How To Start A Trucking Company: How Much It Costs, Planning Guide, & Financing Options
A trucking company could be a profitable small business, but it's important to research your niche and local laws before you get started. Read our guide to find out more!
If you want to know how to start a new trucking company, read on. If you are hesitant because you’re not sure whether starting your own trucking business is too risky, or if starting a small truck company is worth it, these trucking industry trends prove how much owning your own trucking company is worth:
- Trucks carry about 72.5% of all tonnage in the U.S., according to the American Trucking Association
- 69% of hauls are less than 500 miles (so it’s absolutely possible to start small and local), according to the American Transportation Research Institute
- The average profit margin of a trucking company is 4.55%, according to USA Truck Inc.
- The average salary for a truck company owner is $199,616/year, according to ZipRecruiter
Keep reading for step-by-step instructions on how to start a trucking company, plus tips for running a successful trucking business.
Table of Contents
Is Starting A Trucking Company Right For You?
Starting a trucking company is right for you if you understand how the trucking industry works and how it will evolve over time. To start a trucking company, you will need to choose a trucking niche, understand federal and local compliance standards, hire the right employees, and find a sustainable amount of shipping customers. Do all this, and you will own a profitable trucking company.
Some people have some amount of money set aside to purchase licenses and permits, finance equipment, hire drivers, buy insurance, invest in technology, and purchase fuel. However, it is possible to start a trucking company with no money through trucking loans, grants for truckers, semi-truck financing, and other forms of financing.
Is Owning A Trucking Company Profitable?
Owning a trucking company is profitable.
According to the American Trucking Association U.S. Freight Forecast to 2032, truckers currently move about 72.5% of the total domestic tonnage and accounted for 80.4% of the domestic freight bill. The revenue derived from primary freight shipments in the U.S. will increase from an estimated $1,083 billion in 2021 to $1,627 billion in 2032.
Also, according to USA Truck Inc., the average profit margin for a trucking company is currently 4.55%.
The real beauty of the trucking industry is that it’s easy to start small and scale up as your cash flow increases. You can start off as an owner-operator, then invest in more trucks, hire more employees, and secure larger contracts.
How Much Does It Cost To Start A Trucking Company?
Starting a trucking company can cost anywhere from $10,000 (at the very best) to $30,000 or more. This price will vary depending on whether you already have a truck or not, where you are located, and how long you have been driving a truck.
Typically, you are expected to put a 10-20% downpayment on a new vehicle and pay the rest over time. You can also get an equipment financing loan to help you purchase new equipment.
At a minimum, you’ll also have to pay for different types of business insurance, truck insurance, permits, operating licenses, license plates, workers’ comp or occupational accident insurance, an electronic logging device (ELD), fuel, and miscellaneous items like tire gauges and reflective vests.
You’ll also need to factor in business software like accounting and payroll software. Here are the top payroll software for trucking companies.
Starting A Trucking Company In 9 Steps
Admittedly, there’s a lot of research and paperwork involved in starting a trucking company. Defining your brand, choosing your trucking niche, finding the perfect trucks, and securing those first contracts make the less exciting parts worth it.
Here’s how to start a trucking company, from your initial business plan all the way to landing shipping customers.
Step 1: Create A Business Plan
Creating a business plan is important because it helps you identify your goals, costs, target market, and profitability. It’s also a necessary part of many small business loan and grant applications.
Your business plan should include the following:
- Executive summary
- Company overview
- Market/industry analysis
- Target customer analysis
- Competitor analysis
- Operational plan
- Financial plan
- Management team
- Sales/marketing strategy
Read our post on how to write a one-page business plan to help you get started, or drill down on business planning tips below to learn more.
Step 2: Name & Register Your Business
Next, you will pick a business name and register your new trucking business. You will also need to choose the right business structure for your trucking or transport business.
Step 3: Obtain Licenses, Permits, & Insurance
The trucking industry is highly regulated and highly dependent on the state you live in, the kind of vehicles you have, the cargo you’re carrying, and where you’re driving.
There may be additional licensing, permit, and insurance requirements depending on what state you’re operating in, so check in with your state’s Department of Transportation before sending any trucks out on the road.
Step 4: Apply For Financing
You don’t want to clear out your entire savings account to start a trucking company, especially since small businesses don’t usually generate profit or break even in the first year of business.
Instead, apply for financing to get your business up and running while maintaining a personal financial safety net. Here are some of your trucking company financing options:
SBA (Small Business Administration) Loans
The Small Business Administration (SBA) offers four types of loans for small businesses to use for financing equipment, working capital, and business expansion. You can also use an SBA loan to purchase inventory, equipment, and real estate outright.
Read our SBA loan explainer post to determine if you’re eligible for a loan and whether SBA loans are your best option.
Commercial Truck (Equipment) Financing
An equipment financing loan is a secured installment loan where the loan collateral is the equipment you’re purchasing. You’re usually expected to pay around 15% of the equipment price upfront, then a lender will provide a lump sum of money. If you default on your loan, the lender will repossess your equipment.
Read more about the different types of equipment loans and how to get one.
Small Business Term Loans
There are several short-term and medium-term business loans for truckers that are great for startups. You pay short-term loans off over one year, whereas you pay medium-term loans over one to five years.
Read more about the different small trucking business loans for more information on which term loan to apply for.
Grants For Truckers
You can also start your own trucking company with trucker grants. Look in these five places for trucking company grants to find startup funding.
Step 5: Purchase Or Lease Trucks & Equipment
When you purchase a truck, you typically acquire it through financing and pay for it over time. When you lease a truck, you can use it for a predetermined amount of time, but you don’t own it. At the end of the lease, you can choose whether to buy it or return it.
There are many pros and cons of an equipment financing lease vs loans, but in general, you should only lease equipment if you can’t afford a downpayment for equipment or qualify for equipment financing.
Step 6: Hire & Train Staff
How To Hire For Your Trucking Company
You can use a CDL truck driver staffing agency and/or post your job listings online to find new staff members. Post on job listing websites, your website if you have one and on your business social media accounts. Word of mouth is also a powerful recruiting tool, so let your connections know that you’re hiring.
Be specific about the kind of hours your drivers can expect to work, the amount of experience you expect them to have, a salary range, and the minimum requirements for the job.
Driving Experience & Commercial Driver’s License (CDL)
Your drivers will, at a minimum, need a CDL, which may vary in class depending on the loads they will be transporting. Your insurance may require your drivers to have at least two years of driving experience.
Truck Driver Training Programs
When it comes to training staff, it’s best to develop a training program focused on both overarching education and hands-on training. Provide educational materials on safety, local traffic laws, company policy, etc. Give hands-on training behind the wheel or through simulators.
Consider working with a training program development team to create your program. It will be worth the money when you consider the amount you could save on accidents, as well as an increased employee retention rate.
Step 7: Find Loads & New Customers
First, determine your ideal shipper. What industry are they in? What do they ship and where? How much do they have to haul? Are they established and do they pay relatively quickly? Once you identify the type of shippers you want to work with, you can:
- Sign up for online load boards
- Work with reliable freight brokers
- Join associations in the industry you want to ship for (e.g. join a retailers’ association)
- Research businesses you’d like to ship for and cold call them or try to meet them in person to discuss a potential relationship (this is hard for newer trucking companies, but working directly with shippers is the most profitable way to get loads)
- Use a load-matching app
Step 8: Manage Payroll For Your Trucking Company
Truckers can be paid in several ways: hourly, salaried, per-mile, per load, etc. You need a flexible payment management system to capture all those unique scenarios. Look into our best payroll software for small businesses to start your payroll process on the right foot.
If you’re ready to start adding employees to your payroll, learn how to hire your first employee in 15 easy steps.
Step 9: Track Your Income & Expenses
You need to track your income and expenses to determine the financial health of your company. If you’re putting more money into your company than you’re putting out, then you’ve got a cash flow problem. In those moments, you’ll need to adjust your business plan.
Also, there are several tax deductions that trucking companies can claim, so keep those expenses on record for tax season.
Track Costs With Fuel Cards
Fuel cards are used at certain pumps and are restricted to only fuel purchases. You won’t need to get fuel station receipts anymore, because charges on fuel cards display exactly how much your company spends on fuel.
Also, many fuel card providers offer fuel discounts at certain pumps, which saves your business money, especially on long hauls. Choose one of our best fuel cards for truckers to start your fuel payment and expense management off right.
How To Run A Successful Trucking Business
Now that you know how to start a trucking company, here are a few tips on how to run and grow a successful business: