How to Start a Trucking Company: Pro-Tips for Owner-Operators with a Vision
How to Start a Trucking Company: Be your Own Boss
You’ve worked as an owner-operator long enough to know that you’re ready for the next step. You know the industry and you’re confident that you can give customers high-quality service. What’s the next step in starting a small trucking company?
Read the tips listed below to find out what other small truck company owners have learned in their journeys.
Pay Off All (or Most) of Your Equipment
Figure out how much you have left to pay on your truck. Ideally, it should be paid off or very close to being paid off before you start your company. You’ll likely need to buy additional trucks to hire drivers, and that is a huge expense to take on. You do not need to still be paying on your own truck while taking on business expenses at the same time. The less debt you have as you head into business ownership, the more prepared you can be for repair costs and unexpected expenses.
Put Away Savings
As you may have guessed from the first step, money is one of the biggest challenges for new owners of small fleet trucking companies. You may think you’re doing well, only to suddenly find yourself in the red after paying your drivers, paying your insurance, and making monthly truck payments.
The early days of owning a truck company can be difficult. Business may ebb and flow, leaving you without a consistent paycheck for some time. Even if you do have regular customers, you’ll suddenly be dealing with 45-day pay cycles instead of 14-day pay cycles. If something happens to one of your trucks, you have to be able to pony up the money or credit to get it repaired quickly. In addition, insurance for owners of small trucking companies can be extremely costly.
As an owner-operator, you likely just have to pay for insurance that covers you and your truck. As a business owner, you have to cover all trucks that your company owns and all of your drivers. Having a healthy savings account makes it far easier to adjust to life as a business owner and deal with sudden financial crises.
Create a Thorough Financial Plan
Once again, on the subject of money, spend a good amount of time creating a budget and a financial plan. Some company owners head into this venture with a laid-back attitude, planning on paying bills as they come due and adjusting rates as they need to.
However, this can make it difficult for you to build a good reputation with customers and accurately predict your income. Draw up a budget that includes truck payments, a good amount for truck repairs and maintenance, business taxes, employee payments, insurance, and every other expense that comes up in the trucking industry.
Find Out What Makes You Different
If you read the stories of small truck companies that went on to become successful national companies, they all have something in common: their owners knew what set them apart from their competitors.
What can you bring to the market that other companies don’t have?
Why should customers choose you instead of a larger, more established company?
Answering these questions and outlining your vision for your company puts you in a position to make more sound business decisions.
Decide on a Pay Model
How are you going to hire and pay drivers? You may decide to work with owner-operators, a decision that may reduce your insurance expenses and overhead costs.
However, this limits your pool of potential drivers to those who have spent enough time in the industry to purchase their own trucks. If you want to benefit from the large pool of graduating drivers, you may need to consider a traditional employment model.
Don’t Under price Yourself
This is a crucial mistake to avoid when starting a small trucking business. As an owner-operator, you may look at what a company charges for a haul and immediately assume you can do it cheaper. Of course, being cheaper means more customers, right?
Actually, you may find that setting your prices too low can actually drive away larger companies.
The customers you do get, lured in by your low rates, may abandon you for another trucking company as soon as you try to raise your rates. This can lead to an exhausting career in which you are always trying to pay your drivers on time, collect from customers, pay your overhead, and somehow still have enough left to draw a salary. Avoid this altogether by conducting market research and setting fair rates that give you enough leeway to reinvest in your company.
Starting a small trucking company can be a great way to build a legacy for yourself and take your trucking career to the next level. It’s not a venture to take lightly. Learn from successful company owners and have a thorough plan to see you through any situation.