How to Start Your Own Trucking Company in 2023

Starting a trucking company can be an intimidating business operation. But with help from trucking industry experts, it doesn’t need to be. Whether you have been a company truck driver with an established carrier or a new owner-operator, starting a trucking business can be beneficial.

Multiple steps must be followed to start a successful trucking business and avoid mistakes that will cost you. The following content will provide detailed information on how to start and grow a trucking operation.

Step 1: Develop a Business Plan

When starting in the trucking industry, the first thing that must be done is to develop a plan for your business. For both large and small trucking businesses, a business plan must be made. This plan outlines everything that the trucking company wants to accomplish. A clear plan will explain how the business will operate and will set guidelines for success.

How To Write a Business Plan for Your Trucking Company

Below are the essential elements that you should include in your new trucking business plan:

Summary of Business – This section sets the plans and goals of the business.
Company Description – Describe the company in detail, how it will operate, and its unique value proposition compared to competitors within the trucking industry.
Pro Forma – This section is a financial statement that sets our preliminary budgeting for the trucking company. It is imperative to determine what amounts of cash flow and revenue are needed for the business to compete and grow.
Services – Outline the services of the business including pricing, materials, and industries.
Define a Target Customer Base – Go into detail here about the target market, including size, customer base, and geographical region. Also, be sure to include an entire overview of the industry.
Sales and Marketing – Identify a strategy how to gain market share. Include a sales plan and implementation in this section as well.
Final Projections – Present financial goals and predict profits, cash flow, and sales forecast. Also, include a 5-year plan of business growth.

Good companies become great companies by adapting to the market, using comparative business advantages, and positioning themselves with customers with similar characteristics and cultures. Building a successful trucking operation first starts with developing a solid business plan.

Step 2: File for Your Trucking Authority

You cannot run your trucking business without having an active trucking authority. There are different authorities trucking industry regulations for different cargo types, and an MC number is issued through the FMCSA. Getting your own authority is a huge move as it allows you to get paid as your own business owner for hauling a load. When owning your own trucking company, you can decide to hire motor carriers or work independently.

For you to have an active trucking authority and start hauling loads, you must do the following:

Apply for your MC number.
File a BOC-3.
Get an insurance policy.
Apply for your Unified Carrier Registration (UCR).
Pay your Heavy Vehicle Use Tax (HVUT).
Set up your International Registration Plan (IRP) and get your apportioned plates.
Create an International Fuel Tax Agreement (IFTA) account. This is an agreement between the lower 48 US states and Canadian provinces.
Sign up for a drug and alcohol consortium.

It is important to remember that with an active authority you cannot run your trucking business. Once you start the application process for your MC number, it takes about two to three weeks for your authority to become active. In this time period, you must file your BOC-3 and insurance policy with the FMCSA.

Once your trucking authority goes active, you are ready to start hauling loads and getting paid. Typically in the trucking industry, it takes a freight broker or shipper 30, 60, or 90 days to pay on a load. These payment terms can be extremely difficult for a trucking company to afford to pay their business expenses.

Step 3: Choose Your Business Structure

The two most common entities in the transportation industry are Sole Proprietorship and Limited Liability Companies (LLC).

Sole Proprietorship

This is the most common business structure as it’s the easiest one to create. Under this entity, the sole proprietor owns the business himself. The company’s profits and losses are treated as income and losses of the owner on their income tax return.

The biggest concern of a sole proprietorship is a liability. If a lawsuit is filed against a sole proprietorship, it is essentially being filed against the company’s owner and not the business itself. The owner is completely liable for the lawsuit.

Steps to help when forming a sole proprietorship include:

When forming a sole proprietorship under a name other than the owner’s name, a “Doing Business As” (DBA) Certificate must be filed. DBAs are filed at the local clerk’s office where the company will operate.
Start the business. There is no additional paperwork that needs to be filed – it’s a quick and easy setup.

Limited Liability Company

A Limited Liability Company (LLC) has a lot more protection than a Sole Proprietorship but is also an unincorporated business structure. Since there is no corporate tax for an LLC, all profits and losses are reported on each member’s individual tax return. An LLC is not completely separate from its members, but the members are not liable for lawsuits filed against the business. This is the biggest advantage compared to a sole proprietorship.

Steps to help form an LLC include:

All documents must be filed within the state where the trucking business will be operating. Documents that need to be filled include Articles of Organization and an Operating Agreement.
Create an Operating Agreement. This works as an internal document that outlines how your business will run, the business you decide to operate, payroll and share of profit and losses. Some states require you to have an agreement, but you don’t need to file it with them. Articles of Organization is a required document from all states.

Learn more about the common types of trucking company business structures.

Step 4: Buying or Leasing a Truck

Some truck drivers may already own a truck before starting their own businesses, but that is not always the case. Deciding whether to buy or lease a truck is the next big decision that needs to be made. This decision will come down to personal preference and financial situation.

How to Buy a Truck

From a long-term perspective, purchasing a truck is a great option, and you’ll save thousands of dollars in the long run. A big advantage with an owned truck is the trucking insurance premiums will be lower than with a leased truck.

However, buying a truck required a large down payment. Usually, the down payment for a new truck is 10% of the purchasing price and 25% for a used truck. So, for a $100,000 new truck, the down payment would cost $10,000. If buying a truck isn’t in the budget, then leasing one is the next best option.

How to Lease a Truck

When you lease a truck, you are not building equity on it like when you buy, but at the end of your lease term, there may be a buyout price to own it. Since you do not own the truck, you may have to agree to certain lease terms. These terms could include keeping the truck in good condition until it’s returned, minus the wear and tear. Lessors also have restrictions on mileages and may be charged for going over.

A big advantage of leasing a truck is that the lessor will usually pay for its maintenance, and the monthly payments can be considerably cheaper than when you buy, with little to no down payment.

Should You Buy or Lease a Truck?

Assuming you have already obtained your commercial driver’s license and know how to operate a truck, an owner-operator’s next step is to get one. But should you buy or lease one?

This ultimately comes down to your financial situation and personal preference. If you plan to keep your truck for a while and can afford the down payment, buying a truck might be the way to go.

From a long-term perspective, it comes out cheaper. If you can’t afford a down payment or you like upgrading the truck you drive regularly, leasing may be a better option. There are several options for equipment financing to look into if you need additional help.

Step 5: Get Financing

The best and most cost-effective way to finance your trucking company is to partner with an established funding provider. It’s tough to wait 30, 60, or 90 days to get paid for a load, especially when you’re just starting out. Funding options, such as freight factoring, allow you to get paid for your loads faster, improve your cash flow, and help you get back to growing your trucking business.

The industry’s difficulty, plus keeping up with operating expenses, makes managing cash flow challenging for new and established motor carriers. Because trucking companies can experience cash shortages, banks can be reluctant to provide credit lines, or they will charge extremely high-interest rates.

A reputable freight factoring company like Porter will pay you in 24 hours on every invoice. The fast payments will free up your cash flow so you can keep hauling loads. A freight factor will also provide additional services like a free fuel card with advances and discounts, access to nationwide freight through dispatching networks, help with equipment financing, and additional trucking compliance assistance.

Step 6: Get Insurance

Insurance is one of the largest fixed expenses a trucking company will face. Various factors affect insurance costs, like age of equipment, commodities, hauls, radius, vehicle location, loss history, and your years in business. Here are some examples of common insurance coverage you’ll want to make sure your policy has covered:

General Liability Insurance: Protects the trucking business against any property damage or bodily injury that might occur without the presence of a truck. General liability insurance coverage keeps your company afloat in case of major accidents like a client slipping and falling in your office, a load getting delivered to the wrong place, or contractual exposures you may be involved in.
Non-Trucking Insurance: Pays for an accident when the truck driver is not under dispatch.
Bobtail Insurance: Insurance for the damages or injuries caused while a trailer is detailed from your truck, whether or not you are dispatched on a job.
Cargo Insurance: Covers the damage or losses to freight that is in transit from any external cause. This policy will pay regardless of which carrier is ultimately at fault. Damages that are covered include inappropriate packing, infestation, cargo abandonment, customs rejection, and employee dishonesty.
Physical Damage Insurance: This covers damages to your truck and trailer that result from an accident you are not liable. Your premium is based on the value of your equipment. Damages that are covered: collision, overturn, or natural disaster, even if you experience total loss.

Most of the insurance coverages are eligible as tax write-offs for truck drivers. Learn more about which types of insurance are eligible for tax deductions.

Step 7: Find Loads to Haul

There are a few different options for new trucking company owners to find loads and shipping contracts. First, it’s important to note that brokers won’t always work with new trucking companies if they don’t already have a reputation in the industry. One good option is using load boards. They provide an open market with accessible loads for new and established companies.

Building relationships with direct shippers is another option to find freight. Once you build up those relationships, it will be easier to access top freight. Talk to truckers you meet and ask them for referrals on their most reliable freight sources. This may get you in the door to work with some good shippers or brokers.

Step 8: Factor in Fuel Costs

Fuel is one of the largest operating costs that goes with driving a truck. The best and fastest way to save money is with a fuel card. Porter provides fuel cards with savings at over 14,000 gas stations nationwide, saving our drivers thousands of dollars yearly.

Owning and operating a motor vehicle is expensive, so saving money wherever you can is ideal.

Is Owning a Trucking Company Profitable?

Knowing how to start a truck company is the first step, and succeeding is the next. How much your trucking company makes depends on your decisions, but trucking is a good business overall. The following steps ensure you make a profit as a truck company owner.

1. Choose Profitable Loads

Owning a trucking company is profitable if you transport the right products. Choose an industry with less competition that offers work all year round and is necessary even during events like recessions. For example, transporting fresh food products will help you increase your revenue and have consistent business operations.

You can also focus on transporting high-value loads, such as electronics. Providing specialty services can also be profitable, as these shippers may have trouble finding other trucking companies to complete jobs.

2. Offer Competitive Rates

Before you approach a shipper with an offer, decide what you’re going to charge. Calculate your operating costs and possible business expenses, then estimate how much you should charge to cover these and still make a profit.

Remember to not overcharge, as other trucking companies may be competing for the same job at lower rates. The trick is to make a profit while remaining competitive enough so that shippers choose you over other companies.

3. Track Key Performance Indicators

Track your key performance indicators (KPIs) and improve them when you can. You can see how efficient your trucking business is and devise ways to increase your bottom line. Some elements to monitor include:

Fuel usage per week
Miles traveled
Hourly earnings
Total profit — excluding employee salaries

4. Select Direct Shippers as Clients

The clients you choose and how you work with them help determine your trucking business’s profitability. A common way to find jobs is to work through brokers, who work as intermediaries between you and shippers, and load board postings, which announce openings online. However, these methods take a percentage of your overall profit.

Instead of using these techniques, go directly to shippers concerning jobs. You can charge the same amount and receive all of the profit instead of paying a broker or board posting fee.

5. Partner With a Freight Factoring Company

Another way to profit is by working with a company like Porter Freight Funding. We ensure you have a consistent cash flow by paying you for your loads directly and then collecting the payments from your customers later. You can profit from our services by having cash available to make essential purchases and meet your trucking business goals.

Get Paid and Find Loads With Porter Freight Funding

Whether you’re thinking about taking the next big step or have just started a trucking business, you are going to have a number of questions that need answering. Understanding the trucking industry, keeping up with demand and following best practices will help you be a successful truck driver and company owner.

Working with a trucking factoring company can be very beneficial for new trucking companies. They provide trucking companies with consistent cash flow by paying them in 24 hours after they drop off a load. A trucking factoring company will also help its clients find the best paying loads.

If you’re looking to start your own trucking company or need help getting paid quickly, get in touch with us today. We are a leading freight factoring company that provides you with 24-hour pay on all invoices. Call us today at (205) 397-0934 or fill out this form and a factoring specialist will be in touch.