How To Start A Trucking Company In 10 Steps
In 2012, trucks moved nearly 74% of all U.S. freight—that’s about $10 trillion worth of cargo rolling down the road on trucks. In a decade, trucking demands have increased. There are currently 15.5 million trucks—two million of which are tractor trailers—running the roads in the U.S.
Most people didn’t pay much attention. They didn’t think about the goods that they relied on arriving on trucks.
Then the COVID-19 pandemic threw a wrench into the supply chain and the importance of the trucking industry became readily apparent. While trucking stats took a hit in 2020 because of lockdowns and reduced supply chains, they are quickly rebounding.
Though the industry faces challenges due to fluctuating gas prices and changing markets, trucks are necessary to keep the country functioning. Launching a trucking company is within your reach, and we’ll show you the basic steps to follow on how to start a trucking business and set it up the right way.
Step #1: Develop a business plan
A business plan is about organizing your goals and mapping out how you’ll reach them. It should include:
- Summary: Describe yourself, your intentions, and your trucking company. Summarize your plan to hit your goals.
- Description: Go into greater detail, describing your company and noting what you bring to the table that makes you stand out from other companies.
- Market analysis: Analyze the market you’ll be operating in to show how you will generate revenue and accomplish your financial goals.
- Finances: Determine how much money you’ll need to get started, and what your return on investment (ROI) will be over a defined time period.
- Operation and service: Document the systems, staff, and the processes you’ll need to operate your company. List out the services you’ll provide customers.
- Marketing: Describe how you’ll find customers and how you plan to build and maintain a customer base.
Whether you write your own business plan or get help to do it, you can’t skip this step.
Defining your business, your goals, and the market you intend to serve will keep you from being sidetracked or investing time and money in something that won’t help you reach your goals. Plus, without a well-written business plan, it may be difficult to secure outside financing.
One way to find the answers you’ll need for your business plan (and some of the other steps to follow) is to join online trucking forums and get real stories from boots-on-the-ground truckers.
While you’ll join industry organizations for top-level information and support, the info you get from real truckers in those forums will be a little less sanitized and more actionable due to the immediate nature of it.
Step #2: Get your business registered at local, state, and federal level
Don’t take on any customers until you get your business properly registered.
Before registering anything, you should know:
- Your business structure. Your business could be a sole proprietorship, LLC, or partnership. What you choose for your business structure will be based on the legal protections each offers, and whether you’ll have a partner or employees. An LLC will protect your personal assets, for example, in case your business struggles.
- Tax requirements. State and federal tax requirements can be tricky. Work with your accountant to be sure you’ve set up sales tax and an Employer Identification Number (EIN) correctly. Your accountant can help you prepare for quarterly taxes, employee taxes, and more.
- Employee requirements. If you decide to have employees, or plan on it down the road, you’ll want to work with your accountant immediately so things are set up to make that an easy transition. You’ll have to comply with the IRS and U.S. Department of Labor laws in regards to employee classification. You might choose to use 1099 contractors instead of W2 employees, for example. Some states have additional laws regarding employees (e.g. California’s AB5 law).
To check all the boxes, contact city, state, and federal offices to make sure you’re in compliance with all requirements where you’ll be doing business.
When it comes to registering a business, not all states handle it the same. Contact your state government (often the Secretary of State’s office) to speak with someone about small business registration requirements.
Common state registrations include:
- Business name
- Business-type specific information
- Registered agent
- Sales tax ID
Even if your state doesn’t require you to register your business name, it’s wise to do it to prevent anyone else from using it.
Federal registrations and considerations will also be necessary, including:
- Federal tax ID/EIN
- Trademarks (brand)
- Heavy Vehicle Use Tax: For trucks over 55,000 pounds, use IRS Form 2290.
Make use of professionals, like accountants and lawyers, to make sure you get everything set up correctly. While that adds to your starting costs, it’ll save you headaches (and possible fines) down the road.
Step 3: Secure the necessary licenses, permits, and insurance
Contact your state’s Department of Transportation to find out what licenses and permits you’ll need to operate within the state. In general, trucking companies have significant licensing, permit, and insurance requirements. These may include:
- Commercial driver’s license (CDL)
- USDOT number
- Motor Carrier Number (MC)
- BOC-3 Form: Used in case there is a legal proceeding; it designates the process agent who files on your behalf. The FMCSA can help you find a process agent for this must-have step.
- FMCSA Drug and Alcohol Clearinghouse: Government regulations or customer contracts may require operator drug testing. Register all drivers with this clearinghouse.
- If you join the National Motor Freight Traffic Association (NMFTA), you’ll want to get a Standard Carrier Alpha Code from them.
Depending on the truck you’ll be using, you’ll want to register with the International Registration Plan. It will allow trucks 26,000 lbs and up to cross state lines and go into Canada. If you do register and have the intention to operate that way, you’ll need an International Fuel Tax Agreement (IFTA) Decal.
The insurance you’ll need will include insurance not just for vehicle and people, but also your cargo:
- Primary liability insurance
- Passenger accident insurance
- Non-trucking use insurance
- Cargo insurance
- Physical damage insurance
Talk to different insurance agents. Find out who other truckers use by asking in the online forums.
When it comes to business registration, licensure, and insurance, you can’t get it wrong. There’s no wiggle room. Without it, you may be operating at risk, or not allowed to operate at all, and put your entire investment in danger.
Step #4: Select the right truck for the job
Your truck is going to be your biggest investment, and the most important.
Price is going to be the first concern, but it shouldn’t be the only one.
For example, if you’re going to be a long-haul trucker, choosing a comfortable cab and a truck that can handle the weather you’ll be facing are important. You’ll also want to consider whether there are dealerships or shops to get repairs done across the geographic area you’ll be driving.
Weight limits, local vs. long-distance operation, load types—this is why you have the business plan, because that will help inform your truck choice.
Once you’ve decided on a truck, now you have to choose whether you should buy or lease.
Both have pros and cons. Buying outright means the deal is done, and you now have equity to work from in the future. But it also means you have to have excellent financing. Leasing has a lower barrier to entry, and your maintenance costs are covered, but you won’t have equity to trade against in the future. You’ll always be making monthly payments.
Step #5: Get the financing squared away to fund the business
Your costs aren’t just the truck. They include all the fees, licenses, and registrations. They include a brick-and-mortar building if you’re going to have employees and a home base to operate from.
You might look for financing from:
- Small Business Administration (SBA) loans
- Equipment financing loans from banks or institutions that specialize in this
- Small business term loan from your bank
Most banks have some requirements to get a loan, though it may vary. In general, they’ll want to:
- See your business plan and know the purpose of the loan.
- Know your experience as a business owner.
- Check your credit history.
- Verify your personal information.
- View any related financial statements and know about other loans or debts.
- Get possible collateral or a personal guarantee that says you’ll pay the loan or use personal assets to cover it if you can’t.
Step #6: Define your technology stack
Most of the steps so far probably haven’t surprised you, but there’s a good chance you’d skip this step without realizing that you need to define your technology stack.
A technology stack is the collection of technology you’ll use to build and run your business. Some of this you may have alluded to in your business plan.
- Dynamic routing: We’re used to Maps helping us not only find our way, but show us the fastest route. Systems specific to trucks do much the same, making it easy for drivers to save on gas and time while finding routes that can accommodate their truck specifications.
- Dash cams: For both safety and data reasons, dash cams are useful for owners who want to see what drivers are doing or experiencing on the road. They may also be used as proof if an insurance claim is filed against the trucker.
- Collision mitigation technology: Sensors alert drivers to potential collisions. Newer trucks may have some of this built in.
- Electronic logging: Nearly all interstate commercial trucking businesses are required by law to use electronic logging. Electronic logging devices (ELD) are for safety, tracking, and data management.
- Temperature management: If you are transporting food or goods that require certain temperatures, you’ll need software that helps you track the temperature of a load at any given time, saving a log so that you can see if there were unsafe temperature drops.
- Employee management: Scheduling a trucking operation is a balance of many moving parts. While you might start out as a solo operator, it’s a good idea to get set up with employee scheduling software like When I Work right away. Eventually, you’ll be managing complicated schedules and a mix of employees that include drivers, dispatchers, schedulers, or maintenance. When I Work makes it easy for businesses that are a mix of mobile and stationary, like trucking, because employees can clock in on mobile devices. You can see real-time data on who’s on the clock, and where they clocked in. In-app communication with your team, and easy schedule changes, make it simple to manage fluctuating schedules that can pop up. Managing payroll and even on-demand pay is easy, all in one app.
While you may be able to use a spreadsheet to manage OSHA safety regulations, service regulations, and maintenance logs, finding custom trucking software that combines many of these in one would be ideal.
What you need is based on the kind of operation you have.
Remember, though, that your business plan outlines your ultimate goal. You might start much smaller, but your technology stack should be built in such a way that it will grow with you to meet your goal. Trucking software for the trucking-specific concerns and employee management software for all things worker-related leads to a simple but all-encompassing tech stack.
Step #7: Set your pricing guidelines
Pricing guidelines should take into account the kind of driving you’ll be doing.
High-hazard trucking (e.g. ice road truckers, hauling hazardous or oversized loads) make the most because there is more risk. Long-haul truckers would come in second. Local and regional drivers would make the least because they don’t spend as much time away from home.
With that in mind, pricing guidelines must consider:
- What you’re transporting. Is it hazardous? Heavy? How does the NMFTA classify the load (the NMFC number)?
- Base rate. All carriers set up a base rate for every shipment.
- Chosen freight lanes. For interstate trucking, you’ll want to choose a freight lane to frequent (e.g. Memphis or Chicago). When you sign up for a load board, you can see what that lane will pay (usually an average per mile).
- Brokers vs. shippers. Brokers will take a cut out of a quoted price to a shipper. If you work directly with a shipper, you can remove that middleman’s cut.
- Cost per mile. It’s important for you to know what your cost per mile is. That means adding up fixed expenses (truck payments, licensing, insurance, payroll, etc.) with fluctuating expenses. Fluctuating expenses (e.g. diesel, DEF, tires, etc.) are variable, and you’ll have to estimate at first, and then add up after your first year to get a better idea. Add the fixed and fluctuating expenses, and divide by how many miles you drive in a year. That’s your per mile rate.
As you can see, pricing is complicated. Once you get a regular set of clients with regular loads, you’ll be able to fine tune this a bit more.
Step #8: Find and close potential clients
A load board is a common way to find clients.
A load (or freight) board is an online system that connects shippers to brokers. Carriers can also find and connect directly to shippers. You’ll find loads and freight lanes; depending on the load board, you may be able to message shippers directly, see credit information, make notes for your future use, and more.
You might also want to connect with a broker who can set you up with loads. Keep in mind they will take a cut.
Some carriers join the industry associations of the kinds of loads they want to haul. They might join a retailers association or a produce growers association, for example, to find shipper contact information. Some trucking companies call wholesalers directly, visit produce markets, talk to farmers and manufacturers, and network online in other formats outside of load boards.
Working directly with shippers (reefer loads) means you keep more money. You can charge them what brokers charge them, but keep the extra as profit.
Step #9: Develop a marketing plan aimed at client growth
Creating a digital presence can help you find and keep your clients, particularly if you’re trying to get away from load boards and brokers.
Your website is a homebase; all of your other materials point to it. It makes it easy for potential clients to:
- Contact you.
- See who your team is and who they’d be working with.
- See positive reviews of your company.
- Get a sense of your capability and trustworthiness.
Trucking is mobile, and an online presence makes it easy for shippers around the nation to connect. A professional online presence is necessary, especially if you’re cold calling shippers and producers directly—they’ll want to check you out before making a decision.
Don’t forget to have social media profiles (e.g. LinkedIn) as well as industry-specific online profiles and accounts (e.g. forums or message boards). Having that professional website to point back to from social media helps.
Step #10: Track and analyze your income and expenses
Key performance indicators (KPI) should be tracked regularly. These might include:
- Safety (speeding, fast braking/acceleration, crashes)
- Efficiency (fuel economy, deadheading miles)
- Compliance (hours of service violations, unassigned miles)
- Budget (fuel, payroll, maintenance)
- Taxes (paying too much/too little)
Some you’ll want to track weekly, others monthly, and others quarterly.
Some costs can easily get away from you if you’re not regularly tracking them. This includes fuel and labor costs. When I Work employee scheduling software makes it easy to stay on top of labor costs and watch for overtime issues before they get out of control.
There is a truck driver shortage in this country, and that opens a lot of doors for you as an owner-operator. No matter what happens in the economy, we are always going to need freight hauled and supply chains moving.
Tools like When I Work can empower your new trucking company to start, and continue operation, in a cost-effective manner by improving employee scheduling efficiency.