Profitability is the number one reason that people consider starting a trucking company. But figuring out how to start a trucking company involves a lot of planning.
We’ll break down the key facts you need to know about how to start a trucking company into 11 easy-to-follow steps. With this guide, you’ll discover that becoming a truck company owner is an achievable goal.
What’s the Difference Between a Trucking Company and a Transportation Company?
As the names suggest, the primary difference between trucking and transportation companies is their scope.
Trucking companies focus on providing a single mode of transportation services, whereas other transportation companies might include a range of other freight transport, including rail, air, and shipping services.
Focusing on a single mode of transportation enables small business owners to reduce overall startup costs. This makes trucking companies a smart choice for new business owners.
Is It Easy To Start Your Own Trucking Company?
Starting a company is never easy. However, educating yourself about what to expect when starting your own trucking company, as well as the steps and processes you’ll need to follow to get the business off the ground, is a good start.
Average trucking company owners in the United States can expect to earn between $100,000 and $500,000 annually, which is plenty of motivation to put in the necessary work.
However, the biggest roadblock you must tackle before seeing these profits is keeping a trucking company compliant with the many rules and regulations imposed on freight operations.
Pros & Cons of Owning A Trucking Company
While there are many benefits to owning a trucking company, the job comes with an incredible amount of responsibility, too. Just consider the following:
Advantages
- Profit: Trucking company owners make an average of almost 10 times more than truck drivers. Overhead for a trucking company stays low, too, so most of this money stays in your pocket.
- Low Start-Up Cost: Trucking companies don’t have to wait long to see meaningful profits, since start-up costs can be as low as covering CDL fees, if the trucks are financed.
- Freedom: Decide for yourself what to transport, when and how you run your trucks, and who you work with. You aren’t locked into any contracts unless you agree to the terms.
- Flexible Schedule: When you run your own business, you determine how your time is spent.
- Few Physical Demands: Most trucking company owners are, after the first few years, able to delegate most of the more demanding physical labor and driving hours to employees.
Disadvantages
- Multitasking: The flip side of flexibility is the need to balance the many responsibilities of business ownership.
- Stress: Running a company comes with a high degree of stress. After all, your employees rely on you for their livelihoods.
- Insurance Headaches: Covering employees and vehicles involves a lot of planning and paperwork.
- No Off Switches: When you run your own business, you’re responsible for everything that happens 24/7. Unlike truck driving, you don’t get to leave work at work.
It’s important to weigh the responsibilities that come with trucking company ownership against the significant benefits.
Keep in mind that the demand for trucking operations and drivers is at an all-time high in 2021. Now might be the perfect time to create a trucking company.
11 Steps for Starting a Trucking Company
When considering how to start a trucking company, you’ll need to understand the process involved. Successfully creating your own business requires following these essential steps.
Step 1: Create a Business Plan
Before you panic, planning out how your business will operate now gives you a clear path for future growth. The more work you put into your business plan, the more likely your trucking company is to succeed long-term.
For context, the Small Business Administration (SBA) recommends that your business plan should include detailed operations and financial projections for the next 3-5 years.
The SBA also provides templates that make it easy to create a business plan step by step. Your business plan should include these essential components:
- Executive summary
- Company description
- Market analysis
- Organization and management
- Service/product description
- Marketing and sales strategy
- Funding requests
- Financial projections
- Appendix of required documents
Based on your financial situation, you might choose a slightly different approach, focusing more or less on certain aspects of your plan. A well-crafted business plan is also a tool you can use to help acquire small business loans and financing later.
Step 2: Get CDL Licenses
Before you can apply for funding, you’ll need to acquire the necessary Commercial Driver’s License (CDL) for you and your team of drivers. Think through the type of loads your trucks will carry, since this will affect the class of license you need.
Consider hiring a team manager with experience who can help you lead this team effectively and provide valuable insights for you. This manager will also serve as a resource for keeping on top of licensing requirements.
Step 3: Create a Business Name
Your business will be defined by the name you give to it. It’s a critical element of your brand. You want your customers to form positive associations between your business name and business performance.
While it can be tempting to simply use your own name, if your goal is to expand, you will want a brand name that will accommodate that growth. If you become a national company, a name based on your local town might be misleading, for instance.
Keep it simple and professional, but don’t be afraid to be creative. Successful strategies include using short, catchy phrases, acronyms, or references from mythology (elements that aren’t tied directly to a specific place or person that exists).
Test out a few ideas on trusted friends and at least a handful of strangers for honest feedback. You’ll also want to claim a URL for your future website that is as close as possible to your name, or a variation of it.
Finally, remember to check your chosen name against other registered business names in the U.S. Trademark and Patent Office database. You can’t take a business name for which a trademark already exists.
Step 4: Decide Business Structure and Get IRS EIN
Before you can register your business and get an official Employer Identification Number (EIN) from the IRS, you need to choose a business structure. This will impact everything from how you hire and pay employees to how you file your taxes and benefits. You’ll likely choose between:
- LLC
- Sole proprietorship
- Partnership
- Corporation
Take the time to understand the differences and the implications each will have for your business in the future. That said, while it is a hassle, it’s possible to switch between these options later, if necessary.
Once you decide, submit your free online application to the IRS. You can also submit via fax or mail if you prefer, but you will be issued your EIN immediately if you apply online.
It’s a good idea to get this process completed early in your business planning process since you’ll need your EIN for other steps.
Step 5: Apply For A MC Number With FMCSA
Since your business will transport federally regulated commodities via interstate, you’ll need to pay a non-refundable fee to get an MC number from the Federal Motor Carrier Safety Administration (FMCSA).
The only exceptions would be if you plan to carry only your own cargo (rather than third-party), cargo that is not federally regulated (unlikely, but possible), or operate within a single commercial zone, such as within a single state or approved metropolitan area.
Most trucking company owners, however, will need to apply through one or more operating authorities for an MC number. First-time applicants who have never been issued a USDOT number must register through the Unified Registration System online.
Relevant interstate operating authorities for companies operating within the continental United States include:
- Motor Carrier of Property
- Motor Carrier of Household Goods
- Broker of Property
- Broker of Household Goods
- U.S.-based Enterprise Carrier of International Cargo except for household goods
- United States-based Enterprise Carrier of International household goods
Your MC number determines your insurance requirements, too. Because of this, you should check that you don’t file through more operating authorities than are absolutely required. If you plan to operate outside the U.S., you’ll need to apply through even more authorities.
Fortunately, the FMCSA website includes a detailed breakdown of MC number registration requirements and instructions for completing an application.
Step 6: Open A Business Bank Account
For tax purposes, you’ll need to open a separate bank account for your business. You’ll need the following:
- Your EIN
- Personal identification documents
- Business plan and registration information
- Any licenses and certifications, including CDLs
- A certificate of your registered business name
- Credit card eligibility
A business bank account allows you to easily track your business expenses and profits, which makes filing your business taxes much, much simpler later.
Depending on the type of business you choose to become, you may even be legally required to open an exclusive business account. Limited companies, for instance, must be kept completely separate from personal finances.
Step 7: Save Up Money To Cover Initial Expenses
Aside from the various application fees for CDLs and an MC number, you should plan realistically for your startup costs. To stay compliant, you will be required to install certain technologies in your trucks.
Initial expenses might include the following:
- Balances required to obtain truck leases or financing
- Electronic logging devices or ELDs
- GPS and other technology
- TMS software
Dedicated trucking company financing businesses like TAFS can help cover delays in initial invoices with factoring services, ensuring you have the necessary cash on hand to cover expenses. Plan for unanticipated expenses, too. You never know when an engine might break down.
Step 8: Buy Or Lease A Truck
To run your trucking company, you’ll need trucks. With all the other elements in place, it’s time to consider reputable lease-purchase programs, like KSM and other dedicated truck financing solutions.
Of course, if you have the funds, outright purchasing a vehicle that is around 10 years old is one of the best investment options. Most startup trucking companies don’t have those resources, however, so identifying reasonable financing options within your projected budget is critical.
Step 9: Get Insured
Again, compliance matters. Getting shut down for failing to maintain legal compliance can mean more than fines; it may mean shutting down for up to three years.
Your insurance requirements will depend on your type of business and operating authority, as well as how many employees you have, how you employ those individuals and the size of your fleet.
As you might imagine, this equation gets complicated fast and it’s worth finding insurance providers who operate exclusively within the trucking industry. Organizations like the Trucker’s Affiliate Program (TAP) are familiar with the complexities of insuring specialized trucking companies and a great place to start.
Step 10: Prepare Your Legal Requirements
Before kicking off operations, it’s crucial to confirm you meet all legal requirements. The FMCSA website lists all these requirements and provides links to further resources for addressing them.
You’ll need to confirm that you have passed or obtained the following exams and licenses:
- DOT inspection
- BOC-3
- URC Permit
- IRC
- SCAC
- ELD, like a qualified and affordable KeepTruckin ELD
- Any other relevant legal requirements
It’s worth keeping your legal documents as organized, accessible, and duplicated as possible. Some documents must travel inside each truck or with each driver. Others must be displayed either online or in a physical office.
However, some only have to be kept on file. For larger startups, it might even be worth hiring a third-party auditor to confirm your compliance.
Step 11: Find Loads and Grow Your Business
With your trucking company up and running, you’ll need to focus on expanding your customer base. Given current demand, you shouldn’t have much trouble finding loads for your trucking company.
However, finding the best matches for the services your company offers will help you build a reliable base upon which to grow. You can use a traditional broker or use a load board like Convoy.
Will Your Trucking Company Succeed? That’s Up to You
Congratulations! You now know how to start a trucking company. Whether your trucking company lasts and continues to grow is, at this point, largely up to you as the owner.
Owning a trucking company is an incredible amount of responsibility and a lot of hard work and attention to detail. However, these efforts do pay off, quite literally.
Especially in the early stages, however, it’s critical to keep ahead of your expenses. Get ahead of the game with invoice factoring from TAFS to ensure your business has the best possible financial start.
FAQ
Yes, owning a trucking company can be very profitable, though it is also quite competitive. Effective business owners can net between $2K and $5K weekly.
On average, trucking company owners make between $2K and $5K every week.
Trucking companies provide ground freight transportation services, moving large quantities of cargo from one location to another.
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