Guide to Starting a Trucking Business – Checklist
Maybe you are a driver and you want to start your own trucking company, or you have never driven before but want to invest in a trucking business, this article will help you achieve that goal.
To become an owner of a trucking company requires huge capital, just having one truck can cost you about $200,000 alone for a new truck and you will probably need 3-5 trucks to start with. Although you can always start with one truck and save up for the rest later but starting a trucking company still requires a lot of money.
You will also require a lot of permits and insurance before you can transport goods safely on the road. The insurance will help you cover any future damage and cover some of your expenses.
Permits Needed for Trucking Business
- Commercial Driver’s License
If you are starting a trucking business as a driver, make sure to have your commercial driver’s license. If you want to employ other people, you will have to make sure that they all have a driving license.
To get a Commercial Driver’s License (CDL), you will need to go to a driving school, take a written permit exam and pass the driver’s test.
You will have to be at least 21 years of age to drive a truck inter-state. Each test for truck drivers varies from state to state, check at your local Department of Motor vehicles in your state.
- Federal DOT and Motor Carrier Authority Numbers
Federal DOT number is given to U.S truck owners to track their compliance to road safety rules and records. The Motor Carrier Authority Number is used to identify the type of trucking business you operate and the type of goods you are permitted to carry. You will have to register your business with your state first before you can be given the DOT registration. Check the office of the secretary to the state to register.
You can get the numbers when you register with the Federal Motor Carrier Safety Administration (FMCSA) but you will have to pass some checks and tests first.
For more information visit the FMSCA website here.
- Unified Carrier Registration (UCR)
Unified Carrier Registration is given as a prove that your trucking business properly covers the insurance needed to operate on the road.
Visit your state’s Department of Transportation website to learn more.
- International Registration Plan (IRP)
The International Registration Plan is a license plate issued by your state that allows you to operate in all states. The license plate number is usually renewed each year.
- International Fuel Tax Agreement (IFTA) Decal
This a single Fuel license that requires you to quarterly fuel use tax returns with your state.
- Standard Carrier Alpha Code (SCAC)
This is a private code used to identify different transportation companies. You will need an SCAC code to transport military, government, intermodal or international goods.
- Heavy Use Tax regulation
This is the cost of tax per truck based on the weights. If your truck weighs 55,000 pounds, it is subject to federal heavy-highway vehicle use tax.
How much will it cost you to own a trucking business
The average cost of a new truck is $150,000 to $200, 000, you can also get a fairly used truck for $100,000. So, on average, the cost of getting a truck is $150, 000.
For getting your documents and permits ready, it might cost up to $7000 to $15,000.
For insurance, insurance per truck usually costs between $1,000 to $7,000 a year depending on the condition of your truck. This will give you a coverage limit of about $1 million.
The average salary of a truck driver can be up to $60,000 per year. You can multiply this by the number of drivers you’d be having.
You can use this stat to determine how much it would cost you to own a trucking company.
Below is the checklist for a successful trucking company.
8 Detailed Steps to Owning a Successful Trucking Company
1. Write a business plan
Your business plan is your success roadmap. You need to write a detailed method or plan for growing and scaling your business. In your business plan, you will outline what type of goods you will haul, what state(s) you will transport to, how many trucks you’d have and how many drivers.
This business plan will help you get organized easily and understand how you plan to make your trucking company successful.
2. Register your Company
Before you even get a truck, you should register your company with your state government. Do well to also appoint a legal agent to take care of all the paperwork for you. This agent will serve as your legal representative.
At this point, you should also get your Employer Identification Number to enable you open a business bank account.
3. Obtain the Permits
Obtain the required permits to help you run a successful hauling company. The permits help you avoid any issues with the legal authority. Some permits you will need to get include:
- Dot Number
- Unified Carrier Registration
- Commercial Driver’s License
- International Registration Plan
4. Buy or lease a Truck
Now it’s time to Buy your truck. This is a very careful process that requires attention to detail so you don’t buy a bad truck.
You will first have to decide if you are buying or leasing a truck for your business. If you want to lease the truck, bargain the amount you would have to pay. Do not be ashamed to debate on price because you don’t have to throw money around.
If you are buying a truck, try to go with a mechanic to properly check the truck for any errors so that you don’t end up buying a bad truck. Trucks with warranty should be your top pick. You will spend on average $200,000 for your first truck.
5. Go for Insurance
Getting insurance will save you expenses for any accidents that might occur. Before you hit the road, make sure you are properly covered with insurance against anything that might occur.
Some insurance that you need include:
- Cargo Insurance
- Primary Liability Insurance
- Damage insurance
6. Determine how much you will charge
This is the time to determine how much you should charge. A good way to do this can be by checking how much other truck hauling companies charge on different locations. You can come up with different packages based on the weight of goods and miles covered.
Make sure you are not losing out on your end by undercharging which doesn’t mean you should overcharge either.
7. Find Loads and client
This is the time to spend money on advertising and marketing, but instead of paying for adverts to get your first customer, you can try pitching.
Pitch directly to local shippers and build relationships with potential customers. Once you have made a few customers and clients, you can try launching a marketing campaign to get more customers.
8. Manage your income
Once the cash starts coming in, you should spend them wisely on things that will grow your business. You can try getting more trucks and drivers to cover a bigger percentage of the market.
These are steps that can help you start your dream trucking company and successfully scale them. It might take a while to recover expenses, but you should persevere because it is a very profitable venture.
Have any questions? You can ask us in the comment box, and we will be happy to help out.