Trucking businesses are in high demand, with an expected growth of over 27% through the next decade. This is causing many drivers to consider becoming owner-operators or starting a commercial trucking business of their own. When you own your own company, after all, you get a lot more control over the day-to-day operations and a lot more potential to earn an impressive income from this multi-trillion-dollar industry.
Of course, there’s a lot that goes into starting a trucking business the right way. In order to avoid missing out on any important details or letting the feeling of being overwhelmed get to you, we’ve created this helpful guide. It all starts with proper planning and preparation, and a helpful reminder that you’ve made a smart decision:
- 70% of all freight in the U.S. is transported by trucks
- 91% of all companies have six or fewer trucks, meaning small carriers dominate the market
Unlike some industries where the market is waning and the big brands are taking over, trucking still has plenty of room for the “little man”. Let’s talk about what it takes to get started.
Establishing a Trucking Business Plan and Legal Entity
The first thing you need to do is sit down and write a business plan. This roadmap is going to be your key to success and it will also help you with financing in the future if you have to apply for loans and other funds. Fortunately, you’re not on your own here. You can find templates and tools online to help you create a business plan that sets out exactly what you want to do as a trucking business.
You’ll also need to legally establish your business as a commercial entity. What that means is that you can’t just be some guy driving a truck. If you do want to go this route, at the very least you’ll have to register as an owner-operator so that you can work independently. However, you may also choose to set up an LLC or incorporate your trucking business. There are differences to consider, along with pros and cons to each type of business structure.
If you choose to start a business, you will also have to appoint a registered agent or someone who is responsible for communicating with the state on behalf of the business. You’ll also need an Employer Identification Number (EIN) to start a business bank account and file taxes. Sometimes, it’s best to work with a business lawyer or incorporation specialist to handle these details, but it’s not required.
Licenses and Permits for a Trucking Business
Speaking of legal details, don’t forget that you are going to have to get all of the required business licenses, permits, and insurance to operate your trucking business. There are over 150,000 different jurisdictions that all have their own rules for setting up a new business. Therefore, you’ll want to check to see if you need:
- CDL (Commercial Driver’s License) with or without additional endorsements
- USDOT number, issued by the FMCSA (Federal Motor Carrier Safety Administration)
- An MC number, or Motor Carrier Operating Authority Number, of which you may need more than one depending on the type of trucking business you decide to operate.
- IRP (International Registration Plan) credentials and IFTA decals to ensure compliance with interstate transit for those who offer services across several states.
Make sure that you check with your local small business resources and the Small Business Association in your state to see if there are any other requirements for trucking businesses that might not be universal from one state to the next.
While we’re talking logistics, it’s important to discuss all of the insurance that you will need. If you are going to start a trucking business, you will need several types of insurance protection:
- Passenger accident insurance
- Physical damage insurance
- Cargo insurance
- Primary liability insurance
- General business insurance
It’s going to be best to contact an insurance company that is experienced with commercial trucking operations and ask for their assistance in setting up the best insurance package for your new business.
Choose Your Equipment and Find Your Network
In order to be successful in trucking, you have to have the right truck(s) and know where to find the loads. Choosing a truck is about making sure that it’s designed to haul the cargo that you want (such as in the case of trucks with refrigerator capabilities), as well as it being an affordable addition to your business. You may also have to choose between buying or leasing a truck, which again depends on your needs. Consider all of your options and choose what is most profitable for your business. Most owner / operators finance their first truck with a business loan.
As far as networking goes, you have a lot of options. Load boards are a great starting point if you don’t have any other connections. You can jump on these boards and find loads that are waiting for transit all over the country. The boards will provide information about the destination and origin of the freight, the type of load, what it pays, and other details. Then you can decide whether or not to take it.
Once you’ve done some runs and made some connections, you may find yourself relying on these boards less. You can also check out trade shows and industry groups for other resources and connections. The secret is to start outsourcing and delegating the administrative tasks of your business right away, including having a dedicated person to find loads and build relationships for the business.
From Trucker to Business Owner, On Your Terms
Forming a commercial trucking business can be a lucrative choice so long as you know what you are getting into. This is an industry with a lot of logistics, legal issues, and compliance requirements to meet, so it isn’t something that just anyone can walk into. Generally speaking, those who do the best owning trucking companies are those who have been in the driver’s seat before.
Take advantage of the other resources that you have to help you set up the right type of trucking business, no matter what you have in mind. In no time, you’ll be on the road to success with your first load.