Want to know how to start a trucking company? In this article, we will discuss seven steps to be successful.
Small trucking companies and their owners and operators keep our country running. And in today’s current economic standing, the demand for carriers is at an all-time high.
Trucking is the bloodline of industry and our economy, and now is the perfect time to start your own trucking company.
Starting a trucking company in today’s world can be overwhelming.
Where do you start?
In this guide, we’ll walk you through navigating the process to get you hauling.
1. Start your trucking company and gain authority.
To get your trucking company up and running, you’ll first need to decide what type of company you want to form.
Some carriers choose the sole proprietor route, but we recommend forming an LLC due to many factors.
Forming as an LLC tends to be a pretty straightforward process that can help get you rolling faster.
Once you have obtained your LLC, or other company type you will then need to obtain two major authorities: your U.S. Department of Transportation Number and Motor Carrier Number.
Applying for your United States Department of Transportation (USDOT) Number will grant you authority to transport interstate, and the Motor Carrier operating authority Number, from the Federal Motor Carrier Safety Administration (FMCSA) will allow you to transport across state lines.
Generally, this process from submission to approval takes on average 30 days for most companies.
2. Find your future loads.
When you’re just starting off in the trucking industry, you will have to build your customer basis from scratch.
Often, online load boards can be a start to finding and securing loads to haul.
For example, larger brokers such as TQL, J.B Hunt, and C.H Robinson have their own load boards directly on their websites.
Another way that is often overlooked is accessing your own personal network.
Contacting other truckers and companies you have worked for or crossed paths with can help you find potential loads.
Lastly, utilizing dispatchers can be another great avenue to finding loads.
At Provident Commercial Finance, we have relationships with several dispatchers and have connected our trucking clients with them when they struggled to find loads.
Using dispatchers can simplify the process of finding loads.
They do the searching and contacting of brokers for you. Sometimes they will also complete the paperwork in terms of invoicing for you.
This can be a great option for the front-end side of running a business, especially for companies just getting their foot in the door.
Here are some links to major load boards
3. Protect your cash flow, know who you’re hauling for.
The goal for all businesses every day is all the same, getting paid. After getting your company on the road, getting paid is crucial for your long-term survival and success.
The worst thing that can happen for a starting trucking company is to fall into a nonpayment issue on an invoice.
With truck and equipment payments, insurance, fuel, and other costs, you need to protect your cash flow.
Avoiding working for brokers/shippers with a history of nonpayment should be a top priority when choosing loads. And you should routinely check the credit of your customers before you haul a load for them.
This helps you assess brokers and shippers and identify any unnecessary risks before it’s too late.
Some load boards have credit ratings of potential clients to show on average, how fast they pay.
And if working with a factoring company, they’ll also run credit on the broker.
At Provident Commercial Finance, we run credit checks on each broker you may deal with.
Factoring companies like ourselves are dialed in on how well and fast brokers are paying.
As an industry, we share data to better understand how different brokers are paying. We also have a whole team supporting you, pulling and running credit, handling collections, and ultimately making sure you get paid.
4. Know your expenses.
Something often overlooked is all the expenses trucking companies endure. Drivers that were leased to another company or company drivers can underestimate expenses. Some significant expenses include financing payments, fuel costs, truck maintenance repairs, and the most considerable bear in the trucking industry, insurance.
Insurance is the most significant burden on a starting company due to the initial downpayment and monthly payments to follow. Some other costs to consider are food, showers, cleaning costs, office expenses, and so on.
As you can see, these expenses can add up real fast. We suggest that you understand your costs well.
Once you know them all, you should add them up and calculate a per-mile expense figure. This figure can be used to accurately bid on loads and ensure you pick only profitable loads.
5. Save on fuel costs.
No matter where and who you haul for, one expense that will always follow you from point A to point B is your fuel costs.
Today, many apps can show your distance to truck stops and compare current fuel prices. One significant help with fuel costs is getting a fuel card.
These offer support in controlling and tracking your fuel purchases. When you use a fuel card like ours, we have partnered with TCS which helps offer various benefits.
We offer one significant benefit: we can fund our carriers the same day they sell us their invoices.
Our card also offers generous fuel discounts. These discounts can range from $0.60 to $0.70 off per gallon, which adds up when you are filling up your company’s trucks.
This fuel card program can also grow alongside your company.
If you add more drivers to your team, our fuel program can also support them. Help provide that same discount to all employees and control funds for each employee using our fuel card program.
6. Manage your cash flow.
One of the most significant steps in the journey on how to start a trucking company is making sure you can keep your trucks running as you await payment from your first loads.
At this point you’ve had to pay many expenses. This can put a tremendous financial burden on any company, and once you haul a load, you often have to wait 30, 60, or even 90 days for your customers to pay.
Can your company survive this period as you wait for payment?
A line of credit from a bank to keep your trucks running may not always be available. An alternative to bank financing is utilizing a factoring company.
At Provident Commercial Financing, we can protect your cash flow by purchasing your invoices.
Instead of waiting for the customer to pay, you can get an advanced percentage of the load within 24 hrs after delivery to have the funds to pay bills and keep your trucks on the road.
7. Get back-office help.
After scheduling deliveries, securing loads, paying drivers, and maintaining your fleet at the end of the day, you are crunched for time.
However, you’ll still need to make time for paperwork and collecting payment. Without the right system in place, the time spent running your trucking company is in jeopardy. Partnering with someone who can help with billing paperwork and collections can streamline the process so you can focus your time on operations.
That’s where we come in. We can function as your back house staff. When using a factoring company, we handle billing and invoicing communication with brokers and the collection of payments.
Taking this off your plate can help keep your focus in the right place and is why companies stay partnered with us for the long haul.