Do you want to start a truck driving business? If YES, here is a complete guide to starting a truck driving business with NO money and no experience.
Okay, so we have provided you an in-depth sample truck driving business plan template. We also took it further by analyzing and drafting a sample truck driving marketing plan backed up by actionable guerrilla marketing ideas for truck driving businesses. In this article, we will be considering all the requirements for starting a truck driving business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Truck Driving Business?
There can never be a better time to start a Truck Driving company. This is because the need for trucking is currently growing with each coming day. Building and managing a Truck Driving company can be very rewarding and challenging, but before you decide to start this business, you need to consider all the factors involved in it.
Indeed starting this business comes with huge responsibilities for a small business owner. Note that to successfully start this business, you must meet various federal regulations. These requirements have associated cost implications ranging from simple registration fees to the cost of procuring and insuring a truck.
Indeed having your own truck driving company gives you more freedom and increased earning potential. It gives you the opportunity to choose your own freight and routes, and you can increase your earning by selecting cost-effective routes, specializing in pricier freight, and dealing with the clients you choose. Note that as an entrepreneur, you are responsible for taxes and other operating expenses such as fuel, office-related fees and truck maintenance.
Every day in the United States, it is becoming a common necessity for commercial goods and products to be moved to a new city or state. This movement brings up a great opportunity for new transportation businesses and as a result the truck driving industry is an extremely competitive field. This is why you need to carry out concrete research before you dive into the business. If you are considering opening a Truck Driving business, use this guide to plan your path.
Starting a Truck Driving Business – A Complete Guide
- Industry Overview
It is very important to state that this industry is the backbone of the American economy. The industry is also an accurate barometer of its health. Reports have shown that this industry alone is the impetus behind the movement of almost 70 percent of the freight shipped in the United States.
Other industry businesses tend to use its forecast and trends to plan accordingly while also creating viable solutions to any perceived challenges. This lucrative industry in order to meet the continued demands of the recovering economy, expects the number of truckloads moved by carriers around the country to increase in 2017. Analysis about the industry has shown that 81 percent of the total revenue seen in the shipping sector was as a result of activities of trucking companies. Steady increases are expected with revenues swelling by 66 percent by 2022.
Reports from experts in this industry have also stated that a number of factors are expected to come together in 2017 to push trucking rates upward. Not only is the country’s economy expected to continue on an upward tick, the global economy is shaping up for healthy growth as well.
Globally, the economy is predicted to grow at about three percent while the United States should see a growth rate of nearly four percent for 2017. It is important to note that much of this growth since the recession has been attributed to industry, but some analysts think that a significant driver of growth for 2017 will be from consumers.
Starting a Truck Driving Business – Market Feasibility and Research
- Demographics and Psychographics
The truck driving industry is responsible for the majority of freight movement over land, and they are a major stakeholder in the manufacturing, transportation and warehousing industries in the United States of America and in other parts of the world. This industry is said or rather known to be involved in all other lucrative Industry. It is referred to as the life and backbone of the economy of any country.
The demographic composition of those who are in need or those who patronize the truck driving industry cannot be pointed out individually, because we all need their services if not every day. Indeed merchants, industrialist, farmers, contractors and a host of other people who have need to move goods and services from one location to another location are considered to fall within the demography of those to be considered when mapping out marketing and sales strategies.
List of Niche ideas in the Truck Driving Business
This industry is very huge and for you succeed you must select a niche. This industry indeed has lots of niches that you can leverage and the niche you choose would determine the type of trucks you would need and your start-up costs.
- Food truck
- Dump truck
- Building material transportation
- Oil transportation
- Truck driving company
- Truck leasing
Level of Competition in the Truck Driving Business
The truck driving business is a very competitive business, there are so many great truck drivers who tried to get into the trucking business but failed in that attempt. In this industry, the line between profit and loss is very thin; one wrong decision can bankrupt the company.
Building and growing a Truck Driving Business indeed takes a lot of hard work and dedication. You will need a disciplined approach to be able to lead your company to limelight. It is very important that you know how to deal with people in a business sense, to make the right decisions and to take the right actions. If it was so easy to do, in the last few years we would not have had thousands of trucking companies who have lost their equipment and gone bankrupt. The factors that directly influence the trucking industry are
- Variations of the fuel prices
- Ups and downs of production of goods
- Big competition
- Regulatory requirements
- Unpaid invoices or payment delays
List of Well Known Trucking Companies
- B. Hunt Transport Services
- YRC Worldwide
- Swift Transportation
- Schneider National
- Landstar System
- Old Dominion Freight Line
- Werner Enterprises
- Arkansas Best
- S. Xpress Enterprises
- Estes Express Line
- R & L Carriers
It is very important to state that the success of a Truck Driving company rests on the profit that the company will make an annual basis. Operating your trucks for many miles without a load will make you lose money, which means that there will be face drop of the profit and increment of your expenses. We believe that every company has different profit, but on average base the numbers say it is 6-8 percent profit of the annual income per truck.
If the average profit for a trucking company on annual base is 7% of the gross annual income per truck and we have a total profit of $200,000 then we have 93% or $186,000 to cover the expenses and 7% or 14,000 average clear profits per truck.
Have it in mind that the best way to be safe is to be aware of the expenses that kill profit. We advise that getting correct information in this field will give you the chance to make the best freight price and lead your company in the right direction. Some of the expected expenses include;
- Costs of fuel
- Cost of labour
- Administrative costs
- Expenses for Insurance
- Personal, Business and Self-employment taxes
- Cost of regular vehicle maintenance
- Truck repairs
- Vehicle Registration
- Trailer Registration
- License fees
- Medical Exams
- Monthly truck and trailer payments
- Rental costs for office space
- Cost of deadhead miles etc.
Starting your Truck Driving Business from Scratch or Buying a Franchise
Research has shown that a lot of businesses in the Truck Driving industry started from the scratch and are struggling to build a fulcrum for their business. Building a business from the scratch in the truck driving industry needs patience, passion, enthusiasm and immeasurable risks but buying a franchise is a very quick way to own a truck driving business.
Indeed, buying a franchise on the truck driving industry is far better than starting from the scratch. This is because no matter how grand your opening, when you start your own truck driving business it takes time to build a client base and local reputation. When you advertise a known brand name in your new market, customers come ready-made, and the cash starts flowing faster. Also when you start your own truck driving business, you must learn all the basic things needed to strive on your own.
But in a franchise, the Franchisors gives new franchisees extensive training in every aspect of their new business, from receiving a call to the service end point, and many other advanced training to help you stay on top of your business as it grows.
Have it in mind that being caught up in the day-to-day “mundane details” as taxes and supplies might be too heavy for a business that started from the scratch. A lot of franchisors provide field support specialists to help keep their franchisees on track, training them to become managers and leaders working on the business, not in it.
Possible Threats and Challenges of Starting a Truck Driving Business
We all know that every lucrative business has its challenges and starting a truck driving company is not left out. Starting this business comes with its own risks, and only commitment and proper planning can help you achieve or build a breath taking truck driving business. Below are the few challenges and threats faced when starting up a truck driving company.
- Raising Capital for your Start up
- Assembling a Business Team
- Finding Good Employees
- Finding Good Customers
- Dealing with Competition
- Unforeseen Business Challenges and Expenses
- Keeping Up With Industrial Changes and Trends
- Exiting the Business
Starting a Truck Driving Business – Legal Aspect
- Best legal entity for a Truck Driving Business
In an industry which is known as the backbone of the American economy, there are many legal entities you could choose from and it takes careful consideration to be able to choose one suitable to your vision and goals. When it comes to starting a truck driving company, a Limited Liability company is the best legal entity to start up with, because a limited liability company (LLC) provides the limited liability protection of a corporation, while avoiding the double taxation. Also, just because it is taxed like a partnership, it can be more flexible than a corporation and a sole proprietorship.
Have it in mind that many investors believe that investing in an LLC can create unintended consequences under the Employee Retirement Income Security Act (ERISA) pension funds for those who may have invested in the fund. That is why many funds are prohibited by their governing documents from investing in an LLC.
Also venture capital and other funds do not want to wait for a portfolio company to finish its own tax return and issue K-1s to its members before the fund can do its tax return and issue its K-1s to its investors. But we believe there are significant tax incentives to investors who invest in “qualified small business” stock, which needs the company receiving the investment to be a C corporation. All this simply means that we advise that you start your truck driving business as a Limited Liability Company and convert to a C corporation immediately so that you can receive substantial funding from investors.
Catchy Business Name ideas for a Truck Driving Business
- Vision Express Inc.
- Bates Trucking
- Alfred International Group, LLC
- Mighty Transportation Company, LLC
- Beta England Inc.
- All States Trucking
- All mass ways
- Magic Transit Company
- Dayton Freight Lines Inc.
- Manuel Truck Line Inc.
- Evans Logistics
- Farrington Transportation
- Brantley Express Inc.
- Hill Brothers Transportation
- Horizon Transport Inc.
- Guarantee Transport Inc.
- One way Companies Inc.
- Keen Transport Inc.
- Unique Trucking Inc.
- Land star
- Maersk Inc.
- King Transportation
- May Trucking Co.
- Melton Truck Lines Inc.
- Denver Transportation Co.
- East Carriers Inc.
- Old Dominion Freight Line Inc.
The nature of the trucking industry imposes strict insurance requirements on the industry. This is because you own and oversee the operation of commercial vehicles, and your insurance requirements will cost more than many other businesses. To fully understand your insurance responsibilities, discuss them with specialists in your area for them to help you point out the strategic places you need to cover and protect. Some of the areas include;
- Commercial Auto Liability Insurance
- Physical Damage Coverage
- Motor Truck Cargo Insurance (Comprehensive)
- Bobtail Insurance
- Occupational accident insurance
- Non-Owned Truck Insurance
- General Insurance
- Health/medical insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection
Intellectual property is protected in law by, for example, patents, copyright and trademarks, which gives people the utmost opportunity to earn recognition or financial benefit from what they invent or create. Note that by striking the right balance between the interests of innovators and the wider public interest, the Intellectual property system aims to foster an environment in which creativity and innovation can flourish. In the Truck Driving industry, intellectual property rights protect Trademarks, industrial designs and geographical indications.
Intellectual property protection in this lucrative truck driving business just like any money making business is about protecting the time, money and effort you put into your business. This process was initialized to help you protect what’s yours, translate your handwork and ingenuity into profitable returns, set yourself up for growth or business expansion, keep competitors away, ensure you are not infringing in anyone’s right, prevent employees from aiding and helping your competitors, attract investors and also promote your business to investors or potential buyers.
Do not be deceived like few entrepreneurs who believe that the intellectual property right is for big companies. But believe that as a zealous individual who have worked hard to create and manage your truck driving business, it should be in your best interest to make sure your intellectual properties are for you – both now and in the future.
Is Professional Certification Needed to Run a Truck Driving Business?
Professional certification is simply a process by which an individual proves that he or she has the knowledge, experience and skills to perform a specific job. Note that this proof comes in the form of a certificate earned by passing an exam that is accredited by an organization or association that monitors and upholds prescribed standards for a particular industry involved.
In this lucrative truck driving business, having professional certification gives your intending customers the confidence that they are protected and that you are worthy of their patronage- hereby giving you an edge against your competitors. These certifications include;
- Transportation Worker Identification Credential
- Commercial driver’s license
- Tractor-Trailer Driving certificate
List of Legal Documents Needed for a Truck Driving Business
Have it at the back of your mind that almost all states in the United States have their own laws with regards to owning and operating a Truck Driving business. They also have different rules about in-state and interstate transport of goods. The following are the basic requirements for starting a Truck Driving business.
- International Registration Plan
- International Fuel Tax Agreement or IFTA Decal
- Motor Carrier Authority Number and Federal DOT Number
- Heavy Use Tax Form
- Filing for BOC-3
- The driver should obtain a commercial driver’s license or a CDL
- The vehicle must have a registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms for vehicles with two axels
- Vehicles with three or more axels have no minimum weight requirements
Financing your Truck Driving Business
Even with the greatest ideas ever conceived in our modern age, without proper funding those ideas are just like water poured on a rock. Finance in business is a big ingredient that can move a business to the limelight and without a detailed business plan; a company won’t be able to land sufficient funds from prospective investors.
Getting funds for a business is not an easy task because no one would want to pledge his/her money in a business that can’t guarantee returns and profits. Basic ways of financing a Truck Driving business includes;
- Funds from Personal savings
- Getting loans from families and friends
- Taking small business loans
- Getting microloans
- Attract an angel investor
Choosing a Suitable Location for your Truck Driving Business
Note that no matter the size of your business, location decisions are often important. Your location decision has a direct effect on your operation costs as well as your ability to serve customers (and therefore your revenue). You should also know that location decisions, once made, are difficult and costly to undo because the costs of moving an operation are often very significant, and you run the risk of inconveniencing customers and staff.
It is always best to get the location decision right first time. Things to consider when choosing your truck driving business location may include;
- Style of Operation
- Foot traffic
- Accessibility and Parking
- Proximity to other businesses and services
- Utilities and other costs
Starting a Truck Driving Business – Technical and Manpower Requirements
Note that in this business, if you decide to operate a private fleet with your own drivers, you will need to purchase commercial vehicle(s). It all depends on your available start-up capital, you will need to determine how many vehicles are appropriate for your business. Indeed a lot of businesses start small, and as your profits grow you can always add to your fleet.
When choosing what commercial vehicles are appropriate, consider the type of freight you plan to carry. It is important that you know that different types of cargo require different trucks.
Also we have noted that most truck driving companies make sure that they install car (truck) tracker on their trucks; it sure allows them to effectively monitor their trucks and it indirectly increases efficiency. Listed below are some of the key roles that you should make available if you intend starting a medium or large scale truck driving company. Be careful and strict during the employment process, so as to get individuals who align with your perceived goal and visions.
- Chief Operating Officer (Owner)
- Admin and HR Manager
- Transport and Logistics Manager
- Business Developer (Marketers)
- Commercial Truck Drivers
- Front Desk Officer
The Service Process Involved in a Truck Driving Business
As someone who is looking to pitch his or her tent in this industry, you should know that businesses in the industry operate by bidding on and fulfilling transportation accounts and contracts. A lot of trucking businesses usually operate in one of two forms- the difference lies in how they acquire drivers to fulfill their accounts and contracts:
- Sub-contracted drivers
In this particular option, you have to run your business using sub-contractors as drivers. Although you, as the business owner, run the business and receive the contracts, but your drivers are not actually employed by your company. Note that this particular option cuts down on start-up costs, insurance costs and required equipment. But it also gives you less control over your drivers and cuts into your profits.
- Privately-owned drivers
In this second option, you as the owner privately run your business and all operations. It is your duty to use your own equipment, pay higher insurance prices, and hire a fleet of private drivers as employees. This option gives you total control over your business and your employees, and promises the most return on profits. But it sure needs a great deal more start-up capital and operating costs.
Starting a Truck Driving Business – The Marketing Plan
- Marketing strategies for a Truck Driving Business
When preparing to venture into this business, note that having your business advertised is more important than ever for business growth. As word of mouth is getting challenged by the online communities, having a strong marketing strategy can boost your customer base and increase company revenue. These strategies may include:
- Using Direct Mail, Niche Growth
- Leveraging on Social Media
- Note that Professionalism Wins More Business
Tips for Winning Competitors in the Truck Driving Business
It is very important to state that the competitiveness of the truck driving industry makes receiving contracts difficult. Which is why as a start-up business, you most likely will not have the reputation needed to receive large accounts. A lot of trucking businesses start small, utilizing local contracts and small business trade shows to build up their client base. As you successfully complete these jobs, you will be able to grow your business and contract larger jobs. Ways to win your competitors may include;
- Define your company and niche
- Choose a competitive advantage
- Create a customer database
- Excite your customers
Tips for Increasing Client Retention in your Truck Driving Business
Just like we must have stated over and over again, the truck driving business is highly competitive and demanding. As a business owner in this industry, you should be proactive in finding clients. You can go through online bidding sites to check for available contracts and accounts. There are a number of websites that cater to contract bidding. In these sites, you can easily browse through them and put in your bids.
The lowest bidder will get the contract. It is best for start-up trucking companies to provide lower rates at first. You can also go through classified ads and other portals to find clients and contracts. But you should keep in mind that no matter how great your trucks are, dealing with clients is still more important.
We believe that a lot of clients will also help by recommending quality trucking companies to other businesses, which is why we believe you should always put your best foot forward before, during and after the transport. You should employ these strategies;
- Employee loyalty
- Soliciting their ideas and suggestions
- Offer a simple way to pay
- Build the customers and not the price
- Be quick to resolve issues
- Thank your customers
- Turning difficult situations into opportunities to earn your client’s trust
- Offer a reward
- Stop telling customers what’s good for them — and LISTEN TO THEIR NEEDS
Strategies to Boost your Truck Driving Business Brand Awareness and Creating a Corporate identity
It is very important that you do not mistake your brand awareness to be your product, your logo, your website, or your name. Note that your brand is much more than that -it is the stuff that feels intangible. It is that hard-to-pin-down feeling that separates powerhouses and mediocre brands from each other.
So to help you rein in what many marketers consider more of an art and less of a science, here are few things to consider when developing a plan to boost your Truck Driving industry brand awareness and cooperate identity;
- Show Purpose
- Make your business Emotional
- Experienced employees
- Competitive Awareness