All You Need to Know to start a Trucking Company
About the trucking business
The trucking business can be very profitable, but it is incredibly competitive. Many truckers try to get into the business every year and end up failing.
This outcome usually happens to people who are great truckers but are not good business owners. Knowing how to run and grow your trucking business takes more than knowing how to drive a truck or choose a route.
These steps will point you in the right direction. They help you make the transition to becoming a successful business owner.
Before moving towards the pointers that you must take under consideration make sure that you have a plan mapped out, what you are actually hoping to come out of this business. But make sure not to set your bar up too high as it takes time for it all to flourish. So, start slow and work your way up.
Make sure to have an Emergency Cash Reserve
This is by far the #1 reason we see new ventures going out of business. It is very common for an excited individual to enter the transportation industry and decide to transition from a leased driver into leased owner operator. Trucking is a great opportunity but the profit margins are very thin! In the immortal words of Benjamin Franklin: “Watch the pennies and the dollars will take care of themselves.” Is excellent advice. Which leads us to the need for an emergency reserve. We have all heard Murphy’s Law “If anything can go wrong it will.” This could not be any truer than in trucking! Truckers are targets for all kinds of calamities. Everything from DOT officer shakedowns, tire blowouts, broker scams, the list is really too long.
How can you solve this issue?
We highly recommend a reserve of 60-90 days of cash reserve for rainy days.
Trucking is not for the weak hearted
Too many overzealous idiots jump in to the deep waters of trucking with a truck and a dream! Before long the dream and the truck are gone. Some good advice from Sun Tzu the famous war philosopher: “The general who wins the battle makes many calculations in his temple before the battle is fought. “It takes a whole lot more than a truck and a CDL to be successful in trucking. We come across many people who have no idea how to calculate their base operating cost per mile and that a variable costs per mile calculation even exists.
Your three best friends when it comes to the Trucking Business
- Book keeper or an Accountant: An accounting specialist is a Non-negotiable. Don’t waste any more time moving forward without a trust worthy bookkeeper! Seriously it is that important. There is just way too much going on out on the road for you to have time to handle the bookkeeping correctly. Plus, we know you could let your spouse do it for you to save money. You can go cheap on a lot of areas this is one that will put you out of business if you screw it up.
- Safety & Compliance Consultant /Attorney. There are several attorneys out there now that can provide legal & compliance advice including safety consulting services. We are going to just be blunt and say it – the government is NOT on the side of trucking companies. When in doubt the rules are going to focus on the needs of the general population and NOT what is best for trucking companies. We all want trucking companies to have safe operations this is a fair and reasonable expectation. However, we are now approaching the level of government oversight and regulations that you need someone and possibly a team on your side. This is what your attorney does; it is his job to protect your rights and your company! Now more than ever before you need an attorney that is an expert in trucking. There really is no room for error. Hire a bad driver and you are screwed. You let your safety scores get out of control, go park the truck and you are done.
- Insurance Agent; There are a lot of agents out there saying they can get you a free insurance quote. Which is true. There are even a few agents out there that actually specialize in trucking insurance. The important thing for trucking companies is service after the insurance is bound. Does your agent allow you to have 24/7 access to your certificate? Many brokers’ book emergency loads that pay the best after 5:00 what are you going to do if your agent is closed for the day? How do they handle claims or policy changes? Do they answer the phone with a real person that can take care of what you need?
Find and make your 3 new Best Friends ASAP!
Know all your Options
- Option 1 –Stay a driver or switch to owner operator. I know this might sound silly but it is a viable option to fall back and consider. Do you have what it takes to be your own boss? It is not a weakness to admit that staying on as a professional driver is the best decision for you and your family! In many circumstances working with the right company you probably would make a whole lot more money, have improved stability and a happier home life.
- Option 2- Choose Corporate structure. We don’t want to spend a lot of time on this here is the bottom line: you have to choose between sole proprietor, S-Corp, C-Corp, LLC. There are pros and cons to each. This is when we refer you back have an attorney best friend.
- Option 3- You have to choose which one is the right service provider for you. Check the authorities in your area.
- Option 4- Choose an insurance agency/agent to post your insurance filings and service your insurance contract for the next 12 months. This falls under our previous section of choose your new best friends.
- Option 5- So you decided to Not lease on to another trucking company that means you have to choose: A. Be my own dispatcher or B. Hire a dispatcher. This is a critical decision because the wrong dispatcher/brokers can and will put you out of business before you can make 4 more payments on your truck!
Think about these options BEFORE you decide to start spending money on anything.
Know Your Trucking Success Formula
It is true that in trucking the formula is MILES = $$$. However, money is not success. Success is more than money. Success is defined differently per the individual and has different meanings. However, for many in the trucking business success is freedom or it means more time with their family or leaving a financial legacy or you fill in the blank. The key here is for you to begin with the end in mind. It is hard to draw a map to a destination if you don’t know what the destination is. Plus, it is self-defeating to begin with a mental picture of what the end goal is if that goal turns out to not really be what you thought you wanted.
All these steps will be of great help especially if you’re new to a business in general, so make sure to consider them. You’ll be thanking us later!