How to Start a Trucking Business in 8 Easy Steps
There is great potential in learning how to start a profitable trucking business even if you cannot afford to buy a single truck.
Moreover, the transportation and logistics industry holds vast potential through multichannel income streams.
Meanwhile, the competition is real, and you must prepare well before you start. That is why this article teaches how to create a profitable trucking business in easy steps.
Amazingly, before you discard this idea about investing in the trucking business, you don’t need to own a truck. Funny but true!
Moreover, I know of more than one person who went from a truck driver to becoming a truck business owner. That shows how realistic this investment is.
However, unlike people who invest in the business and fail, you can learn to avoid some of the common pitfalls. It is one thing to have business capital; it is another to know to run a successful business.
Undeniable Facts About Running a Trucking Business
- 91% of trucking businesses and companies have six or lesser trucks and make huge profits
- The logistics market is more of a B2B service that cut across all other sectors. For instance, health, commerce, education, international exchange, and need the logistics service.
- Logistics as a business sector will flourish under any import and export-driven economy.
- In Nigeria, poor infrastructure and effective alternatives ensure that 90% of the cargo move by road. In other words, road transportation is the most widely used means in the country with about 200,000 Km network.
- Nigeria realized total revenue of over 5.1 billion USD in 2019, indicating a Compound Annual Growth Rate (CAGR) of 5.8%.
- Some of the critical factors that determine the success of a trucking business are
- Cost of fuel
- Geopolitical events
- Labor costs
- Demand of services
- Government regulations
Significant challenges of the Logistics sector
One of the primary challenges people face when they want to start a trucking business in the logistics sector is capital.
But this business idea is unique in that you can start by leasing a truck for haulage until you can afford yours. No doubt that can be the joker that some people need to begin to make profits.
In other words, don’t limit your chances because you cannot afford to buy a truck. You can create a passive income from trucking business with ease.
However, right from the word ‘go,’ the following are significant challenges you must overcome to be successful:
- Time delays
- Poor tracking
- Service quality
Practical Step-by-Step Guide on How to Start a Profitable Trucking Business
The following steps can point you in the right direction about transiting from the idea stage to the profit-making stage. Isn’t that good news?
1. Write and Vet your Business plan
Never undermine the power of a strong business plan in any business idea you conceive. Our number one comes atop any ‘how to’ about any business idea.
So, begin by developing a trucking business plan that will summarize every thought in your head and the findings you make.
In addition, a business plan is a tour roadmap to success, which can evolve as the business grows.
Moreover, a business plan can help you with the organization, articulating your value proposition, identifying, and sticking to your goals.
It can even show you potential obstacles ahead of time.
Some of the essential things to cover are the
- Set a clear goal and define your objectives
- Cost of owning a truck versus leasing one
- Cost of fuel, truck maintenance, and other expenses
- Financial management and Insurance plan
- How to get loads to haul
- Strength, Weakness, Opportunities, and Threats (SWOT) Analysis of your business idea and proposition.
2. Incorporate your trucking company
Registering your business will serve several benefits both now and in the future. Business registration can separate personal ownership from business liabilities.
In other words, the company becomes a legal entity on its own, separate from individuals.
Moreover, incorporating your business covers all legal, tax obligations, and financial challenges on the corporate walkway.
In some countries, you need a registered agent, a permanent address, accessibility, and other requirements for business registration.
Although incorporations also have a side effect on taxation, studies subscribe to the most suitable registration plan for trucking.
On the other hand, if you need investors, some may insist on preregistration before funding. Moreover, you need legal documents to operate a bank account.
3. Find loads to haul and grow your business
Business never starts until you find the actual goods for hauling through your first customer. While you may need to start small, your first freight sets things in motion and grow from there.
Firstly, reach out to local businesses that may need transportation services or join networking groups. By building viable relationships in your niche, you create a formidable customer base.
Another way is to join relevant associations and trade shows, including apps and online platforms.
Meanwhile, you may have to be consistent with these options before you begin to get results. And while you do, keep running credit checks to build more confidence in your customers.
At the same time, focus on delivering high-quality service to your customers to retain them.
4. Measure your expenses in trucking
Being careless with your expenses is like digging holes into your treasure pocket. Therefore, it is vital to pay close attention to your trucking company’s business expenses.
For instance, bookkeeping software can help to keep track of the business finances. Moreover, some of the crucial items in your finance include
- Trailer finance payments
- Fuel
- Truck maintenance and repairs
- Salaries
- Other office expenses
Putting all these expenses in one place shows the actual cost of running your business. Thereby, you can also measure your business profits.
In addition, you can make a sound financial plan in the long run when you have all the financial information. If you can manage your expenses/income well enough, starting a trucking business can be your best decision.
5. Save money on fuel
Apart from the cost of owning a truck, a big part of your trucking business expenses goes into fuel. Therefore, a good management decision will always be to use a fuel card to monitor fuel usage.
At the same time, you can subscribe to great plans to save more money at the pump.
Moreover, don’t fall for the trick that the lowest fuel pump price often means cheapest fuel expenses.
Apart from state taxes on fuel, truck drivers also deal with IFTA, ensuring the same taxes for all states.
In summary, don’t buy with the pump price but the quality of the fuel while learning the best strategies. By the time you understand how this works, you can make safer and better decisions.
6. Manage your cash flow
When it comes to cash flow matters, your best chance of starting a sustainable trucking business comes to the fore.
Your knowledge of creating a trucking business is incomplete without a sure way to manage cash flow. Besides, how can one determine a profit or loss without it?
Meanwhile, certain expenses are recurring, such as buying fuel, insurance payments, and all. Besides, you can further plan your finances within a client payment cycle of 15, 30, or 45 days.
While you manage the delay, ensure you consider every determining factor that influences your cash flow.
You can even get a business going through fuel advances, redeeming cards, and income from other related services.
Moreover, if you need help mastering your cash flow, seek a financial mentor, which leads me to the next step.
7. Get help when you need to
Here is the point where you need to realize that a tree cannot make a forest. Whether starting the trucking business as a sole proprietor or partnership, you need a back office to grow.
Moreover, you can choose to do it all yourself or use leased drivers for your trucking operations.
As a lone driver, you can run the business with a laptop, internet connection, and a printer. Software for different purposes can increase your efficiency and profitability too.
Meanwhile, in employing workers, ensure you do a thorough interview and training to protect your business.
8. Choose effective Insurance plans
Your plan to start a profitable trucking business is incomplete without setting up the right insurance policy.
Meanwhile, begin by getting approval from the proper authority for all official and semi-official protection.
A typical choice is the Federal Motor Carrier Safety Administration, FMCSA’s public liability insurance.
This insurance covers both bodily injury and property damage while the government regulates its minimum deposit.
When you have a suitable investment for the incubation period, you can sustain the business. However, get ready to abide by all the rules and regulations of the trucking business in your country.
Conclusion
In conclusion, this article discusses how you can start a trucking business and make immense profits. Remember to also stick to the most important plans you have in stock and abide by your rules.
What if you get a commercial truck investment opportunity? It could even be one of the stock and bond investors for the logistics sector. You can partner with giant companies who need the specific service of a freight company to deliver goods.
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