If you are thinking of starting a cargo van business, then you should plan to spend at least $50,000. This is so because you can actually start a cargo van business with just one van, and the least expensive panel-style van is the Dodge Promaster with prices starting at around $41,000.
On the more expensive end is the Mercedes Sprinter, with 4×4, prices starting around $66,000. In as much as you can start a cargo van with a minimum of $50,000, it is important to note that an entrepreneur who wants to start a standard cargo van business with a fleet of cargo vans must be ready to spend over $1 million to get the business up and running.
But over and above, there are certain factors that can determine the exact estimate of starting a cargo van business and that is what we will discuss in this article.
7 Factors That Determine the Cost of Opening a Cargo Van Business
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The Number and Types of Cargo Vans
If you are considering starting a cargo van business, then one of the major factors that will determine how much you are likely going to spend is the number and types of cargo vans you want to start the business with.
For example, if you intend to start your cargo van business with less than a handful of cargo vans, you can spend about $250,000 or more. But if you want to start a standard cargo van business with over a dozen cargo vans, then you should be prepared to spend over $750,000.
Also, it is important to note that the brand, type, and size of cargo vans you want to start the business with will go a long way to determining how much you will spend to get the business up and running.
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The Size of Your Parking Facility
By law, before you can get approval to start a cargo van business, you should be able to secure a parking facility for your cargo vans. Trust me, the cost of leasing a facility that is large enough for a dozen cargo trucks is quite significant.
For example, it will cost you between $500 to $2,000 per acre per year to lease a piece of land in a rural community, while it will cost you between $2,000 to $10,000 per acre per year to lease a piece of land in a suburban area, and between $10,000 to $100,000 or more per acre per year to lease a piece of land in an urban or prime commercial area.
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The Cost of Registering the Business, and Obtaining the Necessary Licenses, and Permits
You cannot start a cargo van business without first registering the business, and obtaining the necessary licenses, and permits.
To start a cargo van business, you need the following licenses and permits; Business License, Vehicle Registration, Commercial Driver’s License (CDL), Motor Carrier Authority (MC Number), USDOT Number, State-Specific Permits, International Registration Plan (IRP) Registration,
International Fuel Tax Agreement (IFTA) License, Hazardous Materials (HAZMAT) Endorsement (if transporting hazardous materials), Unified Carrier Registration (UCR), Local Permits and Zoning Clearances, Sales Tax Permit, Federal Employer Identification Number (EIN) et al.
It might interest you to note that the amount it will cost you to obtain all the listed permits and licenses will form a significant portion of your budget.
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The Required Insurance Policy Coverage
No wise businessman or woman would want to dabble in the cargo van business without having the necessary insurance policy coverage in place.
To start a cargo truck business, you should at least have the following insurance policies in place; Commercial Auto Insurance, Liability Insurance, Cargo Insurance, Physical Damage Coverage, General Liability Insurance, Workers’ Compensation Insurance,
Business Interruption Insurance, Umbrella Insurance, Employment Practices Liability Insurance (EPLI), Commercial Property Insurance (if you have a physical location), Business Income Insurance, Environmental Liability Insurance (if transporting hazardous materials), and Hired and Non-Owned Auto Insurance.
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The Cost of Hiring and Training Your Employees
The fact that you cannot operate a cargo van business alone means that you should make provisions in your budget for hiring and training your employees.
You should make plans for competent people to occupy the role of logistics and transportation manager, cargo van drivers, accountants, administrative officers, maintenance technicians, marketing and sales officers, and customer service officers. Trust me, it will cost you a significant portion of your startup capital to recruit, and train all the employees.
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The Equipment, Tools, and Supplies Needed to Operate Your Cargo Van Business
You should budget for a hand truck (dolly), moving blankets, straps and tie-downs, tool kit, GPS navigation system, mobile phone, portable vacuum cleaner, first aid kit, fire extinguisher, spare tires and jack, fuel container, flashlight, spare keys, and lockout tools,
Vehicle maintenance and repair tools, business signage and decals, receipts and invoicing supplies, personal protective equipment (PPE), load securing supplies (bungee cords, ratchet straps, etc.),
Vehicle maintenance log, clipboard, and paperwork supplies, hand sanitizer and cleaning supplies, tire pressure gauge, and roadside emergency kit. Trust me, the amount it will cost you to buy all that is listed above will form a significant portion of your start-up capital.
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Your Operational Cost, and Contingency
Under your operational cost and contingency, you should budget for fueling your cargo vans, servicing and maintenance, toll fees, parking fees, towing fees, emergency vehicle repairs, unforeseen maintenance costs, unplanned vehicle downtime, legal fees (if facing any legal issues), accidents and collision repairs, and medical expenses (if injuries occur) et al.