to get debt financing (loans) or equity financing (investments).
If you start a trucking business using an LLC or Corporation as your legal entity, then it’s easier to find investors.
It’s easier, though, if you form a Corporation. Corporations have the option to go public by issuing shares and accumulating a lot of funds to expand the business.
Step 9: Start a Business Bank Account
It is important to create a separate business bank account for every business, not just specifically for a trucking company.
How does it help?
It helps keep your personal and business finances separate. Even if you wanted to create a Sole Proprietorship, which you can’t for a trucking business, you should still keep your business account separate.
This will give you a clear idea of exactly how much you’re spending and how much income is coming in. This allows you to make day-to-day decisions on how much you can spend based on the liquidity of your business.
Step 10: Set Up Accounting and Invoicing Processes
One of the main reasons why trucking businesses fail is that they’re not able to manage their finances well. In any other business, a few late payments won’t make a lot of difference.
In a trucking business, however, it could deter day-to-day operations as it is a cash-heavy business with high operating costs.
The best way to avoid this is to set up your accounting, bookkeeping, and invoicing processes from the start. Set clear processes and add strict guidelines to your client contracts.
A streamlined accounting process will also help you with your annual tax filings and keep track of how your business is performing.
Step 11: Build a Steady Customer Base
For any business to be successful, it is important to build a loyal customer base. You should look for ways to find, attract, and acquire more customers for your trucking company.
You can start by joining a load board, which is an online marketplace where shippers and freight brokers post loads. Some of these load boards ask for a subscription fee but many of them allow you to join for free.
It can be a good start to your trucking business and can help you secure a steady customer base. You can also build a simple trucking business website to help potential clients find you.
Many small businesses use platforms such as WordPress to create beautiful and fully-functional websites to get their company online. You can choose any of the pre-designed templates and customize it with your company’s logo, service details, and contact information.
Another medium to attract potential customers is social media. You should create official business accounts on the top social media channels such as Facebook, Google My Business, Yelp, BBB, and list your trucking company in business and local directories.
Why Should You Start a Trucking Business?
Now that you’ve learned how to start a trucking business, it’s important to understand why you should start one in the first place.
In this section, we will discuss some of the reasons why you should start a trucking business in the US. Let’s get started.
1. It’s a Lucrative Business
As discussed earlier, the trucking industry is huge and has tons of earning potential. It’s a growing industry and the demand for trucking services is only going to grow with it.
Depending on the freight you transport and the hours you work, you have the potential to earn a lot of money just by driving goods from one place to another.
2. It’s Recession-Proof
If you start a trucking business you can rest assured that it won’t be affected much by external factors like an economic recession.
No matter what the situation is, there will always be a need to transport goods from one place to another.
The best part is that a trucking industry is not dependent on any particular industry and can have clients from multiple industries. This makes it recession-proof and always in demand.
3. It’s Scalable
There is no limit to how many trucks you can operate as long as you have long-term contracts with a good share of your clients. You can easily expand your business if you start getting clients and a steady flow of income.
You don’t necessarily have to buy new trucks and can always lease them when the demand increases.
If you start a trucking business with Corporation as your legal entity, it makes the expansion process even easier. You can go public, raise funds, and expand to multiple geographic locations.
4. It Allows Flexibility Over Your Work Schedule
If you’re someone who doesn’t like the fixed schedule of a regular job, then starting a trucking business can give you more flexibility over your schedule.
You can choose your working hours and days, your trip schedules, and plan your family time accordingly. You’re your own boss and can decide to work the way you want.
Hopefully, by now, you’d be convinced that starting a trucking business is a good idea. Now it’s just a matter of following our guide on how to start a trucking business and you’re good to go.
FAQs
1. How can I start a trucking business?
Here is the step-by-step process on how to start a trucking business:
Step 1: Conduct Market Research
Step 2: Choose Your Trucking Business Niche
Step 3. Write a Business Plan to Start Your Trucking Business Successfully
Step 4: Legally Establish Your Trucking Company
Step 5: Acquire the Necessary Licences and Permits to Run a Trucking Company
Step 6: Plan How and When to Purchase Vehicles
Step 7: Get an Insurance
Step 8: Secure Funding
Step 9: Build a Steady Customer Base
2. How much does it cost to start a trucking business?
The main cost associated with starting a trucking business is the equipment cost of the cost of trucks. This would totally depend on the number and types of trucks you want to start with.
Other than equipment costs, you would need an initial investment of up to $20K to start a new trucking business.
Here are some components of that:
- Business formation costs $900 to $1,500
- IRP plates $500 to $3,000 per truck
- Heavy vehicle permit of $100 to $600 per truck
- State tax of around $500
- Insurance payments of $2,000-$4,800 per truck
Your total costs, including fixed and variable costs, would again depend on the number of trucks with which you start a trucking business.
3. Is it profitable to start a trucking business in the US?
Trucking industry is a billion-dollar industry in the US and an essential part of the US economy. Different kinds of goods are transported through trucks across the country.
If you start a trucking business right, then there are good chances for it to be profitable. Use GovDocFiling’s business formation services to register your new trucking business and comply with all requirements.
4. Why do trucking companies fail?
Here are some of the common reasons why trucking companies fail:
- Not enough clients at the initial stage to break-even
- High operating costs
- Low-paying freight or clients
- Too many accounts receivables and unpaid invoices
When you start a trucking business you must understand that it is a cost-heavy business that requires a fine balance of income and expenses. You must, therefore, set up strict policies regarding invoicing and payments to maintain a decent working cash flow.
5. How can I start a trucking business without knowing how to drive?
You don’t necessarily need to drive a truck yourself to start a trucking business. You can simply learn how to manage one and hire licensed drivers to drive your trucks.
Simply follow the process for how to start a trucking business mentioned above and hit the ground running.
Ready to Start a Trucking Company?
Starting a business from scratch takes time. You should follow all of these steps diligently to start your trucking business the right way.
If you want to form a limited liability company, you can start your LLC application online with our packages in no time. Our LLC formation packages also include EIN/Tax ID filing with the IRS and other essential legal documents: An Operating Agreement, Employer Contract, an NDA and more.
Do you have other questions on how to start a trucking business? Feel free to ask them in the comments below.