Starting any type of business in 2021 can seem like an overwhelming mission. Loads of paperwork, expenses, research and bureaucracy can be confusing and make anyone anxious to start a new business. Don’t be nervous! One of the industries that has seen stable and high growth over the last few years is the trucking industry. Not even the pandemic slowed its revenue, instead it has generated more demand for truck drivers. If you are on the fence about starting a new business and are keen on trucking then here are all the tools and steps you need to take in order to properly learn how to start your new trucking business.
The trucking industry is taking off these days and if you build your trucking business well, you could definitely see profit in a short period of time. The American Trucking Associations notes that there were “3.6 million truck drivers employed in 2019 (an increase of 1.7% from 2018)”. With employment stable in the trucking industry, so is revenue. The ATA also mentions that “$791.7 billion in gross freight revenues (primary shipments only) from trucking, represent[s] 80.4% of the nation’s freight bill in 2019”. So, there’s no doubt that the trucking business is stable and growing in 2021, but how do you get started?
Before you even start to think about which truck you want, be smart and spend some time creating a business plan. Creating an in-depth business plan will allow you to understand what you will need to focus on in starting your new trucking business. (More on that in a few!)
Lastly, once your trucking company is up and running, it’s important you use the right tools and technology to increase your chances of success! Let’s start to discuss what exactly the path to your trucking business success will look like…
1. Write Up Your Business Plan
It’s essential when starting any new type of business that you create a well thought out business plan. Take some time to really write out how your business will perform and function. A well executed business plan can even help you further down the line when requesting credit from a bank or from an investor. You might ask, what should a business plan even look like?
A quick search on Google for an easy-to-use template and examples will help you, but some must-have points include:
- Your trucking business overview; what is your business’ vision, mission and what services will it provide.
- Market analysis of the trucking industry; who is the audience you plan to target, who are your competitors and what advantages do they have?
- A marketing plan so you can map out how you will market your trucking business, grow customers and increase sales.
- Personnel and staff; how many staff members will you require to start your new trucking business and what will their roles be?
- What are your trucking business’ main objectives? More importantly, how do you plan to measure and meet those goals?
A Forbes article wisely notes that you should “remember who you’re writing it for so it’s easy to understand. List your top priorities so your plan caters to these goals and accomplishes them within a set time frame. For every point you make, back it up with evidence so whoever you’re pitching to sees a realistic plan that will come true”. Your next step should dive into the structure and legal establishment of your trucking business.
2. Determine Your Business Structure
Your next step in setting up and owning a trucking company will be deciding what type of business structure best fits your trucking company. The 4 most common or typical business structures for small business are Limited Liability Corporations (LLC), Corporation (C Corp), Sole Proprietorship and Partnership. Each of these have their own set of rules and regulations as well as advantages and disadvantages. A brief overview of these business structures will help you determine which is the best fit for your trucking business.
- Limited Liability Corporations (LLC), as Forbes describes, are “a popular business structure for startup businesses. LLCs are formed in accordance with state law and have the benefit of providing limited liability protection for the owners”. An LLC also provides some tax benefits because “only the owners of the LLC are taxed (unless a voluntary contrary election is made), and there is no tax at the LLC level”.
- Corporations (C Corp), according to the U.S. Small Business Administration, is “a legal entity that’s separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable”. Corporations offer the most security and protection for business owners from personal liability but “the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting. Unlike sole proprietors, partnerships, and LLCs, corporations pay income tax on their profits”. While it is definitely an advantage that business owners are more protected under corporations, the downside is that business owners who choose to open one will definitely require essential staff and technology to be able to keep up with a hefty amount record keeping, reporting and paperwork.
- Sole proprietorships are “easy to form and gives you complete control of your business”. The downside to a sole proprietorship is that “your business assets and liabilities are not separate from your personal assets and liabilities. You can be held personally liable for the debts and obligations of the business”. If this is your first business venture, it may be more beneficial to protect your personal assets and not have them be directly connected to your business.
- Partnerships are exactly what they sound like, two or more people who come together to start a business. There are two different types of partnerships; limited partnership and limited liability partnerships. The U.S. Small Business Administration mentions that “limited liability partnerships are similar to limited partnerships, but give limited liability to every owner. An LLP protects each partner from debts against the partnership, they won’t be responsible for the actions of other partners”. Partnerships are only relevant for people who are starting a business with a partner or partners, so if you’re starting a trucking company by yourself this option won’t work for you.
It’s important as a business owner to really think about which of these business structures best suits your needs. It may be helpful to speak to an accountant to further discuss what is exactly the best fit for your trucking business. If you don’t want to mix your personal assets or be personally liable for your business then definitely avoid sole proprietorships or partnerships business structures.
3. Now That You’re Set Up, Get Your License And Permits
If you want to be the driver of your new trucking company then there’s no way of getting around the proper licensing requirements. To drive a truck you will need to get a Commercial Drivers License (CDL), there are different commercial classes; A, B and C which determine what size and type of truck you are allowed to drive. To quickly determine which commercial class CDL you need, you may easily refer to your states’ DMV website to find their specific requirements and regulations. You should note, there are a series of practical driving, inspection and road tests you will need to pass in order to receive your CDL, so it’s best to sign up for a class where you will get the necessary experience in order to pass.
To be allowed to haul or transport cargo, you must also apply for a series of permits and follow all rules and regulations in accordance with state and federal laws. In addition to your licensing, you will also need to apply for a Federal DOT and Motor Carrier Authority Number. The U.S. DOT number is used to track your trucking company’s compliance with U.S. regulations and your safety record. The MC number, or Motor Carrier Authority number, is used to classify what kind of trucking business you’re running and what goods you are allowed to transport.
After filing both of these applications with the Federal Motor Carrier Safety Administration (FMCSA) you must wait a mandatory 10 days, in which your application can be contested by anyone who might not agree that you should open a trucking business.
Another important permit required is the Unified Carrier Registration (UCR). This is simply to certify that you have working insurance in the state in which your trucking business is operating.
If you are planning to operate all over the country and potentially in Canada as well, you must also apply for an International Registration Plan Tag (IRP). This is merely a license plate that allows you to do so. You are required to renew your IRP annually for a fee. To find further information or check prices visit your state’s DMV website.
The last thing you will need in order to start your trucking business is an International Fuel Tax Agreement decal for your truck. The IFTA Resource Center notes that it is used “to simplify the reporting of fuel use by motor carriers, which operate in more than one jurisdiction” and is necessary for any trucking business who intends to work across state lines or in Canada. To obtain your IFTA sticker all you have to do is apply for the IFTA permit and the sticker will be sent to you shortly after.
4. Get Insured
Obtaining insurance is a necessary but costly expense for the trucking industry and in order to obtain some of the aforementioned permits and licensing it is necessary to get insurance first. The FMCSA has a detailed PDF regarding all insurance requirements and relative pricing to refer to if you’re ever in doubt on which insurance is required for your trucking company. Federal regulations require 4 main types of insurance for you to be able to start driving:
- Primary Auto Liability must be used to insure all trucks leased or owned and provides holders with protection if a third party gets injured in an accident. The minimum amount for liability coverage starts at $750,000 and goes up to $5,000,000.
- General Liability is also required by every state and protects business owners if you or an employee causes damage to property or cause bodily damage due to an accident.
- Physical Damage insurance covers vandalism, collisions, theft and natural disasters. In addition, if the truck becomes physically damaged beyond fixing or repair this insurance coverage will allow you to replace it.
- Bobtail coverage is only used when you or the driver of the truck is using it for personal use or is off duty.
While this list covers the required insurance for you to start driving, there are other insurance options that cover the cargo you are hauling or medical expenses for your or your employees if they are injured on the job. If you want more coverage and security then it may be beneficial to look into these insurance policies as well.
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5. How to Cover Start-Up Expenses
In order to cover start-up expenses like buying or leasing a new truck or even paying for all the permits and licenses, it’s important to look into finding investments or securing yourself a line of credit from the bank. This is also where a well thought out and detailed business plan will assist you when starting and owning a trucking company. In order to apply for bank loans and financing, you must bring your business plan for them to review. This will help you and your bank to determine which sort of loan or financing is right for you, do your research and find out all the stipulations and regulations for each loan or line of credit your bank offers.
6. Buy Or Lease Your Truck
It’s essential when owning a trucking company that you buy or lease the right truck for your needs. If you are transporting goods that require refrigeration then it would be important to find a truck that fits these needs and has a refrigerated cargo hold. Are you going to be sleeping in the truck cabin or do you plan on only doing day trips? These questions will help you narrow down your specific needs, so make sure you ask yourself what exactly you’ll be transporting and what you will need in order to be comfortable in your new truck. If you’re looking to save some money, it would be smart to buy or lease a used truck. Just head down to your local truck dealer or search online sites like Autotrader.com or craigslist to find something at a lower price.
7. Hire And Manage Your Trucking Business Team
Now that you’re all up to speed on the rules, regulations, licensing and permits it’s time to hire your team because you can’t run a trucking business completely on your own. Regardless of whether or not you’re learning how to start a trucking business with one truck or how to start a trucking business without driving, if you don’t have the experience or knowledge to run and manage every aspect of your business then it will be necessary to hire staff that do have the required experience and skills. For example, will you be the driver for your new trucking company or do you intend to hire someone to take on this roll for you? If so, you may be able to cut down on costs and time spent on getting your CDL if you hire a driver who already has it.
The Entrepreneur gives a list of some of the most common and important roles a new trucking or transportation business owner should have in order to be successful. For example, it may be useful to hire an office manager to take care of all office administrative tasks. You may also need a bookkeeper or accountant to take care of payroll and taxes. If you want to grow your leads and sales it’s also imperative to hire a sales and marketing team to get the ball rolling with advertising and customer promotions.
To ensure your trucking business’ success you must hire a capable team to help efficiently manage your business. Although it may take time to find the right candidates, once you do, you’ll be able take off running with your new business and manage an all star team to get the job done!
8. Use The Right Tools And Technology To Enhance Your Trucking Business
To be successful in your new trucking business it’s important that you use the right tools and technology to make sure your internal operations run smoothly and efficiently. It’s also super helpful for your employees when you invest in using the right technology to help them stay productive, engaged, motivated and connected. The Connecteam employee management app is perfect for the trucking industry because it’s specifically made for deskless workers. As the owner you will be able to remotely run nearly every aspect of your business from clocking in and out, scheduling employees, dispatching drivers, daily workflows and task management.
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The Connecteam employee management app will assist you in owning a trucking company in the following ways:
- Allows for super simple and fully customizable digital scheduling. Instead of calling each of your employees to be able to make a working schedule, you can easily send in-app messages and push-notifications to ask them to fill in their availability. In addition, you can color code each truck in the schedule to make it easy to visually understand.
- An in-app chat feature makes it no sweat to easily communicate with all your on the go deskless employees. Send company announcements, updates and newsletters at the touch of a button and view in real time who has seen or not seen messages. You can also send GIFS, pictures and videos to help boost employee engagement.
- A geo-fencing time tracking feature will make it effortless for your employees to clock in and out when they reach their designated work area.
- The workflow feature will undoubtedly streamline your internal operations. As a business owner you will be able to quickly publish and manage workflows. Furthermore, you will also be able to track in real time your employees progress and send automated reminders if they haven’t submitted their workflow at the end of the day. For example, create a customized workflow for truck inspections before and after dispatch.
- Create fully customizable forms and reports on the go; create a truck repair form or a hazard report for your employees to fill while out on the job.
- Simplify training and onboarding by creating a customizable training program with read and sign features, quizzes and PDFs. You can also easily track your employees training progress in real time.
- Make sure your employees are up to date and in accordance with compliance and safety regulations by providing them digitally accessible safety training courses and forms.
With Connecteam everything is stored online and there are no storage limitations so the sky’s the limit. Without an employee management app it will become increasingly difficult to manage your team as your business grows. Instead of using pen and paper, bring your new company into the digital era with an employee management app like Connecteam.
Now You’re Ready To Hit The Road With Your New Trucking Business…
Now that you have all the information on how to start a trucking business it’s time to get truckin’. The trucking industry is in high demand right now so make sure you’re ready and prepared to take on this new challenge. Take the time to write a business plan and take it with you when applying for loans, financing or credit from the bank. Make sure you’ve made the best decisions about how you want to structure your new trucking business or what insurance coverage best fits your business needs. Double check with your local DMV of any state specific rules and regulations.
In addition, do your research and determine which type of truck is a perfect fit for you. Lastly, digitally manage your entire trucking business with the right technology. The Connecteam employee management app helps business owners avoid miscommunication, delays, and lost paperwork. Instead, with Connecteam you can simplify your scheduling and payroll process, customize workflows and tasks, streamline internal daily processes and easily reach your dispatched employees with the in-app chat.
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