Did you know trucking business calls for 70% of freight in the USA? This means roughly $700 billion of the goods business in the USA is dependent on truck transportation shipment.
Naturally, the demand for trucks is quite high now.
Do you wish to start as an entrepreneur in the USA? If yes, then opening a trucking company seems very promising.
In this article, we will be discussing these points:
1. Costs related to starting your own trucking business
2. The general checklist for starting a business.
3. Checklist exclusive for starting a trucking business.
Cost Related to Starting Your own Trucking Business:
Everyone has a budget in mind while starting a business on their own. What is your budget for a trucking company? If you are not sure of the amount you should have in mind while making a trucking business plan, here is an estimate for you-
➦ Cost for documentation and registration of the company: $500 or more
➦ Cost to arrange for IRP Plates: $300
➦ Taxes applicable to Heavy-duty vehicles: Anything between $10 – $550 (depending on the type of vehicle)
➦ Cost towards the salary of a driver of the truck: $40,000 per annum
➦ Cost for purchasing a truck: $15,000-$175,000 per vehicle (depending on the size of the truck you wish to purchase)
➦ Cost for availing the US DOT Number: $300
➦ Registration cost for Unified Carriers: $75
➦ Annual Insurance Premium: $10,000
➦ Endorsement charges for CDL: $140
➦ Promotional and marketing expenses: $5,000 or more per annum
The mentioned figures are all tentative. The cost is relative to the size and duty of the vehicle. The taxes and license costs vary from one state to the other.
If you have the budget to meet these expenses then it’s time to focus on starting a trucking business checklist.
The General Checklist for Starting A Business:
Like any other business, trucking companies have the same requirement to initiate. The general checklist to follow while you start a transporter business are-
1. Preparing A Business Plan
You can’t expect a successful start in business if you are starting off without any business plan. How to start a trucking business in that case? Prepare a proper plan for the business. Usually, your planning should cover these plans-
➦ Deciding a name for the company
➦ Description of the company
➦ Analyzing the market
➦ Planning the sales and marketing
➦ Analysis of the business service
➦ Strategically planning the sales
➦ Take projections on the finances
➦ Make personnel planning
➦ Prepare organizational and management structure
➦ Decide on the structure of the business
➦ Prepare a summary of the business plan.
This should be your business planning approach if you do it traditionally. If you wish to plan for a lean set-up then these points need to be considered-
➦ Major activities
➦ Important partnerships
➦ Critical resources
➦ Segments of your target customers
➦ Propositions and their values
➦ Structural costs
2. Legal Establishment of The Company
Now that you have a business plan ready in hand, decide the business structure you want, and get it registered with the state and local government bodies. Common structures you can choose from are-
➦ DBA or proprietorship
➦ Partnership firm
➦ LLC or Limited Liability Corporation
➦ S-Corp or C-Corp
Each of these structures comes with their own benefits and complexities. Even the taxation varies on the structure you choose!
The process can be complicated if you are not acquainted with the steps. It is best to hire a professional agent to get the registry done.
The responsibility doesn’t get over here. You also need to acquire your EIN and get a business bank account started.
3. Obtaining the Necessary Permits and Licenses Required for A Trucking Business
When you start a business, you need to obtain permits and licenses that satisfy the requirement of the county, state, and even the local governments.
There are over 150,000 jurisdictions with their own necessities. How do you know which permit is necessary?
What permits or licenses you require is solely dependent on your business operation and services offered.
Some common licensure needed for trucking companies are-
➦ CDL or Commercial Driver’s License from the State
➦ US DOT Number from FMCSA or Federal MotorCarrier Safety Administration for company identification
➦ MC Number or Motor Carrier Number from MC Operating Authority
➦ IRP or credentials for International Registration Plan
➦ IFTA decal or International Fuel Tax Agreement
4. Leasing or Purchasing the Correct Vehicle and Necessary Equipment
Whether you have the right equipment for the trucking company will decide the fate of the company.
Like any other business, you need to have all the necessary equipment to provide the best service.
Common points to consider while choosing equipment in a trucking business are-
➦ Is the business focusing on cargo? If yes, choose your vehicle accordingly. It should be able to accommodate the load.
➦ Are you transporting items that can perish in your truck? Ensure that there is a compartment for refrigeration.
➦ Consider your budget and decide whether you want to buy or lease the equipment and vehicle.
Though they are equipment, having a responsible and experienced truck driver is a big point of consideration.
5. Insurance Coverage for The Business
Insurance coverage is a must in every business to protect the company during unforeseen situations. It’s a mandate to avoid risks.
Even the transportation business requires insurance. Only the type of insurance is a bit different. Here you need-
➦ Insurance for primary Liability
➦ Insurance for the cargo
➦ Insurance of the vehicle and drivers from physical damages
➦ Insurance for accidents of passengers
6. Understanding Expenses and Tracking the Revenue Income of the Business
The operation of every business is successful when you keep a proper track of your incomes and regular expenses. How can you track the expenses and maintain a balance with your income?
Some tips to help here are-
➦ Use accounting software or hire professionals
➦ Have clarity on the time and the method of payment after each delivery
➦ Maintain a record of all your expenses
➦ Never mix your personal and business accounts. You can get a corporate credit card Singapore for your business expenses instead.
7. Get Load for Business Growth
Indulge in promotions for business growth and more customer contacts. For freight business, load boards assist with promotions.
8. Compliance with Business Rules and Regulations
By compliance you are needed to maintain proper tax and with the Government. Maintain the norms set forth by the state for your business and avoid being penalized.
Checklist, Exclusive for Starting a Trucking Business:
We know the general steps for starting the transportation business. But is it enough? Let’s focus on the exclusive list on how to start a trucking company.
1. Apply for your licenses through Trucking Authority. You will be needed to submit the MCS-150 form to get your US DOT Number from them.
2.Refer to FMCSA for the list of Processing agents. Only an authorized Processing Agent will be able to fill out your BOC-3 Form.
3. Get truck insurance. You can refer to the insurance options mentioned earlier for this.
The process to start your own trucking company can be a little time-consuming. It is also likely to call for an investment of a good amount. But the outcome is pretty bright owing to the huge transportation demand.