Last Updated on January 17, 2021
If your 2021 goal is to start a new business, you’ve picked a great year, especially if you want to learn how to start a trucking business. With a high demand for over-the-road trucking, you can start a successful business if you pick a niche and do it right.
Reasons to Start a Trucking Business
If you’re looking to work for yourself in 2021, a trucking business is a great place to start. Here are the top reasons to consider it:
- It’s affordable even if you don’t have a large amount of money to start.
- You don’t need to own trucks to start a trucking business – you can rent and/or hire owner operators to work for you.
- You don’t need a big office space; you can run the business from your own home.
- It’s rewarding to know that you’re helping the economy by moving goods across the country.
How Much Does It Cost to Start a Trucking Business?
Like any business, starting a trucking business has initial costs everyone must pay to get up and running. On average, trucking business owners need $10,000 – $20,000 to start.
The fees vary by state and owner, but in general, include:
- Registration and permit fees
- Truck down payment
- IRP plates
- Heavy vehicle use tax
- Other state taxes
In addition to your startup costs, trucking companies have ongoing costs (like any business) that you should be aware of including:
Fixed costs are those that are ongoing either monthly or annually. In general, truck company owners pay the following monthly fees:
- Truck payments
- Insurance payments
Truck company owners also pay the following fees annually:
- Permit costs
- License or plate renewal
If the trucking business has employees, they’ll also have payroll costs either weekly or bi-weekly depending on the format they choose.
Trucking companies also have variable costs (costs that change each week depending on the amount of work). They include:
- Truck maintenance
- Truck repairs
- Lodging (for over-the-road drivers)
Tip: This article is next in the series of How-To. If you are also interested in other business ideas, please check out the previous articles.
How Can I Start a Trucking Business with No Money?
Most people need at least some money to start a trucking business, but if you don’t have the $10,000 – $20,000 needed for traditional startup costs, there are a few options:
- Look for financing that doesn’t require a down payment or requires a lower down payment. Non-traditional lenders may have options that are more affordable for you upfront. Just watch the financing fees as they tend to be higher because of the higher risk lenders take. You can even start with one truck if necessary.
- Consider renting equipment. If you have some money to get by each month, but not enough to make a large down payment, consider renting equipment. You may find month-to-month leases or even rent-to-own opportunities that help you get started without a large amount of capital.
No matter how you obtain your equipment, always make sure you have enough money for ongoing expenses including fuel, insurance, repairs, and license plate renewal. If you need money to start up, consider asking friends or family to invest in your business. You may also apply for various grants including a Small Business Administration Grant or the National Association for the Self-Employed Grant.
Best Way to Advertise a Trucking Business
All businesses need to advertise, especially trucking business to get ahead of the competition. Today it’s easier than ever to advertise using the following methods:
- Use social media – Start a Facebook and LinkedIn profile and post helpful information. Don’t try to sell right off the bat – instead, show that you’re a leader in the industry and the sales will naturally come in.
- Start a website – Your website should contain all the information potential clients need to get them to call you. Don’t give away your pricing on your website, but give them reasons to want to call you based on the information provided. Show the value-added services you’ll offer.
- Network – Join trade associations and network as much as possible. If they have events (in person or virtual) attend as many as possible. Let the industry know what niche you specialize in and why they should choose you.
- Ask for referrals – There’s no higher compliment than referrals from past customers. Ask past clients for reviews for your website or social media page. Also, ask them to refer you to anyone they know who needs trucking services.
Is Starting a Trucking Company Profitable?
Like any business, a trucking business can be profitable if you plan accordingly. Each year the industry grows more and more, despite the tariffs. It employs more than 8 million people as of 2019, with the number growing at faster rates during the pandemic.
Like any business, in order to be profitable, you must run a ‘smart business.’ This includes:
- Choosing a niche – Don’t try to do it all. Choose a niche, market to it, and offer over-the-top customer service because you know the niche so well. Look for areas that larger companies don’t specialize in because then you’ll solve a pain point for companies.
- Know your costs – You can’t determine your rates until you know your costs. Look at both your fixed and variable costs.
- Figure out your per mile rate – Check out what competitors charge for the same size and type of loads. Get quotes from at least 10 brokers and determine what you want to charge based on what’s already out there.
Compare the prices you can charge to your overall costs and decide if it’s profitable. If you don’t find enough profits in the niche, look elsewhere. The sky is the limit for trucking companies – you just need to find the area that will make you the largest profits when you look at how to start a trucking business.
Why Do Trucking Companies Fail?
Any business can fail, but trucking companies are at higher risk when owners don’t forecast expenses properly.
Owners must account for both fixed and variable expenses. Most fixed expenses are easy to predict/budget, but many owners don’t budget for variable expenses well enough, putting them under quickly.
With fuel prices changing rapidly, maintenance costs unpredictable, and regulations changing often, it can be too much for businesses who don’t have enough capital to withstand the financial changes.
Start Your Trucking Business on the Right Foot
Starting any business is scary and will involve ups and downs. If you do your research, ensure you have enough startup capital and have reserves to see you through the downtimes, you’ll enjoy a profitable business that can last for many years to come. Do your research and learn how to start a trucking business and you’ll have a viable business for many years to come.