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The Secret Tips to Running a Trucking Business

Running a business of your own is basically part of the American dream. There’s nothing more exciting than the thought of being your own boss and being able to make a lot of money. You’d like to run your own business, but you aren’t sure what kind you’d like own. You don’t want to sell things to other people, and you don’t want to go into the food or service industry. You’ve considered turn-key operations where the money makes itself, but you think you’d want something that’s more hands on.

If you want to try something different, running a trucking business could be the new venture you’re looking for.

A profitable industry

It’s been known that the ability to drive a fleet vehicle is a coveted job skill. Being able to drive a big rig can make you money, but owning a company that sends out the rigs is even more profitable.

If you’re looking for something that’s profitable, the trucking industry could be what you need.

It’s estimated that the industry itself generates around $650 billion in revenue every year, and that number is only expected to grow.

There are over 11 million registered large trucks in the country, so you won’t have an issue finding the equipment you need to get started.

There’s money to be made in the industry, but only if you’re a good fit for the job.

What to consider before running a trucking business

Trucking is a growing and popular industry, but that doesn’t mean that just anyone can succeed in it.

Almost any budding entrepreneur thinks that they would be perfect for it, but a lot goes into being able to manage a fleet.

Aside from having a good business sense you need to have management skills, the ability to problem solve, and the ability to analyze data.

You’re going to be wearing a lot of hats when you’re running your business, and you need to be prepared to handle the workload.

If you want your business to be successful, there are a few things you need to do.

Estimate your costs accurately 

Starting a trucking business isn’t as simple as buying a few fleet vehicles and getting some drivers.

Running a trucking business costs a lot of money that goes beyond the price of the trucks and the employee’s salaries.

Maintenance can cost a significant amount of money.  Trucks need to be examined frequently to make sure that they’re running well.

Some companies take maintenance so seriously that they’ll have a mechanic look at each truck when it comes back from a delivery.

There’s also the cost of employee benefits and insurance. Both vehicles and employees need to be insured for a variety of things.

On top of this, there’s rental costs for your lot and business, and other costs are bound to pop up along the way.

Talk to a financial adviser so you can determine what you’ll need money wise to start your business.

This is important because you’ll need to…

Get a good loan 

 

When you’re discussing your budget with your financial adviser, make sure to talk about the loan amount they think is best for you.

Since you’re getting a loan, it’s also important to make sure that you look like a great potential investment to your lender.

Take some time to bring up your credit score before you apply.  Also, consider asking someone with stellar credit to co-sign your loan if you’re worried about your score.

Consider subcontracting truck drivers 

Now that you’ve spent some time considering finances, you may be wondering how you can afford to pay your employees.

If you want to save money on operating costs and still have good drivers, you may want to consider using subcontracted truck drivers.

These truck drivers are hired per contract for specific jobs, they’ll only work when you need them to.

This can be the ideal set up for people that are interested in running a trucking business but want to start their company with less capital.

Data and software are your best friends

When people think about running a trucking business they usually don’t think about software.  But the right kind of software and data collection methods can ensure that you’re running your business in the best way possible.

The right kind of software can make managing finances a breeze.  You’ll have one place where you can keep all of your paid and outstanding invoices, employee payment information, account balances, and more.

Collecting data from trips is equally important.

Find out how often drivers are stopping to fill up, and how much fuel costs them in each state.  See which routes are the most efficient and which ones seem to take more time.

Having all of this data on hand could help you find more efficient routes for your drivers or could help save you money on fuel.

Perform maintenance frequently 

Remember how we mentioned that some companies will perform routine maintenance on every truck after it gets back from a delivery?

That may seem like too much, but it helps ensure that all fleet vehicles are in top running shape.

When you’re running a trucking business, it’s important to keep in mind how much wear and tear can occur on a running big rig.

Some of these truck drivers are running their vehicles non-stop for hours at a time while they travel across the country. Even trucking businesses that stay local can put some serious miles on their rigs.

If certain issues go unnoticed for too long, your rigs can get seriously damaged.

A loose belt or low oil may go unnoticed in a regular car for a few weeks or even months depending on how much it’s driven. All it takes is one long trip for damage to become apparent in a big rig.

Aside from having professionals routinely handle truck upkeep, it can be helpful to train your truck drivers in simple maintenance. Their dashboard can only tell them so much about the state of their vehicle.

Always put safety first 

Overall, it’s important to make sure that your trucking company and your drivers are compliant with all safety standards set by the American Trucking Association and the Federal Motor Carrier Safety Association.

There are rules about hauling certain kinds of materials, equipment usage, and nearly every aspect of trucking you can think of.

The trucking industry on average produces 5,360 fatalities and 142,000 injuries each year. When you’re running a trucking business safety should be your number one priority above all else.

Highway and driver safety clearly is a priority. Your truck drivers need to observe safe driving practices when they’re on the road. Drivers that constantly take shortcuts, speed, or drive aggressively shouldn’t be a part of your company.

Driver safety is only a small part of the issue. There are other hazards associated with trucking people can forget about.

Unsafe loading and unloading practices have the potential to harm employees or damage products. Drivers should also be thoroughly trained on hauling hazardous materials if you choose to go into that industry niche.

Find good clients 

The key to running a trucking business is to have a lot of clients you can rely on.

Some owners lull themselves into a state of false security once they land their first big contract. But it’s important to remember that the 6 or 7 figure contract you have today may not be there tomorrow.

Even if you have an excellent client you think will be with you for decades, you still need a solid business development plan to ensure that you’re bringing in new work.

If you can’t devote yourself to finding new clients you need to hire someone that can handle sales. Look for someone that specializes in the trucking industry and may already have some connections.

Bring on good talent 

Running a trucking business will be hard if your drivers have a reputation for being late or rude to clients.

Your truckers are going to represent your business on each trip, and you want to make sure you hire people that are up for the task.

There’s nothing wrong with hiring people that are new to the industry, but you may want a seasoned vet or two on your team in the beginning.

They’ll know the ins and outs of the industry, and they could even serve as a mentor for newer drivers.

Don’t risk bringing on someone with a bad driving history. They may have their CDL, but you should look into their personal background.

If they have speeding tickets, road rage incidents, or any charges involving drugs or alcohol, they probably won’t be good for your business.

Wrapping up

As you can see, running a trucking business requires a lot of work. You’ll need a good mix of reliable employees, the right equipment, and a mind for business if you want to succeed.

Do any seasoned trucking business owners have advice for people new to the industry? Tell us about it in our comments section!

If you have questions about trucking services, contact us so we can answer them.

 

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.

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