How to Start a Trucking Company: Everything You Need to Know
To find out how to start a trucking company, you'll need to follow specific steps, including deciding which type of business to form and creating a solid business plan.3 min read
To find out how to start a trucking company, you'll need to follow specific steps, including deciding which type of business to form and creating a solid business plan. Check with your state to make sure you follow all guidelines and pay the necessary fees to create your business.
How to Start a Trucking Business
Identify the type of trucking company you wish to run. Your business will be one of the following types:
- Sole proprietorship.
- Limited Liability Corporation (LLC).
- Corporation (C-corp, S-corp, etc.).
Each type has its own good and bad points, with variations depending on the state you're in. You might consider consulting with an accountant to see which business type is best for you.
Draw up a business plan that outlines your expected revenues and expenses. Include your salary in expenses. Consult with a business adviser, who can help you create the right plan.
Next, you'll register your business with your state's Secretary of State office. You can usually do this online at the state website. There, you'll input the business owner details, establish a unique name for your business, and pay any required fees. Fees differ by state. For example, California fees are about $100, while in Texas, fees are around $300. Once your business is registered, visit the IRS website to obtain a free tax identification number.
You'll have to be proactive in landing clients. At bidding websites, you can check available contracts and accounts. Some sites allow contract bidding where owners can browse and put in bids. Typically, the lowest bidder lands the contract. For a startup trucking company, it's best to have lower rates, at least initially.
You can also use classified ads to look for clients and contracts. No matter how great your trucks are, good customer service is what keeps your business running. Some clients will be helpful by recommending a trucking company to other businesses. Providing excellent service during every phase of transport, including before and after, is very important. When you make customers happy, they're more likely to return to you with more business.
Network in the trucking industry and develop relationships with clients. If another carrier can't take on a project, he will usually reach out to his network first. You can land project by referrals from other carriers and gradually build your own solid customer base. Make sure shipyards and large distributors are aware of your services. Deliver goods on time and in good condition to maintain your client base and grow it.
You might land your initial shipping customers from a load board, but this shouldn't be a long-term method of landing clients. These boards are very competitive, and owners often have to bid very low to land projects. It's hard to make a profit if you charge rock-bottom rates just to land the job. In addition, load boards usually result in one-off loads instead of long-term relationships with clients, so you have to constantly look for new clients.
Costs of the Business
Figure out your start-up capital costs to determine what equipment you can afford. This affects the equipment and number of trucks you'll be able to buy.
Depending on the goods you transport, you may need specific equipment to maintain their condition. If you plan on going into the food transport business, you'll need refrigerators. You can start with smaller units since your first orders will probably be small. As your business grows, you'll be able to upgrade.
You'll probably spend the most money on equipment. Once you know what you'll need for your trucking outfit, you can choose to lease or purchase the necessary equipment.
Be aware of your expenses when you bid. You want to bid low enough to be competitive, but you also need to make a profit. To enter a bid that satisfies these conditions, you must know what your expenses are, so consider the following:
- Truck and trailer payments.
- Truck repairs.
- Fuel costs.
Starting a trucking company takes some work, especially when it comes to landing clients, but by having a detailed plan in place, you can create a new business from scratch and eventually turn a profit.
If you need help starting a trucking company, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.