One of the strongest industries in the United States is the trucking industry and as long as there’s a need for products and goods to be delivered, trucking will continue to be one of the largest industries in the country. And since the trucking industry is worth billions, learning how to start a trucking business is not a bad idea. If you’re considering to learn how to start a trucking business, I’m sure you have many questions you need answered. In this article, we’re going to explore everything that it takes to start a trucking business.
How Will Your Trucking Business Operate
Trucking businesses operate by bidding on and fulfilling transportation accounts and contracts. In most scenarios, trucking businesses usually operate in one of two forms, known as sub-contracting or being privately owned. The key difference lies in how they acquire drivers to fulfill the accounts and contracts of the company.
- Sub-contracted drivers: Under the first option, you run your business using sub-contractors as drivers. Although you, as the business owner, run the business and receive the contracts, your drivers are not actually employed by your company. This option cuts down on start-up costs, insurance costs, and required equipment. On the other side, this option gives you less control over your drivers and cuts into your profits.
- Privately-owned drivers: Under the second option, you privately run your business and all operations. You use your own equipment, pay higher insurance prices, and hire a fleet of private drivers as employees. This option gives you total control over your business and its employees, and promises the most return on profits. On the downside, this option requires a great deal more start-up capital and operating costs.
Although you’re learning how to start your own trucking business, you’ll be taking the same path as other business owners when they start a business. Learning, understanding and applying those same starting a business principles will be important. Take your time and research exactly what you’ll need to start your business.
According to Small Business Administration, you should follow the 10 Steps to Starting A Business model. Below, you’ll find more resources to help you accomplish that goal.
Ten Steps To Starting Your Trucking Business
Step One – Start A Business Plan
Step Two – Get Business Assistance & Training
Step Three – Choosing A Business Location
Step Four – Finance Your Business
Step Five – Build The Legal Structure Of Your Business
Step Six – Register Your Business Name
Step Seven – Get A Tax ID Number
Step Eight – Register For State & Local Taxes
Step Nine – Obtain Business License & Permits
Step Ten – Understand Employer Responsibilities
Complying With Trucking Business License, Permits And Forms
In the trucking industry, you have a wide range of trucking industry specific requirements that your business must meet and keep current. Those requirements may include taxes, permits and licenses. You need to make sure that you’re aware of all regulations that may pertain to your business.
- Federal DOT Number and Motor Carrier Authority Number‘ Understand your requirements and apply for these certifications online at the Federal Motor Carrier Authorit’s website.
- Heavy Use Tax Form (2290)‘ Comply with tax regulations related to the heavy use of U.S roads with IRS Form 2290.
- International Registration Plan (IRP) Tag‘ Understand your requirements and obtain IRP tags by visiting your stat’s transportation website and their IRP portal.
- International Fuel Tax Agreement (IFTA) Decal‘ Understand your requirements and obtain IFTA decals by visiting your state’s transportation website.
- BOC-3 Filing – Use a processing agent and the BOC-3 filing option to secure and maintain active operating status.
Source – Small Business Administration
Making Sure Truck Drivers Have Proper License And Endorsements
As a trucking business owner, you’ll also be responsible for making sure that your drivers have proper license and endorsements to drive your trucks. This will be dependent on the type of trucking business you operate. All truck drivers will be required to have a commercial drivers license. Each state in the United States has different laws and requirements. In order for drivers to get their CDL, they will be required to take a CDL test. It will be your responsibility to make sure all drivers comply.
Trucking Insurance Requirements
As a trucking business owner, not only are you responsible for the many requirements in trucking, you also have trucking insurance requirements that have to be met. The nature of the trucking industry imposes strict insurance requirements on businesses. Because you own and oversee the operation of commercial vehicles in your business, your insurance requirements will likely cost more than most businesses.
The good news if any, you do have a wide range of trucking insurance options. You should take the time to weigh out your options and try to find value with quality. Some insurance providers may have good coverage at a high cost while others may have average coverage at a lower price. The amount of insurance you pay on your trucks will also be dependent of the state you live in. Some states will have lower insurance cost while others may be more. The best advice we can give you is to take the time to shop around.
The following guides provide more information on types of business insurance and your requirements:
- What Type of Insurance Do I Need?
- Finding and Buying the Right Policy
- Protect Your Business With the Proper Insurance
Another element that you will have to consider is employers’ rights. Employees are protected by laws that you must comply with. Make sure that you take the time to get familiar with these laws and requirements. The U.S. Department of Labor’s Occupational Safety and Health Administration provides assistance for the trucking industry to meet such expectations.
Proper Equipment For Your Business
One of the toughest elements to starting your trucking business is getting the proper equipment you need to operate on a daily basis. There’s nothing cheap about the trucking industry. Trucks, fuel and tires are all expensive. One of the most common reasons trucking businesses don’t get off the ground is due to startup cost. In order to start a trucking business, you will need the funds to purchase equipment and supplies.
Now, if your trucking business operates a private fleet with your own drivers, you’ll need to purchase commercial vehicle(s). Depending on your start-up capital, you’ll need to determine exactly what you need to begin operations. Everyone has to start somewhere.
The majority of businesses often start on a small scale. As your company begins to generate profits, it will be a good time to expand and add to your fleet. Remember, the more trucks you have in your fleet, the more profits you can grow.
Another thing that you need to consider before you begin to purchase trucks is the type of cargo an. d freight you plan to ship. Different types of cargo require different equipment. For example, if you’ll be transporting food, you may require a refrigerated truck or if your cargo is oversized, you may require a flatbed truck. Each transport type has different pricing, so knowing what type you want before beginning your business is a great tip.
Client Accounts And Contracts
Nothing comes easy in the trucking industry. While the trucking industry is a multi-billion dollar industry, client accounts and contracts are tough to get as a new startup business. Unlike other trucking companies that have been delivering goods for years, you won’t have that reputation starting out. You’ll have to make sure you work hard to build your company’s reputation and surround yourself with a winning team.
Most of the larger trucking companies you see today started out small, this should be encouraging to you. Most of them started local and they took care of business in their backyard. Business owners can make the time to connect with other companies, such as trade shows and trucking events. Truckers Logic can help you promote your trucking business, helping you make meaningful relationships along the way.
As long as you provide great services, accounts and contracts can be won by your business. Make the extra effort to build relationships and make connections. And as you slowly build your reputation (as long as it’s good) you will likely see your trucking business growing.
Source: Small Business Administration