Cost of Operations worksheet from a trucking business class we attended. Enter your own numbers here and see what you come up with!
10 Things To Know Before Starting A Trucking Company - A Primer
Merriam-Webster defines PRIMER (in this usage, pronounced “primmer”) as a “small book for teaching children to read, a small introductory book on a subject, or a short informative piece of writing”. This article falls under the last part of the definition - a short informative piece of writing to outline the most basic things to know before starting a trucking company.
When most people in our industry say they’re going to “start a trucking company”, they usually mean they want to become an owner-operator. An owner-operator is just what it sounds like, a person who owns and operates the truck in their company. It’s typically a one man operation and that person is considered a self-employed trucking company owner.
As owner-operators driving a custom rig, my husband and I have often been on the receiving end of people asking us how they can get started in trucking and do what we do. It’s not hard, but it’s not easy either. There’s a lot of research involved and even more questions to ask – of others and yourself.
Since these questions usually come from company drivers wishing to strike out on their own, either by becoming an owner-operator or starting a company themselves to employ other drivers, they typically need to answer the same questions and be given the same general business start-up advice. For the purpose of this piece, I’m going to assume the reader already possesses a commercial driver’s license (CDL). If you do not have a CDL, you need to research the steps to do that. Start here at the FMCSA’s page answering the question “How do I get a Commercial Driver’s License?”
As with any business, every topic you research will branch off in many directions, with more research needed to gather information and more questions rising up that will need answering. Just keep going. The more you know, the more prepared you will be. The following is a brief list of questions to get answers to before thinking about starting a trucking business.
1. First of all, what kind of freight do you want to haul?
Some drivers haul anything and everything that works with their trailer type, while others specialize and do the same freight on a regular run. You will want to have an idea of what kind of freight you’ll be hauling before you go out and purchase equipment. There are many trailer types to choose from – van, refrigerated, flatbed, RGN (removable gooseneck), step-deck, tanker, etc. – and which one you’ll use will be determined by the type of freight you expect to haul. There are also many tractor types available, too, so you’ll want to narrow it down to the one that meets the specifications of your operation.
2. Once you’ve determined the kind of freight you’ll be hauling, you will need to buy the equipment necessary to move that freight.
While in the process of determining your equipment needs, you’ll want to figure out where you’re going to operate because some trucks are better suited for long haul operations than others and because these trucks and trailers are not cheap, you’ll want to get something that will work initially, then take you into the future if you plan to branch out. Equipment usually means a tractor and trailer. Tractors can range from $30,000 for a used tractor to $250,000 for a custom sleeper truck. Trailers can range from $10,000 to $120,000 depending on what kind of freight you’ll be hauling.
This is where you’ll be doing a bulk of your research. Go online, find some trucking forums, ask questions. Go to truck stops if you can and talk to drivers you see hauling the kind of freight you’re interested in. Stop by truck and trailer dealerships and find out what they’re offering and pick up spec sheets to become more knowledgeable. And if you can, hit one of the major truck shows – the MATS or GATS are great places to start – where you’ll find the best gathering of all things related to the industry. Trust me, you’ll leave with a goodie bag full of information!
This is where you’ll be doing a bulk of your research. Go online, find some trucking forums, ask questions. Go to truck stops if you can and talk to drivers you see hauling the kind of freight you’re interested in. Stop by truck and trailer dealerships and find out what they’re offering and pick up spec sheets to become more knowledgeable. And if you can, hit one of the major truck shows – the MATS or GATS are great places to start – where you’ll find the best gathering of all things related to the industry. Trust me, you’ll leave with a goodie bag full of information!
3. What business structure will you have?
The best business structure choice will depend on your personal situation. Read through the definitions of the available legal business structures, then decide which one is best suited for your business needs. The simplest, with the least amount of paperwork, is the sole proprietorship, but you will need to do your homework before deciding which works best. Entrepreneur.com has a great article titled Determining The Best Legal Structure For Your Business to get you started.
4. How will you handle maintenance and repairs?
Repairs can be one of the biggest money drains on your business. It’s not difficult to blow through savings if you’re hit with a big repair. Although your trailer may need an occasional repair, the big money repairs are usually done on the tractor. Good maintenance is a must when you’re running the show and maintaining your equipment should be a priority. It will cost you money, sure, but in the long run if you keep up with regular maintenance and take care of small issues before they become big, breakdowns and repairs come less frequently. Truck stops across the nation offer shops to help you keep up along the way, but if you have a local shop you come to trust, even better. If you’re mechanically inclined you can save a lot of money by doing your own maintenance and repair work.
5. Do you have an accountant?
Whether you decide to file taxes yourself or hire a professional, know that the trucking industry is very similar to other businesses as far as the need to file taxes goes, but we do have some industry-related specifics - per diem, fuel tax, repairs, equipment depreciation, etc. – and as a small business, there are numerous tax deductions you’ll be able to take advantage of. Running any business takes a lot of work, but preparing your own taxes might be a little over your head. Having a good accountant familiar with tax law, tax codes, and possibly even the trucking industry, will be extremely helpful.
6. Do you need special clearances or endorsements added to your license?
Many drivers will need a Hazardous Materials (HazMat) endorsement and possibly a Transportation Worker Identification Credential (TWIC) to transport certain freight or access shipping ports or military installations. Those are both available through the Department of Homeland Security. In addition to those two credentials, other endorsements may be needed to pull certain trailer types - tankers, doubles and triples, etc. – you can inquire at your local motor vehicle department regarding those. These all cost money that usually comes out of your own pocket but these special additions are typically good for two to five years depending on your state and the type of endorsement you get, and often provide advantages to you over other drivers when being considered to haul certain kinds of freight. Although it’s wise to get the manual from your state to study and review, these practice tests are helpful because the operation of the vehicle and the information needed for the endorsements are generally similar. I’ve used them many times finding the repetition helps to solidify the information in my mind.
7. What kind of business license, permits, regulatory documentation, insurance, etc. do you need? And what about complying with electronic logging device (ELD) regulations?
Registering your business with your state is one of the first steps you can take in making your company official. Trucking is a federally regulated industry and whether you’re intrastate or interstate, there are some requirements you’ll have to meet for both. The links below will allow you to access the information you need to get started in these areas.
Get your USDOT Number and your Motor Carrier (MC) Operating Authority Number through the Federal Motor Carrier Safety Administration (FMCSA).
Get an International Registration Plan Tag (IRP) and your International Fuel Tax Association (IFTA) decal.
Go to the IRS website to find out about filing your Form 2290, Heavy Highway Vehicle Use Tax (HVUT) Return.
Check the FMCSA website for Electronic Logging Devices information.
In addition to all of this, you’ll need insurance for your business – liability, bobtail, cargo, etc. – making sure to check minimums and get enough to cover cargo damage. There are several companies that deal primarily with the trucking industry and they can help you get started with determining what fits your operation.
8. Do you want to be an independent contractor leased on to a large carrier or do you want to do everything yourself?
Many owner-operators lease on with a large carrier who will handle everything from finding customers, to doing most of what’s listed above in #7. This leaves you to drive, maintain your vehicle, and prepare and pay your taxes. Leasing your equipment on to a company means they’ll take a small percentage of what the load pays, which is often worth it, especially when you’re first starting out and learning the ropes of being independent. Other drivers handle everything themselves, using load boards such as GetLoaded or DAT to find loads, which they book themselves and then deal with payment on their own or through a factoring company. You will need to do your research on this to determine what will be the best path for you.
9. Do you have money or credit to fund the equipment you’ll need, in addition to a small stas to get you through the first 6 months.
Start-up expenses include equipment purchases, licensing and regulatory fees, insurance, maintenance costs, employee pay, etc. Start-up and operating expenses are a big concern when creating any business, but in trucking, some of the equipment can cost as much as an average person makes in a year. Sometimes, even as much as one would pay for a house, so you have to be realistic about what you can afford from the outset and what you can keep going. If you don’t have this kind of money lying around, you’re going to want to look into financing for what you need. Do this homework early in the process.
10. Are you a member of the Owner-Operator Independent Drivers Association (OOIDA)?
If not, join today! The OOIDA is a North American international trade organization dedicated to the interests of truck drivers. As a member of OOIDA, you will be supporting the only organization that represents the nation’s small business truckers. OOIDA fights for your rights. They are your voice. They are your advocates. They represent us to the lawmakers in Washington, D.C. and let them know how truckers feel about what’s happening in our industry. Since 1973, the year OOIDA was founded, they’ve been fighting for the rights of professional truckers and continue their mission to this day. In addition to being on top of policies and regulations that affect our industry, they offer truck insurance, health and life benefits, retirement plans, rebate and discount programs, education and business tools, classes, and more. It’s a vital part of our industry, and well worth the $45 per year for the membership. They’ll even send you a free monthly magazine!
If not, join today! The OOIDA is a North American international trade organization dedicated to the interests of truck drivers. As a member of OOIDA, you will be supporting the only organization that represents the nation’s small business truckers. OOIDA fights for your rights. They are your voice. They are your advocates. They represent us to the lawmakers in Washington, D.C. and let them know how truckers feel about what’s happening in our industry. Since 1973, the year OOIDA was founded, they’ve been fighting for the rights of professional truckers and continue their mission to this day. In addition to being on top of policies and regulations that affect our industry, they offer truck insurance, health and life benefits, retirement plans, rebate and discount programs, education and business tools, classes, and more. It’s a vital part of our industry, and well worth the $45 per year for the membership. They’ll even send you a free monthly magazine!
These ten steps are just a guide to get you started, but they should push you in the right direction. As with any endeavor, it’s best to gather as much information as you can and move forward with some kind of plan. If you’re already driving a truck, you have some of that information already, which will make the transition to owning your own business that much easier.
Surf the net, stop at truck stops to pick up industry magazines, and don’t be afraid to send emails to people like me who work in and write about the industry. What I’ve found being in this business, is that drivers are willing to share information, whether they help you themselves or point you in the direction you need to go to find the answer to your questions. This is very much within your reach. I wish you the best of luck!
2017: Shores Lined With Fir
2016: #NeverKale
2015: Blue And Yellow Make Green
2014: An Instagram Glimpse Of Interstate 64
2013: More Fun Than Mr. Potato Head
2012: Triage
2011: They Claim To Have The Most Sky
2010: No Escape
2009: Help Wanted. Must Have Own Cassock.
2008: It’s All An Illuuuuusion
2007: Tipping Point
2006: Snap Decision To A Healthier Life
2005: Lazy Hazy Crazy Days Of Summer
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