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!
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.