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How to Start a Grain Hauling Business

Do you want to start a grain hauling company? If YES, here is a complete guide to starting a grain hauling business with NO money and no experience.

In life, there is always a need for people to move goods from one location to the other. Loads of business people have taken advantage of this to set up their own businesses and they are smiling to the bank on a regular basis. As an aspiring entrepreneur, if you are looking for a business to do that will guarantee you returns on your investment, then you should consider starting your own haulage company.

As a matter of fact, it will pay you to specialize in grain hauling especially if you live around an area where grains are cultivated.

A grain hauling business is indeed a profitable venture just like any other hauling business as it requires minimal startup capital except for the amount required to acquire a standard truck. In most cases, you can lease a truck or even purchase a fairly used truck for a start.

The bottom line is that you can start the business alone and then grow it in such a way that you can own and operate fleets of haulage trucks. If you are interested in starting owner grain hauling company, then you should ensure you read through this article in order to get the required guidance and industrial tips.

Steps to Starting a Grain Hauling Business

1. Understand the Industry

A grain hauling business operates in the trucking industry and it is a known fact that the industry plays a very important role in the economy of the world.

They provide essential services to the united states economy by transporting large quantities of agriculture produce, raw materials, machines, equipment, dirt, rocks, building materials, and finished goods from manufacturing plants or farms to retail distribution centers or ports and from warehouses to construction sites.

As matter of fact, heavy duty trucks are indispensable in the construction industry. In the United States, large truck and bus drivers require a commercial driver’s license (CDL) before they can be permitted to operate. The activities in the trucking industry is regulated by the United States Department of Transportation (USDOT), the Federal Motor Carrier Safety Administration (FMCSA) and the Federal Highway Administration (FHWA).

They ensure that drivers and trucking companies adhere to safety rules and regulations and also that drivers undergo special training on how to handle large vehicles before obtaining their commercial driver’s license (CDL).

Statistics has it that food and food products, lumber or wood products, as well as petroleum or coal account for 34.8 percent of truck traffic in the United States and by volume, clay, glass, concrete and stone, farm products, as well as petroleum and coal account for 35.6 percent of truck traffic.

The advancement in technology in areas such as computers, satellite communication, and the internet, has contributed immensely to the growth of the industry. The advancement in technology is responsible for increase of productivity of trucking companies’ operations, it helps them effectively monitor their trucks and their drivers and it helps drivers save time and effort.

The trucking industry is not restricted to trailers or large trucks hauling goods from destination to another via interstate highways, it also involves smaller trucks that help transport smaller goods within same city. In the U.S., about 66 percent of truck tonnage moves distances of 100 miles or less; local and regional hauls account for almost half of all truck revenues and are they are the preferred choice for private carriers.

The Local Specialized Freight Trucking industry, which transports oil, ores, grains, gases, frozen food and other freight that requires specialized trailers is indeed a large industry.

Statistics has it that in the United States of America alone, there are about 60,852 registered and licensed local specialized freight trucking companies responsible for employing about 259,944 people and the industry rakes in a whooping sum of $48 billion annually.

The industry is projected to grow at 0.8 percent annual growth within 2014 and 2019. It is important to state that there are no establishments in this industry that has a lion market share.

Starting and operating a grain hauling business can be challenging, but the truth is that it can be rewarding at the same time. One good thing about the industry is that it is open for both big time investors who can start the business with a fleet of trucks and aspiring entrepreneurs who may start with just one truck.

Some of the factors that encourage entrepreneurs to start their own grain hauling business are that the business is easy to set up and they can easily run the business as a one man show (sole proprietorship) and still generate good income.

One notable fact about this industry is that it is not over saturated. The fact that farmers need to move grains and farm produce from one location to another on a daily basis means that there is always a ready market for a grain hauling business.

Starting and operating a grain hauling business can be demanding and challenging, but the truth is that it can be rewarding at the same time.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who hire the services of grain hauling companies is not restricted to farmers. There is a wide range of business people who are not farmers but are active players in the farm produce business and would also want to engage the services of grain hauling companies.

As a matter of fact, the target market for grain hauling companies should include, Merchants and Warehouse Operators, Retailers who would want to move their grains from one locations to another, Manufacturers (whose raw materials are grains), who would want to move their grains from location to another.

So, if you are looking towards defining the demographics for your grain hauling companies, then you should make it all encompassing.

3. Decide Which Niche to Concentrate On

It is important to state that there are no niche ideas within the grain hauling business because the business is a niche idea in the specialized trucking industry.

The Level of Competition in the Industry

The level of competition in the grain hauling business is dependent on your location and of course the capacity of your truck. If you can successfully create a pact with local grain farmers or merchants who deal in grains in your location, you are likely going to experience little or no competition.

For instance, if you are the only grain hauling company in your location that is into inter – state or cross country hauling of grains, you can successfully monopolize the market for a long time before you start having competitions.

4. Know Your Major Competitors in the Industry

In every industry, there are always brands that perform better or are better regarded by customers and general public than others. Some of these brands have been in the industry for a long time while others are best known for how they conduct their businesses and the results they have achieved over the years.

These are some of the leading grain hauling businesses and trucking companies in the United States of America and in the globe;

  • Groendyke Transport
  • The Dependable Companies
  • Shaffer Trucking
  • PRO Transport, Inc.
  • Con-way Truckload
  • Schneider National
  • Sierra West Express
  • Sinclair Trucking Company
  • Southeastern Freight Lines
  • Swift Transportation
  • Consolidated Freightways
  • Paschall Truck Lines
  • Arnold Transportation Services
  • USF Glen Moore
  • Knight Transportation
  • YRC Worldwide
  • Werner Enterprises
Economic Analysis

When conducting costing and economic analysis for your grain hauling business, you just have to critically examine these key factors; place, pricing, and promotion.

As a matter of fact, you would have to continue to review these key factors at regular intervals while running your business. As a grain hauling business owner, you need to have a proper grasp of your competitive landscape if indeed you want to maximize profits and be in the frontline of the industry.

Please note that in this regard, the first thing to consider is the type of truck to purchase. Considering that brand new semi – trucks start at $80,000 and run up to $200,000 or more, buying a used commercial truck is a much more economical route for most truck drivers.

A perfect rule of thumb is to purchase the best used commercial truck you can afford. Starting out as a self-employed truck driver can be financially risky, that is why you have to minimize debt by avoiding a truck payment that is beyond your means.

It is important to note that truck fueling, servicing and maintenance cost is one of the most important factors contributing to the overall cost of grain hauling business and should be considered as a major factor when carrying out your costing and economic analysis.

5. Decide Whether to Buy a Franchise or Start from Scratch

If you are looking towards starting a grain hauling business, you would have to start from the very scratch because you will not get the franchiser of a grain hauling business to buy except you want to partner with an established trucking company.

Besides starting a grain hauling business from the scratch is less stressful when compared to other related businesses. With grain hauling business, you should just try as much as possible to secure an efficient haulage truck, commercial driver’s license (CDL) and then leverage on every marketing tool within your disposal especially the internet when it comes to marketing your services.

Please note that most of the successful grain hauling businesses and trucking companies around started from the scratch and they were able to build a solid business brand. It takes dedications, hard work and determination to achieve business success.

6. Know the Possible Threats and Challenges You Will Face

If you decide to start your own grain hauling business today, one of the major challenges you are likely going to face is the presence of well – established grain hauling companies or standard trucking companies who are also into grain hauling in your target market location.

The only way to avoid this challenge is to create your own market; concentrate on local framers or local merchants who need the services of a trucking company or grain hauling business.

Some other threats and challenges that you are likely going to face when you start your grain hauling business are mature markets, bad economy (economy downturn), stiff competition, volatile costs, and rising fuel prices. So also, unfavorable government policies, seasonal fluctuations, and of course emergence of new competitors within the same location where yours is located.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

When considering starting a grain hauling business, the legal entity you choose will go a long way to determine how big the business can grow. You can start your grain hauling business as a general partnership, limited liability company, or a sole proprietorship.

Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale grain hauling business especially if you are just starting out with moderate startup capital and a single haulage truck. But if your intention is to grow the business from one haulage truck to a fleet of trucks, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the Limited Liability Company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your grain hauling business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to study the various legal entities to use for your grain hauling business, you will agree that limited liability company is most suitable especially if you have plans to grow into a full-blown trucking company. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.

8. Choose a Catchy Business Name

When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own grain hauling business, here are some catchy names that you can choose from;

  • Farmers Delight® Grain Hauling, Inc.
  • Jeff Baden & Sons® Trucking Company, LLC
  • Green Line® Grain Hauling Company, LLC
  • Extreme Truckers® Grain Hailing Company, Inc.
  • Texas Connect™ Trucking Company, Inc.
  • Iowa Brothers® Grain Trucking Company, LLC
  • Rodney James® Grain Hauling Company, Inc.
  • Ferguson Tony & Sons™ Grain Trucking Services, Inc.
  • Silver Trucks® Grain Hauling Company, Inc.
  • Farm 2 Port® Grain Trucking Company, Inc.

9. Discuss with an Agent to Know the Best Insurance Policies for You

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate policies for your business.

Insurance for your truck business and for yourself  is something you shouldn’t undermine. Although you might want to settle for affordable coverage, but you also need insurance that protects your assets. To keep your insurance cost down while also being properly protected, you will have to consider a lot of factors. Note that your driving record is a key factor in determining your truck insurance cost, so it’s very necessary to always follow best practices on the road.

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your grain hauling business in the United States of America;

1. General Liability Insurance

General liability insurance, sometimes known as public liability insurance in the trucking industry, covers third-party bodily injuries and property damage that comes from/during business activities that aren’t related to truck driving. For example, general liability covers medical or legal bills if a customer dislocates their shoulder tripping over boxes in your office.

2. Trucking Liability Insurance

Trucking liability insurance, most times called a primary liability, takes care of the cost for injuries and property damage you may cause others when operating your truck.

Interstate truckers who haul non-hazardous goods are federally mandated to have a minimum of $750,000 of truck liability insurance. Intrastate truckers have to carry the minimum as mandated by their state’s laws. Trucking liability policies usually require every truck to be scheduled, or listed on the policy. Insurance companies will not pay claims if the truck is not scheduled.

3. Non-trucking Liability Insurance

This particular insurance covers damages and injuries to third parties that occur when you’re driving your truck for non-business purposes, such as running personal errands. If you have a truck accident when you’re not working, non-trucking liability pays for the other person’s medical bills and property repairs.

Note that this coverage is majorly for drivers under lease with a motor carrier. Even though they are typically covered by their motor carrier’s general liability insurance, that policy is only for business activities like hauling cargo, dead-heading, or traveling for maintenance. Drivers still need non-trucking liability insurance to cover non-business driving.

4. Bobtail Insurance

Bobtail insurance is liability insurance that protects you and your truck when you’re driving for business but not hauling a load, like when you’re traveling between jobs. The policy pays your legal bills if someone sues after an accident.

Bobtail insurance is often confused with non-trucking liability coverage. Both cover gaps in the liability insurance commonly provided by motor carriers. However, bobtail insurance covers business-related driving, whereas non-trucking is for personal driving.

5. Physical Damage Insurance

Physical damage insurance pays for damages and repairs to your truck caused by certain covered perils including accidents, natural disasters, theft, and vandalism. It’s not legally required, but it is recommended for all drivers. Plus, most lenders require physical damage insurance for financing. All owner-operators need physical damage insurance to protect their investment in their trucks, and this includes drivers under lease.

6. Motor Truck Cargo Insurance

Motor truck cargo insurance covers your responsibility for the cargo you carry, typically paying out when it’s lost or damaged. The coverage is not a legal requirement, but it is recommended for all owner-operators and for-hire motor carriers. Basic triggers for motor truck cargo insurance include: Fire, Collision, Theft, Water damage, Equipment breakdown, Striking of a load.

7. Workers’ Compensation Insurance

This insurance is a state-mandated coverage that pays employees’ medical costs and lost wages if there are work-related illnesses or injuries. Only motor carriers and owner operators with employees have to get workers’ compensation, but some states may require coverage for business owners in high-risk industries.

Depending on state law, injuries covered by workers’ compensation typically include: Traumatic injuries after a truck accident, Repetitive stress injuries from loading and unloading cargo, Work-related illnesses from exposure to harmful chemicals etc.

8.  Trailer Interchange Endorsement

Trailer interchange insurance pays for physical damage you cause to another person’s trailer. It is important for truckers and motor carriers that regularly enter trailer interchange agreements.

9. Hazmat Truck Insurance

Hazmat truck insurance isn’t always a separate policy or endorsement, but it’s worth noting that hauling hazardous materials is strictly regulated. Federal law increases the mandatory minimum liability coverage to $1 million for any trucker hauling hazardous materials such as fuels, chemicals, or fertilizers.

10. Trucking Umbrella Insurance

The amount of damage a semi can cause means claims often exceed your truck liability limits, and this makes trucking umbrella insurance a valuable coverage. Like other commercial umbrella policies, this policy extends the limits of underlying liability policies. If a claim costs more than what your other insurance covers, umbrella liability pays the rest.

11. Uninsured & Underinsured Coverage

Uninsured and underinsured motorist insurance covers your costs after an accident with another driver who is either uninsured or whose limits aren’t high enough to cover your damages. It’s also the least expensive coverage but well worth the cost if you end up needing it.

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your grain hauling business, usually you may not have any need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

But if you just want to protect your company’s logo and other documents or software that are unique to you or even operation concepts, then you can go ahead to file for intellectual property protection.

11. Get the Necessary Professional Certification

Aside from your Commercial Driver’s License (CDL), you don’t need any professional certification to be able to own and operate a grain hauling business in the United States of America.

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentation.

If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own grain hauling business in the United States of America;

  • Business and liability insurance
  • Commercial Vehicle Operator’s Registration for heavy duty trucks
  • Appropriate driver’s licenses for drivers (Commercial driver’s license (CDL)
  • Assistant’s licenses for assistants
  • Health inspection Certificate
  • Proof of ownership, proper identification and vehicle license
  • Tax Payer’s ID
  • Fire certificate
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Non – disclosure Agreement
  • Employment Agreement (offer letters)
  • Employee’s Handbook
  • Operating Agreement for LLCs
  • Insurance Policy
  • Apostille (for those who intend operating beyond the United States of America)

13. Raise the Needed Startup Capital

Starting a standard grain hauling business can be cost effective especially if you already own your haulage truck. Securing haulage truck is part of what will consume a large chunk of your startup capital.

When it comes to financing a business, one of the major factors you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your grain hauling business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for Loan from your Bank
  • Pitching your business idea and applying for business grants and seed funding from government, donor organizations and angel investors
  • Source for soft loans from your family members and your friends.

14. Choose a Suitable Location for your Business

A grain hauling business can be started in any location of your choice as long as you have access to good road network. As a matter of fact, most grain hauling businesses run the business from their home especially if they have a good parking space in their compound.

But if you are looking towards starting a standard grain hauling business with fleet of trucks, it is important to note that a business facility in a good location does not come cheap hence you should be able to allocate enough fund for leasing / renting packing space in your budget.

If you are new to the dynamics of choosing a location for your business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your grain hauling business.

15. Hire Employees for your Technical and Manpower Needs

When it comes to starting a standard grain hauling business, you will need at least one haulage truck and other related equipment that will aid you in carrying out your job. It is important to state that this haulage truck and equipment can be purchased as fairly used if you are operating on a low budget.

When it comes to choosing between renting and leasing a facility for your grain hauling business, the size of the business you want to start, and your entire budget for the business should influence your choice. If you have enough capital to run a pretty large business with enough parking lot for your haulage trucks, then you should consider a long lease or out rightly purchasing a land.

As regards the number of employees that you are expected to kick start the business with, you don’t need to employ anybody, it is a business that can be solely run by just the owner. The owner can serve as the driver, marketer, accountant and logistic manager.

But if you want to run a standard grain hauling business, then you should look towards hiring a manager (you can occupy this role), logistics manager, truck drivers, accountant, sales and marketing officers (could be freelance) and customer services officer.

You would need about 10 people to effectively run a small scale but standard grain hauling business. Please note that there will be times when you are expected to hire laborers to help you in loading and offloading your trucks and also experts to help you handle some job function such as servicing, repairing and maintaining your truck.

If you are just starting out you may not have the financial capacity to retain all the professionals that are expected to work with you which is why you should make plans to partner with specialist in the industry.

The Service Delivery Process of a Business

Usually, when a grain hauling business gets a contract to transport grain, they will first conduct cost analysis in order for them to know the number of trucks, manpower and resources needed to carry out the job. Once they conclude their cost analysis, then they will deploy the required manpower and trucks needed to execute the job and then they will get paid after successfully carrying out their job.

16. Write a Marketing Plan Packed with ideas & Strategies

The fact that the entry barrier for starting a grain hauling business is low means that there is bound to be more players in the industry no matter the location you choose to start yours. You must come up with innovations if you must carve out a market for yourself within the available market in your community, city, state or country.

Here are some of the platforms you can utilize to market your grain hauling business;

  • Introduce your business by sending introductory letters alongside your brochure to grain farmers, grain merchants and manufacturers who make use of grains as part of their raw materials amongst others in the United States
  • Promptness in bidding for grain hauling contracts
  • Advertise your services in community based newspapers, local TV and radio stations
  • List your business and services on yellow pages ads  (local directories)
  • Leverage on the internet to promote your grain hauling business
  • Engage in direct marketing and sales
  • Encourage the use of Word of mouth marketing (referrals)
  • Leverage on the internet to promote your business
  • Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
  • Engage the services of marketing executives and business developers to carry out direct marketing for you.

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you offer your grain hauling services at a price that is highly attractive is to ensure that you source your startup capital from sources that won’t put pressure on you or give you high interest rate.

Another strategy that will help you offer your grain hauling services at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your services.

You can also try as much as possible to work with independent contractors and marketers, it will help you save cost of paying sales and marketing executives.

18. Develop Iron-clad Competitive Strategies to Help You Win

The trucking industry is a competitive industry, and you must come up with a unique and highly creative strategy to be able to outsmart your competitors in the industry. Part of what you need to do in order to stay competitive in the industry is to continue to create easier and cheaper ways of transporting large quantities of grains for your clients.

In other to stay competitive in this industry, you must ensure that your haulage trucks are always on time and they carry out neat jobs devoid of accidents and complain. The truth is that if there are fluctuations and delays in the services you provide, customers can choose to shift allegiance and settle for other options available.

19. Brainstorm Possible Ways to Retain Clients & Customers

When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps to attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your products and services delivery, they can hardly source for alternative service providers.

Statistics has it that one of the major reasons why clients source for alternative service providers is when there is a drop in quality. Another reason is poor customer service.

One of the strategies you need to employ in order to generate repeated sales from your customers and also to retain them is to ensure that your haulage truck is always on time and your customer service does not fluctuate. The truth is that if your services and customer service fluctuates, you are likely going to struggle to get your customers coming back; people usually go for products that are of good quality.

Ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them and also attract new customers.

Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.

With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).

20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secrets of larger corporations is that they spend fortunes to boost their brand awareness.

If your intentions of starting a grain hauling business is to grow the business into a standard trucking company with fleet of trucks transporting grains all across the United States and Canada, then you must be ready to spend money on promotion and advertisement of your brand.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your grain hauling business;

  • Place adverts on both print (newspapers and magazines) and electronic media platforms
  • Sponsor relevant community based events / programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your business
  • Install your billboards in strategic locations all around your city or state
  • Distribute your fliers and handbills in target areas
  • List your grain hauling business in local directories / yellow pages
  • Advertise your grain hauling business in your official website and employ strategies that will help you pull traffic to the site.
  • Ensure that you wear your branded shirt and your haulage truck is well branded with your company logo