The trucking industry is one of the largest and most integral parts of the American economy. In fact, 70% of U.S. freight goods are moved by trucks. Due to the industry’s economic impact and value, there’s always a high demand for trucks, truckers, and trucking companies. With that being said, before you start your own trucking business, it’s important to first familiarize yourself with all the economic and logistical factors. Knowing what to expect, including obtaining necessary licenses and startup expenses, will help you be better prepared and more successful in the long run.
Starting a Trucking Business in 6 Steps
If you want to become the owner-operator of your own trucking company, here’s a six-step plan to get you started.
1. Write a Business Plan
The first step for anyone looking to build a new business from the ground up is to create a business plan. This plan should include your foundational reasoning for starting the company as well as the necessary capital to get the company off the ground. The Small Business Association (SBA) recommends including a 3-5 year projection of how you expect the company to grow. Other important components of a business plan include:
- A detailed account of your prospective operations, including the staff you will hire and the technology and vehicle systems your company will use
- An analysis of current market conditions and how your company will grow and adapt to respond to them
- A survey of the services the company will offer its clientele
- Detailed financial projections to determine expected growth/revenue
As a new business owner, developing a thorough, detailed plan is most important because it’s a stepping stone to the rest of the process.
2. Get a Commercial Driver’s License (CDL)
In order to drive a truck, you will need to have a commercial driver’s license, or CDL, as required by the Federal Motor Carrier Safety Administration (FMCSA). There are different types of CDL licenses, listed by Class, you can obtain, so it’s important to know which type your business will require. Depending on the type of materials you are transporting there are also endorsements needed, many of which require additional testing and may mean you have to renew your license more frequently for safety reasons. Make sure to do your research and ensure you have the proper licenses for your business needs.
Drivers over the age of 21 are eligible to apply. The application requires fees, proper identification, and tests for knowledge and vision confirming you understand the requirements for operating a large truck.
3. Register Your Business
In order to officially get your business up and running, you will need to register with local and state governments according to regulations in your area. This process includes a couple steps, as seen below.
- First, you will want to choose a business entity that suits your needs. For example, if you are starting the business alone, you may want to consider a limited liability company (LLC) for the protections it affords. There are other types of LLCs for partnership companies or larger corporations.
- Next, you will want to choose a business name that expresses the identity of your company and communicates a strong impression to customers. Before doing so, it is important to consult the US Patent and Trademark Office database to make sure your company name is original.
- Lastly, you will need to apply for your trucking authority. This registration is mandatory for companies using vehicles of more than 10,000 pounds Gross Vehicle Weight (GVW). You can file an application concurrent with your business registration through your state.
4. Obtain a Business License, Permits, and Insurance
Following your registration procedures, you need to make sure to obtain the proper licensing and permits to operate your business legally. Because of the unique challenges trucking companies face in a highly regulated industry, it is important to research all requirements before you begin operations. These steps may include:
- Getting your U.S. Department of Transportation (USDOT) number
- Getting your International Fuel Tax Agreement (IFTA) stickers
- Obtaining an Employment Identification Number (EIN)
- Register for properly apportioned license plates
- Obtaining a Standard Carrier Alpha Code (SCAC) from the National Motor Freight Traffic Association (NMFTA)
- Acquiring proper local/state business licenses
- Obtaining commercial liability, cargo, physical damage, and other necessary types of trucking insurance
5. Choose the Right Equipment
Of course, some of the most important business decisions you will have to make involve finding the right equipment for your needs. This means trucks first and foremost, but also other supportive systems the vehicles will need to operate smoothly, such as electronic logging devices (ELDs).
When buying a truck, there are several factors you may want to consider before purchasing, including:
- Price point
- Weight limit
- Cab style
- Required hauling distance
- Weather resistance
Other important considerations include whether you want to buy used trucks or new trucks as well as whether you want to outright buy versus lease your vehicles.
6. Secure Startup Funding
Buying one commercial truck alone is an expensive endeavor, so in order to start your trucking company you will need significant capital. Aside from the expenses involved in buying trucks, you will need to consider the upkeep and operating costs, fees surrounding business licenses/permits, and the costs of other systems you will be using. Thankfully, there are some options you can consider for securing a loan:
- SBA Loans are a popular option for small businesses because of their low interest rates, high loan amounts, and generous repayment terms. This type of loan is great for starting a new business, but they can be difficult to acquire.
- Short-term business loans are often the most common loan type sought by new small businesses. Though they are easier to acquire than SBA loans, they also usually come with higher interest rates and must be repaid more quickly.
How Much Does it Cost to Start a Trucking Company?
The costs required to start your trucking business ultimately depend on your location, number of trucks, and business plan. Registration, taxes, and other paperwork to start the business alone can cost up to $15,000. Obtaining your CDL also depends on the locality but typically costs between $3,000 to $10,000. Once you start purchasing equipment the cost rises significantly, but, as mentioned above, the total cost will depend on many factors such as buying new vs. used trucks and trailers.
As discussed above, you will need to make a detailed business plan which forecasts possible revenue and other related financial projections to make sure your company will have cash flow and can remain profitable and successful.
Frequently Asked Questions (FAQs) About Starting a Trucking Company
Can you start a trucking business with just one truck?
Yes, there are many trucking businesses that operate with one truck. Trucking companies with a low number of trucks are very common. In fact, according to truckinfo.net, 90% of all trucking companies in the U.S. operate with six trucks or fewer.
How much can you make owning a trucking company?
While the actual numbers may differ greatly depending on your location, role, and other factors, owner-operators take home $2,000-$5,000/week, according to Cargo Transport Alliance LLC.
Can you own a trucking company without a CDL?
Yes, but you will need to hire CDL truck drivers since you won’t be an operator. As the owner you are not required to have a CDL.
Next Steps to Starting Your Business
Now that you know how to start a trucking company, we’re here to answer any additional questions you may have. Drivewyze offers a wide range of solutions, resources, webinars, and other support for anyone looking to get involved in the industry.