If you’ve been working as a truck driver for some time, you may be considering setting up your own trucking business. It’s a logical progression. The good news is that you can set up your own trucking business by investing in one truck, for starters.
Here are the steps you can follow if you want to set up a trucking business of your own.
1. Buy Your First Truck.
If you’ve decided to set up your own trucking business, start small and buy one vehicle. Every entrepreneur begins with nothing but their talents and skills; there’s nothing wrong with starting small. Generally, you can expect to pay between USD$15,000 and USD$175,000 for a brand-new truck. If you want to, you can pay in installments, which will make your purchase more manageable. This typically only requires you to shell out USD$10,000 for the down payment.
The great thing about buying a brand-new truck is that you won’t have to pay for immediate repairs and maintenance. You can focus on setting up the business and finding a skilled driver or perhaps becoming the driver yourself. If you need advice, there is surely a skilled freight consultant in the trucking industry who can help you solve any issues that arise.
If you can’t afford a brand-new truck, your next best option is to buy one that’s not more than five years old. Ideally, the vehicle shouldn’t have covered more than 600,000 miles. Before purchasing a second-hand truck, you’ll need to budget for maintenance and necessary upgrades.
2. Factor in Insurance.
In order to run a trucking business, you must take out insurance. You can expect to pay up to USD$10,000 per truck for insurance every year. This amount can decrease or increase depending on the following factors:
- Age, experience and license history of the driver
- The truck’s model, year and current condition
- Type of coverage per vehicle
Your insurance premium may go down if you invest in electronic logging devices meeting Federal Motor Carrier Safety Administration (FMCSA) compliance standards.
3. Budget for Marketing Costs.
If you’re planning to be a trucking entrepreneur, you should set aside some capital strictly for the purpose of securing clients. Depending on the marketing methods used, this can cost anywhere between hundreds of dollars to thousands. Common marketing costs include:
- Website Development
- Social Media Marketing
- Advertising (e.g. in press, radio, television)
With the advent of social media marketing, advertising budgets can be as big or small as you like. Investing large sums of money can be a good strategy to begin attracting clients and spread brand awareness, but organic marketing—capturing the attention of your target market without paid advertising—is an effective and affordable long-term plan.
4. Grow the Business.
If you’re very ambitious and have the capital, you can buy more than one truck for your new trucking business. However, expect to shoulder several million dollars in capital to build a large-scale trucking business. This may appeal to those who’ve been involved in the trucking industry for quite some time. Before considering a larger and riskier venture, ensure you’re confident in your driving and business skills.
One advantage with starting small is that you can adjust to market conditions more quickly than a large-scale trucking business could. There would be less capital outlay and your loan payments would be easier to manage. On the other hand, with a fleet of trucks you could source bigger loads for bigger clients and thus reap more profit. So, you need to study which option is best for your situation.
Some trucking businesses have the desire to grow their fleet and operations, but lack the capital to do so. One option is to subcontract work out to other drivers and/or operators who have their own trucks. Those drivers and/or operators could be considered independent contractors; you can liken them to freelancers who work from contract to contract only.
5. Consider Other Expenses.
If you’re already a licensed trucker and are starting your own trucking business, you must check the qualifications of drivers before hiring them. Some candidates, while highly experienced, may require investment from your business before they can start driving. Important questions to ask include:
- Is the driver skilled enough to drive a commercial truck?
- Does the driver have the correct license/certification for driving a commercial truck?
- Should I invest in additional trucking education for my new driver?
As your operations expand, you may also need to hire additional employees such as mechanics, bookkeepers, and accountants, so be sure to budget for new staff.
Regulations governing the trucking industry—both in your home state and across the U.S.—will continue to change over time, so it’s crucial you keep abreast of those that pertain to your business and monitor developments.
In the competitive trucking industry, passion and determination are required to succeed. But, with the right skills and attitude, you may have what it takes to set up a trucking business of your own. It pays to plan sufficiently before you start the any business, and trucking is no different. Make sure you are aware of the various expenses involved, especially with regards to training drivers and the vehicles themselves, so you can calculate how profitable the business really will be. Then, you can proceed to make your trucking business a profitable reality.