Every year, trucks in the United States move 10.5 billion tons of freight, which is 78 percent of all freight tonnage in the country. This effort requires over 3.6 million trucks and 3.5 million truck drivers.
Clearly, without the trucking industry, America would crumble to its knees. With the supply line from manufacturers to wholesalers, retailers and end consumers cut, millions of Americans will be unable to access various products.
Do you want to play a part of this industry and help to keep American moving? Well, you can do so by becoming a truck driver or starting a trucking business.
But we're not interested in truck drivers today. In this article, we're telling you how to build a trucking company from the ground up.
Understand the Market
About 30 percent of new businesses fail within the first two years of operation, and the number 1 reason, according to Investopedia, is founders fail to investigate the market.
To start a successful trucking business, you must gain an intricate understanding of the trucking industry. Does your location have a great demand for trucking services?
What trucking problems or gaps is the market facing? What does the trucking future look like? How will disruptors, such as self-driving trucks, shape business?
If you already have some experience as a truck driver, or you've previously worked in an established trucking company, you certainly already have a fairly good grasp of the industry.
Build on that by doing more market research. Read up the latest industry magazines and journals, and talk to experienced truckers and freighters, shipping brokers and other industry players you can get ahold of.
Identify a Business Model
Trucks and truck drivers are the lifeblood of any trucking business. As such, the next step is to establish how you will acquire these assets.
You can purchase your own trucks and hire drivers, or you can subcontract the service to drivers who have their own trucks
Either model has its own strengths and weaknesses. Buying your own trucks, for instance, is cost prohibitive. Entrepreneurs who pursue this model typically start out with one or two trucks, and then scale over time. On the upside, you'll have greater control over your business, and the model has a higher profit return.
The subcontracted driver model doesn't require as much capital to start and you won't go through the hassle of hiring competent truck drivers, but you have to put a lot of effort into building a recognized brand that can pull in shipping clients.
This model is ideal for people who have vast connections in the trucking industry (can easily get clients) but lack the capital to invest in their own trucks.
Register Your New Trucking Business
Although registration requirements for trucking businesses vary from state to state, you generally need to:
- Choose and register your business name and physical address
- Pick a business structure (Sole proprietorship, partnership, limited liability company or corporation). Find a business lawyer to help you make a smart choice
- Get federal and state tax IDs
- Apply for business licenses and trucking permits. These include the Federal DOT Number and Motor Career Authority Number, Heavy Use Tax Form, International Fuel Tax Agreement Decal, Internal Registration Plan Tag, and BOC-3 Filing.
Set Up Your Business Office/Premises for Success
Regardless of the model you choose for your trucking business, you'll want to set up a proper office. This is not a kind of business you can run from your garage at home.
In the early days, you don't need a large team to keep the wheels turning. A front office manager, bookkeeper or accountant, and one or two sales personnel will suffice.
Also, set up a reliable business phone, get an internet service provider and secure any other service that is crucial for your daily operations.
Purchase Business Insurance
Truck accidents are a constant worry for trucking business owners. In 2015, 4,050 trucks were involved in fatal crashes, and 87,000 were involved in injury crashes.
A single truck crash can have devasting effects on your company. You could lose to the truck driver to death or a long-term physical injury, the truck, as well as the freight. Cumulatively, the loss can render your business bankrupt.
This is why it's very important to buy adequate insurance for your fleet. You also need general liability insurance, workers compensation insurance, cargo insurance, and even cyber liability insurance. In the event of an accident or any other event that results in loss, your insurance provider will step in and provide compensation.
Do your homework well to find a reliable insurance company. You don't want to get on board with an insurer who will take ages to process and pay out your claims.
Make Use of Trucking Technologies
Self-driving trucks are here, but that's not the only technology you should be thinking about.
To find clients and ensure your trucks are always on the move, use load boards. These are web and mobile platforms that connect shippers, freight brokers, and forwarders to trucking companies.
The shipper posts a load, trucking companies bid for it, then the shipper selects the winning bid.
While load board makes finding clients easier, you're advised to keep using other methods to find clients.
For instance, you can reach out to manufacturers in your region and propose to be their shipping partner.
Stay on Top of Industry Trends
The trucking industry has a well-worn reputation for being slow-moving and resistant to change, but that is slowly changing! From new technologies to safety regulations, trucking companies have no choice but to embrace them.
As a trucking company owner, you have to stay on top of these changes and adapt to them accordingly. If a new safety law is enacted, you've to comply or risk facing hefty fines.
Get Your Trucking Business Moving
Starting a trucking company is a smart choice. With the manufacturing industry grinding on to meet increasing consumer needs and the e-commerce industry exploding, the demand for trucking services to move goods will keep surging.
With the tips fleshed out in this article, you're now in a better position to start a trucking business that can grow into a dominant player.
And when the time to find your first client comes, count on us to hook you up.