Many of the largest trucking companies in America began with one driver, their truck, and a dream. Like any business, starting a trucking company is difficult, and success is often elusive. But, it can be done. Whether you plan on starting with one truck or a fleet, the basic steps to start a trucking company are the same.
To help you think about the process, we’ve put together this list covering the basics of how to start a trucking company. If you're looking for the abbreviated checklist of this article, check out How To Start A Trucking Business Checklist.
Step 1 - Gain Experience
Newcomers to the trucking industry are frequently advised by veteran owner-operators to gain truck driving experience as a company driver before taking on the challenge of starting a trucking company.
Why? Because learning to operate a commercial vehicle in various situations comes with a steep learning curve and rookie mistakes—like getting stuck, backing into things you shouldn’t, and other mishaps—happen quite often to new drivers in the trucking world.
Added to the challenge of learning to operate a big truck is the challenge of learning to successfully run your trucking company, which comes with its own steep learning curve. What are the advantages of gaining experience before launching your own operation?
- Large carriers are committed to providing their inexperienced drivers with the training and guidance required to become successful truck drivers.
- Large carriers can easily absorb the cost of mistakes that would put an inexperienced driver who started their own company out of business.
- You are able to focus on learning how to operate safely and in compliance with federal regulations.
- You will learn how to run tight schedules without violating hours of service regulations.
- You will gain familiarity with what it costs to operate a commercial vehicle in terms of maintenance, fuel, etc.
- You will learn how the business works by doing research, reading trade journals, CloudTrucks blog posts, and joining social media discussions.
- You can start developing your network with other drivers and shippers which will come in handy when you launch your trucking company.
- You are able to learn the nation’s freight lanes so you can make better decisions about the type of cargo your future trucking company will transport.
- Working for a large company first helps you make sure trucking is the right career choice for you before you’ve invested large sums of money into starting a trucking company.
Gaining two to three years of experience driving for an established carrier is an investment in the success of your future trucking company. Once you’ve gained experience, you’ll find yourself better positioned when it comes time for the next step of starting a trucking company—setting up a business plan.
Step 2 - Set Up a Business Plan
Starting a trucking company isn’t something done on a whim. To be successful, you need to have a solid plan in place before launching your operation. There are plenty of factors to consider when developing your business plan. Here are a few examples:
- Know what niche you will focus on (dry van, tanker, flatbed, etc.)
- Research the maintenance costs and durability of the common power units (trucks). Repair shops charge different rates according to the engine and manufacturer. Finding the right balance can reduce your operating costs.
- Do you need certain permits and CDL endorsements? (Hazardous materials, bulk liquids, etc.)
- Will you need to purchase a trailer for the niche you’ve selected?
- Determine how much money you will need to set aside to cover operating costs and common maintenance needs such as new tires, oil changes, and fuel.
- Will you operate in all 48 states or focus on a smaller region? This matters when it comes to how much you have to spend for state-specific permits.
You can also create a business plan projecting 3-5 years ahead so that you have an idea of where you are going. Generally, business plans include:
- Executive Summary: a short explanation of your company and what your purpose is as well as briefly touching on how you will achieve your goals
- Company Description: a description specific to your company and what it will do, what its mission is, and what sets you apart
- Operations: everything related to the ‘how’ of your company, such as technology, staffing, and systems for running the company day-to-day
- Services: what you will offer to customers; if it’s clear for you, it will be clearer for them
- Market Analysis: analyze what the current market is like and how your company will be able to fit into it
- Sales and Marketing: a game plan for bringing in customers
- Financial Projections: realistic expectations for revenue and profit and how you will meet those goals
These are just a few suggestions for planning. Keep in mind that the more you research, the better your plan will be. Once you have your plan in place, it’s time to start on the paperwork.
Step 3 - Complete All Paperwork
The trucking industry is heavily regulated by the federal and state governments so there is a considerable amount of paperwork involved such as:
- Establish the business entity (LLC, Inc., LLP). Incorporating makes sure your business is properly structured and effectively separates your personal from your business. This includes determining your business name and setting up an EIN (employer identification number) with the IRS. (Your EIN is like a social security number for your business and is needed for opening a business bank account as well as required for tax filings.)
- Acquire licenses (apportioned plates, etc.), and permits relevant to your intended area of operations and type of cargo. Of course, you’ll need your CDL. But other important licenses and permits include your USDOT number and a BOC-3 filing.
- Acquire motor carrier operating authority. You have two options. The first is to obtain your own authority, which can be expensive. Filing fees start at $300. The second option is to drive under another company’s MC authority. For example, CloudTrucks allows owner-operators to drive under our MC authority and we handle all freight negotiations for you. You can even bring in your shipper contacts. Head over to our Getting Started page to learn more.
“CloudTrucks allows owner-operators to drive under our MC authority and we handle all freight negotiations for you.”
To start your trucking company off on the right foot, it is essential to complete all required paperwork and pay all required fees before beginning business operations.
Step 4 - Acquire Necessary Equipment
Start buying the equipment (truck, trailer, etc.) you planned for in step two. At this point, you’re probably not generating any revenue, so avoid overextending your budget by buying items you don’t need yet.
The two main things to consider:
- Does the vehicle accommodate the cargo you are planning to transport?
- Would buying or leasing be better for your company?
Here are a few tips when it comes to purchasing a truck and/or trailer:
- Older equipment is cheaper to buy but more expensive to maintain than new equipment.
- Look for a truck make and model with a proven track record for good fuel performance, durability, and reasonable maintenance costs.
- If you’ve spent two or three years working as a company driver, you’ll have a better idea of your needs and a network of fellow drivers and truck mechanics to consult with before finalizing your equipment purchases.
- If you’re lacking cash reserves to purchase equipment, leasing is always an option. However, the ongoing costs associated with leasing will affect your business. Research leasing practices, learn about the additional costs, and compare offers from different leasing companies before making a final decision.
- CloudTrucks offers owner-operators leasing opportunities with our new Road to Independence program.
Once you’re up and running, you can acquire any additional items that you need virtually anywhere in the country thanks to a well-developed national support industry focused on serving truck drivers.
Step 5 - Get Insured
Make sure you are insured before getting out on the road and launching your business. There are different types of insurance for companies, so consider your options and choose what works best for you:
- Primary Liability: To cover damage or injury where you are at fault
- Cargo: To cover damage to or theft of cargo
- Physical Damage: To cover damage where you are not at fault
- Passenger Accident: To cover injury of passengers in your truck
Step 6 - Get Loads and Grow Your Business
Once you’ve completed steps one through five, it’s time to start making money by getting loads. We also wrote an entire article on methods of finding loads. To summarize, as an owner-operator you have three options for finding a load:
- Load boards - these are like classified ads for the trucking industry. Shippers and brokers post loads and owner-operators can take their pick.
- Shipper relationships - This method may cause additional delays in getting your first load if you haven’t been networking with shippers ahead of time.
- Freight brokers - A sure way to find a load but expect to hand over 25% - 50% of your load revenue to the broker.
You will need to have a strong cash reserve if you use these methods as it may take up to forty-five days to get paid for your first load and every load after that. It’s important to understand how freight payments are processed and the delays that occur. You also need to anticipate and cover your expenses while you wait for these accounts to settle.
The CloudTrucks app is a great way to find loads. Once you’re approved, browse the loads and choose the ones you want. Plus, check out instant payments with our CT Cash card so that you can start profiting sooner.
Step 7 - Manage Your Business & Run a Successful Trucking Company
Transporting your loads is only half the battle. You must also manage your business operations. Invest time in growing your business knowledge and developing good management habits. To that end, here are some suggestions to help you on your way to success:
- Keep track of your income and expenses like insurance, legal fees, and maintenance.
- Debt is risky, so borrow only what you need when you need it.
- Thoroughly review all shipments, and factor in the cost of maintaining your equipment, taxes, fees, fuel, tolls, etc. when determining if a load is profitable.
- Maintain a healthy cash reserve for unexpected repairs, time off, and those times when loads get scarce.
- Use CloudTrucks to optimize your schedule, find loads, and maximize your revenue.
Step 8 - Maintain Compliance
Maintaining compliance with state and federal regulations is essential for sustaining long-term success.
- Keep track of all expiration and renewal dates for licenses, permits, filings, and insurance.
- Make sure the paperwork you’re required to keep on board your truck is in an accessible and easy-to-remember the location.
- Maintain safe vehicle operations at all times including following hours of service regulations, weight restrictions, and other safety regulations. Failure to do so can negatively impact your CSA safety score and make it impossible to haul loads for certain shippers that require good safety scores.
The last thing you want when you’re headed to a scheduled pick-up is to be put out of service for non-compliance and hit with hefty fines. It can damage your relationship with your customers, add additional expenses, and quickly put you out of business permanently. It’s also the easiest potential problem to control simply by reviewing your legal documents on a regular basis.
Starting a trucking company is a challenge, but you don’t have to do it alone. As a virtual carrier, CloudTrucks stands ready to support you throughout your career as an owner-operator. We allow you to operate under our authority or drive under your own with our new Flex program, help you find loads, and assist you with back-office paperwork while giving you the freedom to succeed on your terms. Head over to our Getting Started page to learn more.