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These days, many entrepreneurs have decided to develop businesses within the trucking sector. If this is the case for you, now is the time to gain advice and information regarding how to start your trucking company. Below you'll find just four pointers you can use to keep your trucking company on the road to success.
As you probably expect, running a trucking company takes a few key pieces of equipment. A truck is essential for obvious reasons, but a truck alone does not a company make. You’ll definitely want a few different types of trailer to allow you versatility in your hauling capabilities. While you may not need a refrigerated trailer while you’re first starting out, you’ll definitely want to buy yourself a box trailer and probably a flatbed as well. A car trailer could be a good purchase as well, as the ability to haul cars can open up your business options.
There are dealers around such as Truck Country, Great Western, and a variety of others that specialize in semi-trucks and trailers. These specialized dealers are a great way to shop around and see different makes and models of truck and decide what would work best for yourself. It’s also convenient to be able to make multiple purchases all in one place. All of this equipment adds to the overhead needed to get you going. At the end of 2014 the average cost for setting up a full rig was almost $175,000, with the truck itself running around $110,000 - $125,000, and each trailer sitting at $30,000 - $50,000.
If you plan on buying multiple trailers you could easily end up spending up to $300,000 to get yourself started. Of course, that’s assuming that you plan on buying everything new. If you were to look into buying second-hand equipment you could make breaking into the industry a much easier task. Contacting established trucking companies to ask about buying their used machines is a good place to start for this, as many of the larger companies routinely update their fleets.
As you may already know, newer truck operations tend to rely on load boards to gain clients. While this approach is tenable during the incipient stages of the business-building process, it is not a long-term solution. This is the case because the bidding process that transpires through load boards results in trucking companies dealing with rock bottom prices. Another pitfall of load boards is that the relationship between client and customer is not always long-term. To wean yourself off of load boards, be sure to start building your own list of customers by making sales calls.
Sales calls might not be something that you were planning on doing when you decided you wanted to start a trucking company, but any entrepreneur’s fate involves trying to sell their services to potential customers. If you buckle down and work hard at building your customer base now, however, you will find that within a year or two you can pay someone else to find new leads for you.
Every business has issues with cash flow, as the ratio of incoming money to expenses isn’t always perfect. Sometimes you will find that unexpected expenses build up and hit you like, well, a truck. This infographic on the costs of running a big rig is a great resource to help you plan your finances. According to the infographic, about 9% of your annual cost will come from repair and maintenance. Unfortunately, not all of that will be routine. Like any vehicle, a truck can break down for any number of reasons.
You may find yourself needing to replace leaking tires, burnt out lights, or even belts or other engine components. If you chose to buy a second-hand vehicle to limit your total overhead, your truck probably won’t be covered by any type of warranty so any mechanical issues you run into will be up to you to solve. While these costs can be high, they are relatively small compared to the cost of fuel for your truck which will make up a whopping 38% of your annual costs. One good strategy could be to estimate high on fuel costs so you have extra room in the budget to use in case of a break-down.
In many cases, cash-flow issues arise because the shipper doesn't provide a quick-pay. In these situations, the trucking company might have to wait up to two months to receive payment for a load. One way to avoid this issue is through the use of freight factoring. With this kind of financing, you can obtain an advance on your freight bills. This way, you can attain immediate payment from a factoring company rather than dealing with a two month delay. Note that the accelerated payment will enable you to continue covering operational costs such as the purchase of fuel.
One of the first things you'll want to do in order to start your trucking company is securing your insurance. Keep in mind that there are several strict insurance rules and regulations that you will need to adhere to. For starters, note that you must attain insurance from a company like Integrity Transportation Insurance or someone similar for both your company as well as your vehicles.
Also note that some of the companies you transport freight for might maintain their own unique requirements. These requirements exist in addition to all of the federal requirements you'll be responsible for. With this reality in mind, you'll need to ensure that your current insurance policy meets the specific requirements of the companies you'll be hauling loads for. If you've decided to start a trucking company, it's important to get things going and growing as quickly as possible. Use the business strategies listed above to increase the likelihood that your trucking company will become increasingly successful with each passing day!