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How To Make Sure Your Trucking Business Is A Success

So, you’re thinking about starting a trucking business, but perhaps you aren’t sure how to truly succeed at it. A career as a trucker is both potentially lucrative and rewarding. But at the same time it is incredibly competitive. To be frank, many truckers try to break into the business every year and do not succeed, for whatever reason.

But don’t let that dissuade you. The key differentiating factor is that many can be a good trucker, but not everyone can be a good business owner. The fact of the matter is this: Knowing how to operate a successful trucking business is about more than being able to drive a truck or map out a route.

Today we will cover five essential steps to ensuring your trucking business is successful. First, you have to make sure you acquire the right equipment for the job.

The Right Equipment

Procuring the right equipment will be the most expensive decision you will have to make as you get your business going. What kind of trucking do you plan on doing? Do you want to go regional or national? Furthermore, what part of the country are you operating in? Will you be going over mountain passes and through hilly regions?

Once you have figured out the application, the next decision is whether to buy or lease the equipment. Buying is straightforward. Like any normal vehicle purchase you put a down payment and finance the rest. These are expensive machines, so rarely will one have the cash on hand.

Leasing the equipment is a bit more complicated, though in some cases you may end up with a lower payment. With a lease you pay a monthly fee for the use of the equipment. Other options are structured in such a way where you own the equipment once the last payment has been made. With leases, there are a dizzying array of options.

In the end, there is no final answer. It really depends on the specific situation you and your business is in. Just make sure you don’t wind up making the wrong choice.

Acquiring Customers

Most new truck operators get their shipping customers from a load board. And while load boards should definitely be part of your long term strategy, they certainly shouldn’t be the only component. Even so, they have many benefits.

Once you have settled on a good, quality load board to rely on, you can begin making sales calls and also building a customer list of your own. While building a customer list is hard work, there are advantages to it. Working with a set group of customers provides you with a level of consistency that’s hard to get when you are always working with new customers.

Bid Smart

While your bid must be low enough to be competitive, you’ve still got a profit to make. The only way you can be sure your bid will meet your needs is to know your expenses. Whether it be truck maintenance, repairs, payments fuel or overhead, you need to know the intimate details of your cost structure.

Once you have that information pinned down, you will know exactly what you need when the time comes to put in a bid. Always remember to bid low, but bid smart.

Run an Efficient Back Office

The size of your back office needs depends on the type of business you are running. Obviously, a small fleet will need a more expanded back office than a single owner-operator.

Think about your back office operations from a process and procedure standpoint. From utilizing technology to enhance your business operations to streamlining payments and contracts, how well your back office runs could make or break your business.

Keep the Cash Flowing

Cash flow problems are some of the toughest a trucker can deal with. Many shippers pay on a net-40 or net-60 payment cycle. When you have to wait two months to get paid, you can run into some serious cash flow problems.

There are a few ways to combat this, whether it be through freight factoring or using third-party finance companies, the fact is you need to get your bills paid when they are due.

Looking to start a trucking company? Whether you want to run a small fleet or hit the road as an owner-operator, keep these principles in mind!

How To Start A Trucking Business? Part 1 – Plans and Regulations

With the nation’s economy still growing, and freight demand still rising, the need for capable trucking companies has never been greater. The marketplace is growing, and commercial goods need to be moved from city-to-city and state-to-state.

This need creates new opportunities for savvy entrepreneurs who enjoy both their independence and hefty paydays. One thing for people to remember, however, is that competition is steep.

Although starting a new business is never easy, maintaining a profitable trucking business requires a few extra steps other small businesses would not. You’ll want to thoroughly research the industry you plan to enter before dipping your toe in.

Over the next several weeks, we are going to take a deep look at every aspect of starting a trucking business. Today, we’ll start with the type of business you want to start and forms and regulations you’ll need to be aware of to do it.

Two Fleet Types

The first step in getting your trucking business off the ground lies in determining what kind of business you plan to operate. Trucking companies operate by bidding on and fulfilling freight hauling contracts.

The vast majority of trucking companies operate in two ways, with the main difference between the two being who drives the trucks and how accounts and contracts are fulfilled.

First, you can operate as a privately-owned fleet. In this scenario, you privately run your business and all the operations. You likely own your own equipment, pay higher insurance premiums, and operate a fleet of truck drivers. While you have total control over the operation, this option requires quite a bit more initial start-up money and costs more over the long haul.

The second way still leaves you to operate your own company, but instead you don’t have your own employees. As a sub-contractor, you hire independent operators to handle driving responsibilities. While you receive the contracts, your drivers are not actual employees of your company.

In this set up, you can expect lower start-up, insurance, and equipment costs. On the flip-side, you will have less control over the truck drivers and your company profits won’t be as hefty.

Whichever business model you go with, remember that figuring out the truck driving model is just the first step. After picking a direction, focus on all of the traditional steps one would take in starting a business.

Rules and Regulations

As with any new business venture, it’s important to understand what it takes to get a new business off of the ground. Once you’ve settled on the type of trucking business you want to run, brush up on your business basics. Although trucking is unique, consistent threads flow through running a successful business.

Next, you’ll need to take a close look at all of the trucking-specific licenses, forms, and tax and permitting regulations. Depending on the type of business you are trying to start, there are several important requirements.

The Federal Motor Carrier Safety Association and IRS need special documents and forms from you filled out and acted upon before you hit the road. Specific decals will also need to be placed on your vehicles. We’ll cover which exact forms you’ll need and how to register in Part II of our series, so stay tuned!

Company Business

In addition to these steps, if you plan on employing private drivers, they will need their own special permits and endorsements. Each state has their own portal to provide in-depth information on commercial driver’s license requirements, permits, safety information, and rules and manuals.

In case your eyes start to cross trying to make sense of all the compliance information, you may want to hire a compliance professional to help isolate any requirements you might miss.

Remember, these are just the beginning steps. Depending on your business type and range of operation, there may be more steps than we’ve outlined here.

Next week, in Part II of our series, we will take a look at the forms you’ll need, how to fill them out, and insurance and equipment requirements. Does it seem like a lot? Well it is, but don’t be discouraged, the opportunities in trucking are endless.

How Can Someone Start a Trucking Business?

Almost everything you buy has been moved by a truck at some point, whether it’s food, gasoline, clothing or other items. The trucking industry can be very lucrative, but it is also a highly competitive industry. It’s smart to research the industry thoroughly before starting your own company to be sure you understand everything involved with starting a trucking business.

Decide If You’ll Subcontract

One of the first decisions you need to make when starting your trucking company is deciding whether you will hire employees or use subcontractors to drive your trucks. They are positives and negatives to each method and trucking companies have succeeded both ways. There are generally less start-up costs involved when you have sub-contractors instead of employees, but you also have less control over the schedule of the drivers and you may have to pay a higher percentage of the money you make to subcontractors than you would pay to company drivers.

Trucking companies who hire drivers to work for them as employees have more control over the drivers and can set the rates that they will pay the drivers. The downside is that the company has to pay for insurance and equipment costs that would normally be paid by subcontractors.

Starting The Business

In some ways trucking companies are started the same way that other businesses are started. The company owner must register the business with all applicable state, federal and local agencies. You must get a business license and all necessary permits before your company can legally operate. It is essential that you get a Federal Department of Transportation Number. This number must be displayed on all of your trucks. You also need to apply for and receive Federal Motor Carrier hauling authority.

Tax Forms and Registrations

There are several tax forms that must be completed periodically for your trucking business to be operating legally. One of these is a heavy use tax form. You also need to obtain International Registration Plan tags as well as International Fuel Tax Agreement decals from your state department of transportation. A BOC-3 filing is required to operate a trucking company legally in the United States. It’s best to visit a local licensing office or your state department of transportation’s website for specific information you need to legally operate a trucking company in your state. It’s best to talk to an accountant who has experience with the trucking industry when you are forming your trucking company. They will be able to offer business advice and help you manage the company’s finances correctly right from the start.

Trucking Insurance

There are very strict insurance requirements that anyone who owns a trucking business must meet. You must have insurance on your vehicles as well as the company itself. Some of the companies you haul freight for may have even stricter requirements than the federal regulations, so make sure your insurance policy meets their requirements before hauling loads for those companies.

Equipment

If you decide to hire truck drivers and operate your own fleet of commercial vehicles, you need to purchase the vehicles. Most experts in the trucking industry recommend starting with just one or two vehicles and adding to your fleet as time goes on. This gives you the ability to learn the trucking industry without being overwhelmed by the number of drivers and vehicles in your fleet. Think about the type of freight you will be hauling before purchasing trucks and trailers so that you buy the appropriate vehicles. Refrigerated trailers are likely to be more expensive than dry van trailers, but they are necessary if you will be hauling food or other perishables.

About QuickTSI

QuickTSI is your one-stop-shop for everything you need to run your transportation and freight logistics business. Our website allows you to post load or find trucks, post trucks or find loads, look up carrier profiles, view trucking companies, find truck driving jobs, and DOT medical examniers.

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