A complete guide that covers everything you need to know about starting a transportation business. We take you through the eight steps so you’re set up for success.
Table of contents
The transportation business can be a complex business to get involved with, but it can also be a rewarding one. But, you knew that already!
There are a variety of categories and specialties within the industry, depending on whether you want to focus on transporting people, goods, or perhaps both.
No matter where you choose to focus your efforts, there is likely to be enough demand for you to create a successful transportation business.
Of course, starting a transportation business isn’t going to be easy. While there is a lot of opportunity in this industry, there is also a lot of competition and a lot of complexities to master. There is a lot to know about how to start a transportation business before you begin your journey. With that said, here is a guide to starting a transportation business that can become successful.
Pick a Niche
As mentioned, there are so many options within the transportation industry, so you need to pick a lane before starting a transportation business.
First, you should decide if you want to focus on transporting people or cargo. Each option has a variety of other options, but there is a fundamental difference between the two business ideas.
Of course, it’s best to do some market research to learn more about the demand for various options and the scope of each.
- For instance, you could rent out vehicles like moving vans, limousines, or cars.
- You could also use vehicles of any kind to ship cargo, perhaps choosing a specific item you want to focus on that is being underserved by the market.
Ultimately, this will come down to where there is a gap and your personal preference, but it’s best to choose a niche before attempting to do anything else.
Write Your Business Plan
After you have your niche in mind, the next step in starting a transportation business is writing a great business plan. This step will provide business structure and involve even more targeted research into your chosen niche.
Think of your business plan as your road map for how you’re going to get your business off the ground and turn it into a success. All of the questions you’ll have to answer and all of the obstacles that you’ll face should be addressed in your business plan.
Specifically, you’ll want to include everything you’ve learned about your niche, including the current competition and the customers you will target. You will also need to estimate your startup costs, how much funding you’ll need, and the prices you plan to charge for specific services.
Even if some of the answers to these questions might change over time, you still need to do your homework and have a base-level answer. In the end, your business plan will tell you about the opportunity you have to succeed and provide a clearer step-by-step of how to start a transportation company.
Register Your Business
With a plan in place, as well as (hopefully) a name, the next step of how to start a transportation company is to get registered. You will have to trademark your name and register it with the proper local, state, and federal authorities. Just keep in mind that you don’t want to go through the hassle of doing all of this until you have a business plan written and a road map to starting a transportation business that will be viable.
A key part of the registration process is applying for an employee identification number (EIN). Taking this step will make things a lot more official, allowing you to file taxes as a business and establish a line of credit for your business.
Needless to say, these are all things that will need to be handled by the time your business officially launches and starts to actually transport people or things.
Take Care of Licenses and Permits
Unfortunately, even after your business has officially been registered and you have your EIN, the paperwork isn’t over yet. Depending on the niche you’ve chosen, there are specific business licenses, permits, and other forms of authorization that you’ll need for your business to function.
Ideally, you’ll have learned about these details while putting together your business plan. But you will need to go ahead and take care of those things sooner or later.
While you’re in the permits and licenses stage of how to start a transportation company, then this might be the right time to find business insurance. If you have drivers, passengers, cargo, and other elements of a transportation business, you’re going to want to invest in a healthy amount of insurance.
The best advice is to share your business plan with several providers to get a better idea of the type of coverage you’ll need and where you can find the best coverage.
There’s almost no chance that you’ll have enough money to start a transportation business with the money you have saved up on your own. Even a small business or local transportation business will need a lot of capital to get started. After all, you need to spend money to make money, so you’ll need to pursue some kind of investment in order to get started. Of course, this is easier said than done, which is why you need to have a great business plan that explains to financial institutions why your business has a chance to be successful.
Most new businesses will attempt to get a loan from a bank or credit union. Depending on the industry, there might be business grants that you can apply for. Most people will approach friends and family for help or pursue angel investors and other private investors who want to be involved in your business.
No matter what funding route you pursue, anybody who gives you money will first want to see your business plan, which is why doing your due diligence before starting a transportation business is essential.(And once you’re up and running, keep an eye out for how you can reduce business expenses!)
Invest in Your Fleet
Once you’ve taken care of funding and have the money you need to start your business, the next step will be acquiring the vehicles and equipment you’ll need to run a transportation business. Of course, the specifics of what you need will depend on type of transport business you’re planning to provide (medical transport, cargo, etc.). It could be cars, single vans, trucks, buses, ships, but there will be vehicles of some kind when starting a transportation business.
The trick here is to invest wisely.
You don’t necessarily want to buy the cheapest vehicles possible if it means having to replace your fleet sooner rather than later. It’s important to take the longevity of your vehicles into account when making such a critical purchase. You also don’t want to overlook the importance of vehicle maintenance.
While investing in your fleet, you also need to invest in equipment that can help you with vehicle upkeep so that they can help you run your transportation business for a long time.
Get Digital Equipment
In the steps above on how to start a transportation company, we pointed out that you need the right vehicles and equipment to be successful. And there is no greater equipment needed than that of a digital solution to efficiently run your business. At the forefront is the Connecteam transportation app which allows you to manage your business and employees under one roof.
Think about it – when you’re running your transportation business, managing your employees, and focusing on the bottom line, the last thing you want is to get tripped up by mundane tasks that suck up all your time.
Here’s where the Connecteam app comes in:
- Dispatch routes based on shift requirements
- Add key information to a route and shift such as tasks, address, and instructions
- Set repeating shifts, use templates or drag and drop, or show shifts up for grabs
- Connecteam is a GPS time tracker so you can ensure employees are clocking in and out of work from their job sites, preventing time theft.
- More accurate timesheets for streamlined payroll to QuickBooks Online and Gusto
- Fill and send reports while on the go, which is automatically shared with you in whatever format you prefer (truck repair requests, vehicle inspections, hazard reports, etc.)
- Share one-time tasks (like license renewal, vehicle inspection, etc.) to individuals or teams
- Upload safety material, compliance announcements, manuals, and more to the training center so your team can access it any time
- With 1:1 or group chat, streamline internal and operational communication
- Increase engagement with live polls, a suggestion box, and surveys
With Connecteam, it’s no longer about how to start a transportation business but rather, how do I keep it running efficiently? And with all the features we listed above, it’s so easy!
Tune Your Transportation Business Up For Success
Start your free 14-day trial, no CC required
Find the Right Team
Even if you’re business savvy and know how to start a transportation business, you probably won’t get very far without the right team around you. Again, the specifics will depend on your chosen niche, but it’s a safe bet that you’ll need plenty of team members to run a transportation service.
Obviously, you might need people who can drive your vehicles that transport people or cargo. These people must be trained and qualified. But even if your business involves loaning your business vehicles to other people, you will still need a team of technicians, salespeople, and administrators to work with customers and take care of the day-to-day operations of your business.
No matter the duties they’ll perform, it’s critical that you as a business owner, will hire people that you trust and that will buy into the type of business you’re trying to build. Every business has its own culture and way of operating, so you’ll want to find team members that you know can fulfill the vision you have for your transportation business.
Bottom Line On Starting A Transportation Business
Whether you’re looking to start a sole proprietorship (single or as a married couple) or a partnership, these eight steps is all it takes when thinking about how to start a transportation company. These steps still apply even if you’re just curious about how to start a transportation business with one van. From all the logistics like sorting finances, getting insurance and licenses, to the more meaty tasks like implementing proper technology and hiring a good team, you’re well on your way to success!
Efficiently Run Your Transportation Business With Connecteam
Give it a spin today and save your business from “bumps” and “pitfalls” down the road!