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How to Start a Trucking Business
The demand for transporting goods is strong and constant, which makes trucking big business. If you are a truck driver, or even if you’re not yet, you could start a lucrative trucking business of your own. It could be a great opportunity for you to take advantage of the market, and work for yourself.
Of course, starting any kind of business takes a lot of work. The key to success is gaining the requisite knowledge and moving patiently through the development and launch process, as detailed in this step-by-step guide.
$$25,700 – $203,200
Time to build
Recovering post-pandemic shutdown, growing
$58,125 - $94,162.50 p.a.
Step 1: Decide if the Business Is Right for You
Starting a trucking business requires significant time, money, and effort. Before you jump in, it’s a good idea to educate yourself so you avoid the most common pitfalls.
Pros and Cons
Every business has its pros and cons, which you should weigh to decide whether a trucking business is a good fit for you.
Here are some basic pros and cons of starting and running a trucking business.
- Travel to interesting places
- Work independently and make your own hours
- Getting started is relatively simple and straightforward
- Job security is high, as trucking services are always in demand
- Marketing will be required to build a reputation
- It might take a year or two to make significant money
- Potential for unhealthy lifestyle and fatigue
German data firm Statista valued the US trucking industry at more than $791 billion in 2019, before pandemic-related lockdowns reduced the need to transport goods.https://www.statista.com/topics/4912/trucking-industry-in-the-us/ As the economy recovers, the industry is expected to a rebound.
The trucking industry is highly sensitive to economic fluctuations. When commerce is up, the trucking industry flourishes. During economic downturns when consumers make fewer purchases, there are fewer deliveries and trucking suffers.
How much does it cost to start a trucking business?
The start-up costs for a single-vehicle trucking business range from about $25,000 to more than $200,000. To start with a fleet of trucks, you would of course need much more capital.
- Setting up a business name and corporation $200
- Business licenses and permits $200 – $300
- Insurance $5,000 – $10,000
- Business cards and brochures $200 – $300
- Website setup $1000 – $3000
- Initial marketing budget $200 – $500
- Truck and trailer $15,000 – $175,000
- IRP plate $500 – $3000
- Heavy vehicle use tax and permit $100 – $600
- U.S. Dot number $300
- CDL training and license $3000 – $10,000
How much can you earn from a trucking business?
Your profit will vary depending on whether your business is a one-person, one-truck operation, or has a fleet of trucks and several drivers.
The average truck business owner-operator makes $1.55 in revenue per mile and drivers average 121,500 miles per year, according to industry advisor American Truck Business Services. But if you can drive 75,000 miles your first year, you should make gross revenue of just over $115,000. Expenses generally take about half of your revenue, and include fuel, maintenance, insurance, food, and lodging. This would leave you with a profit of $57,500. If you are paying a driver, your profit margin would drop to about 20%, leaving you with $23,000 in net profit.
As you build a reputation and reach the industry average of 121,500 annual miles, your gross revenue would be around $180,000, with a profit of more than $90,000. If you’re able to expand your business and operate five trucks, you’ll clear more than $900,000 in annual revenue and a very tidy profit!
What barriers to entry are there?
There are some real barriers to entry for a trucking business, including:
- Expensive to get started, with high ongoing costs
- Much time and money spent building your brand
- Adapting to life on the road
Step 2: Hone Your Idea
Now that you have a good idea of what’s involved in starting a trucking business, you might want to hone your concept in preparation to enter a competitive marketplace.
Why? Identify an opportunity
Research US trucking and look for industry needs and weaknesses. Maybe there’s a certain kind of freight that is short on committed drivers. You could start by calling trucking firms and ask if they’re looking for drivers — this is a good indication that that line of work offers a real opportunity.
Once you have built a proven track record, it will be easier to get new clients and repeat business, which will be key to your business success.
What? Determine your products or services
Determine if you want to specialize in a certain industry or in a certain region of the country. Keep in mind, a bigger driving range will likely mean more opportunities.
How much should you charge for trucking services?
When you are just starting out, you may have to charge a lower-than-average price until you build a reputation. On average, owner-operator drivers make $1.55 per mile. But to command that price you will need to first make a name for yourself through industry experience.
Research trucking services in your area to determine the best prices for your market.
Who? Identify your target market
Your target market will be just about any company with goods to transport. A good way to start is to research which businesses transport the most goods and then give them a call offering your services at a discount. If you do a stellar job, you should be able to retain them and gradually increase your price to the market rate.
Where? Choose your business premises
In the early stages, you can operate your business from home to keep costs in check, assuming you have space for your truck. But as your business grows, you may need to hire workers for various job roles and rent out an office. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these four rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- The name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “trucking” or “transport”, boosts SEO
- Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step business name generator
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names at a web cataloging site such as NameChk. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Step 4: Create a Business Plan
Every business needs a plan, a rough outline that helps guide a startup through the launch process while maintaining focus on key goals. A business plan is also crucial for helping potential partners and investors understand your company and vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your shop’s services in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.
Step 5: Register Your Business
Registering your business is an absolutely crucial step — a prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s done, you have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states offer real advantages when it comes to trucking.
If you’re willing to move, you could really maximize your business!
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your trucking business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the four main options:
- Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
- Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.
Step 6: Register for Taxes
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate on a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
- Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.
Step 8: Apply for Licenses/Permits
Starting a trucking business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level licenses and local county or city-based licenses and permits. Additional permits may be required by your state, such as a general business permit or license. The license requirements and how to obtain them vary, so check the websites of your state, city and country governments or contact the appropriate person to learn more about your local requirements for a trucking business. You could also use the SBA’s guide to identify your state’s requirements.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
For peace of mind and to save time, we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state, and provide them to you to make sure you’re fully compliant.
Step 9: Open a Business Bank Account
Before you begin making money, you will need to have somewhere to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your trucking business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer business account options, just inquire at your preferred bank to learn about rates and features.
But it is a good idea to look at a few options, as banks vary in terms of offerings, and you want to find the plan that works best for you. Once you choose your bank, you just need to bring your EIN (or Social Security Number if you decide on a sole proprietorship) and your articles of incorporation or other legal documentation that proves your business is registered.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked but is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business, and your life.
Here are some types of insurance to consider:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
You can create your own website using services like WordPress or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web developer to create a custom website for your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. We examine several of them below.
Some of your business will come from walk-by customers and web surfers, but you should still spend time on marketing! Especially as a new business, getting the word out and increasing customer awareness is crucial.
Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men over age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audience.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you are unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
You will need several key items to successfully launch a trucking business, starting with:
- Semi-truck and trailer
- Mechanic’s tools for on-the-road repairs
Step 12: Build Your Team
You may not need to hire any employees straight away if you plan to start small and use your home as your office. But as your business grows, you may add more trucks and find a need to hire staff. Potential employees for a trucking business include:
- Office Manager – Sets appointments, orders supplies, maintains office
- Truck Drivers
- Customer Service Rep – Speak to clients and solve issues
- Marketing Lead – Social media marketing, SEO
Your business may at some point need to hire all of these positions, or just one or two of them, depending upon its size and needs. You might also hire multiple workers for a single role, or a single worker for multiple roles, again depending on your needs.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn or Facebook, or using free classified sites like Jobs and AngelList. You might also use a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Finally, you could also hire a recruitment agency to help you find talent.
Step 13: Start Making Money!
Focus on USPs
Unique selling propositions, or USPs, are the unique characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your trucking business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Some signature USPs for your trucking business could be:
- Low per-mile rates and a focus on value-based pricing
- Newer trucks and equipment
- Family-owned business with great customer service
- Guaranteed reliability and speed
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as being the 10th customer on Black Friday.
- Optimize calls to action (CTAs) – Experiment with text, color, size and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Signage – Put up eye-catching signage at your store and website
- Flyering – Distribute flyers in your neighbourhood and at industry events
- In-Person Sales (IPS) – Offer your products at local markets, tradeshows
Niche Your Market
You should consider creating a niche for yourself by specializing in a certain aspect of your industry. This could jumpstart your word-of-mouth marketing within your niche market. As a trucking business owner, however, you probably will not want to stick with one niche for long. You’ll want to be available for a broad variety of transport services.
Build Affiliate Relationships
Affiliate marketing is advertising in which you compensate third parties, who are your affiliates, in order to generate traffic to your website. You develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.
Trucking Business FAQs
With one truck, you’ll be an owner-operator and a one-person show. It’s a lot of work — you’ll do your own sales and marketing, manage operations, and drive the truck — but the rewards are all yours.
The profit potential in trucking is solid, with most owner-operators making at least $58,000 in a year. With five trucks and drivers you could push your profit up to nearly $190,000.
Start-up costs range from $25,000 to $200,000 for a one-truck operation. The key to keeping start-up costs down is to find and buy a reliable used truck.