With many industries experiencing layoffs, it has some people searching for new careers with more opportunities that can withstand an economic downturn. One of the industries that still has strong demand is the trucking industry.
There has been a shortage of truck drivers that has existed for years and still persists today. So for those willing to take the plunge, owning and operating your own truck can put you in the driver’s seat of a new career that is more recession-proof than most.
Not only that, some owner-operators can make over $110,000 per year, which puts it on par with several high-paying professional jobs.
In this article, we’ll look at the needed steps to become an owner-operator and start your own trucking business.
What You Need to Know First About the Trucking Industry
Although a trucking business can be a great opportunity to be your own boss, it still requires careful consideration before starting. As with anything, there are pros and cons that have to be considered to make sure it’s the right fit for you.
However, if after careful consideration you believe starting a truck business may be right for you, you can experience great success as long as you follow some key steps that will help you avoid the most common pitfalls others may face.
Steps to Start a Trucking Business
Starting a trucking business is actually a very straightforward process. At first glance, it may seem a bit overwhelming due to the various requirements, but all of these steps simply need to be done in the proper order.
Below, we’ll look at the key steps you must follow to get your truck business up and running.
Develop a Comprehensive Business Plan
A business plan is essential for every business, whether it be a local small business just starting out or a multi-million dollar tech startup. A business plan acts as your road map to guide you on your journey.
Just like you would follow a map to your destination to avoid getting lost, a business plan allows you to stay on track as you build your business from the ground up.
Obtain a Commercial Driver’s License (CDL)
Driving a truck requires a special type of license known as a CDL or commercial driver’s license.
To obtain this license, you will need to take both a written and a driving test at your local DMV. Since this is a test, you need instruction on how to complete both the written and driver portion of the test.
There are many schools that offer these classes, and some even provide incentives for completing the course.
Determine the Business Structure
All businesses need to have a legal structure. This can be a sole proprietorship, a partnership or a type of corporation such as an LLC.
You’ll want to research which one works best for you. A common choice is an LLC because it offers legal liability protection as well as possible tax advantages.
An LLC can also be easier to manage than other types of corporations that require more bookkeeping.
Obtain Trucking Permits and Licenses
Different types of trucking may require different permits above just your CDL. So this step will depend on the type of trucking you choose and the materials you plan on carrying.
The additional licenses may be state-specific or federal. A great place to start is your local DMV. Simply contact them, and they will help direct you to local permitting information regarding your type of driving.
Open a Business Account
This step is very important and is one that is often overlooked. You will need to open a separate business bank account to handle the finances related to your trucking business.
Don’t make the mistake of using a personal account as this can cause tax and even liability issues down the road.
Opening a business bank account is only possible after you’ve registered your business as we outlined above. This is why it’s best to follow these steps in order.
Almost all drivers will need to finance their trucks in some way. This can be a lease or through traditional financing.
You also have options such as financing a new truck or looking for a used model. A used model can save you considerable money, but you have to be aware of any maintenance issues.
If you lack experience with trucks, sometimes a new truck is a better option if you can afford it. If you do want to consider a used truck, try to find an experienced trucker in the industry who can help you pick a reliable one.
Buy or Lease a Truck and Trailer
Once you have your financing in order, you can purchase your truck. This process is similar to buying a car and once the financing is in order, it’s just a matter of choosing your truck and going through the paperwork.
Once it’s all done, you can simply drive your truck off the lot.
Obtain Trucking Insurance
Just like any vehicle on the road, you will need insurance for it. Trucking insurance for a commercial vehicle is a little different than passenger car insurance, but most major insurance companies provide this service.
Your lease or financing agreement may require specific insurance. Your local state regulations may also require certain coverage. Your insurance agent or insurance company can help you navigate this process.
Establish Your Brand
At this point, you are officially the owner of a trucking business, which is a very exciting prospect. Now, you can start to build up some marketing materials for your brand.
This can include a simple website, business cards and social media profiles so potential customers can find out about your services.
Join Load Boards
Most independent truckers find work on load boards. These are internet sites where various companies post loads that need to be transported and truckers can bid on the jobs (loads).
It’s important to note that these jobs/loads are just one-time events. You pick up and deliver the requested load and then you are paid.
Joining these boards can be free for truckers or sometimes require a small monthly fee. It’s best to choose a few boards and monitor them closely for the best jobs.
You may find some boards are better than others for your particular needs, so experiment and try a few out to see which offers you the best loads.
Benefits of Forming a Business for Drivers
It’s important to understand that being a truck driver means you own a business. That means even though it’s just you, you still have to run your operation like a business.
The reason is that doing so gives you a lot of advantages.
- Setting up your business as an LLC or other structure may give you certain tax advantages that are not possible otherwise. This can save you considerable money.
- Forming your business properly protects you from certain personal legal liability in the unfortunate event you are sued or are involved in an accident.
- Forming a business and having a business bank account makes you look like a professional business that is run responsibly and in accordance with rules and regulations.
- Forming a business can also help with obtaining a business loan and lines of credit.
How Much Does It Cost to Start a Trucking Company
This exact figure can vary quite a bit as it depends on many factors. For example, are you starting with one truck or do you plan on buying more than one and hiring drivers?
Also, will you be buying new trucks or financing older models to save money?
All of these things will have a big impact on your specific costs. However, it’s important to note that many costs should be seen on a monthly basis, as your trucks will likely be financed.
For example, let’s look at the cost of a truck with a total price of $150,000.
With a downpayment of 10% or $15,000 and a 5-year loan at 5% interest, your monthly payments will be about $2,500.
Remember, your truck may cost less than this if you purchase a used truck or one with fewer features. Overall, trucks can be priced anywhere between $40,000 and all the way up to $200,000 for the highest-end models.
Insurance can cost anywhere between $1,000 and $1,667 on average.
These may seem like high expenses per month, but it’s important to know that truckers can be paid up to $2.50 per mile. So a single 500-mile load can bring in $1,250, minus fuel costs.
Many truck drivers use factoring companies, which allow for payments much faster after a load is completed in return for a small fee.
Ready to Start Down the Road to Financial Independence as a Truck Owner-Operator?
Starting a truck business as an individual can be a great way to provide financial security for yourself.
If you’re ready to get started, let doola help you with our business tools made for entrepreneurs just like you. Our business registration and bookkeeping services help you get up and running quickly without the hassle of messy paperwork or complicated filings.
Contact doola today to learn how we can get you started on the path to owning your own successful trucking business.
Is the trucking business profitable?
Yes. How much you make will depend on several factors. But some owner-operators can make over $110,000 per year according to Salary.com.
Is starting a trucking company easy?
If you do your research and follow some of the steps outlined in this article, starting a trucking company can be easy. However, it does take hard work and dedication as well. Working with a company like doola can also make registering and running your business much easier.
How many trucks do you need to start a trucking company?
You can start a trucking company with just one truck or as many as you want. The choice is yours.
How do I start a trucking business with one truck?
You will be what’s known as an owner-operator, which is very common in the trucking world. You can find independent loads to haul on load boards or work privately with a few clients.
How can I start a trucking company with no money down?
If you have good credit, a solid business plan and all the needed permits, you may qualify for no-money-down financing on a commercial truck loan.