Whether you’ve been dreaming about starting a trucking company for years or you just realized it was your next play, mapping out your transportation company’s first steps and long term plans could make all the difference between smooth sailing or a bumpy road ahead. What you do before you get out on the road can help you get your company set up, operational, and even profitable more quickly.
Starting a trucking company? Your answers to these 14 questions can help you get off to a faster start.
What will your company be called?
If this sounds like an elementary first step to you, you’re correct. Coming up with a name for your trucking company shouldn’t be an afterthought. You’ll be saying this name to clients, friends, family, and strangers for years – or even for the rest of your life. It’s also going to be the face of your business. This is your chance to be creative, think about what you want to be known for, and incorporate the values and goals that are most important to you into your trucking company’s name.
What will your niche – or main focus of operations – be?
Lots of trucking companies know how to move things from point A to point B, but looking past this basic concept, what – exactly – do you see your trucking company moving? In the early days of your startup, it’s especially important for you to streamline operations and stay focused on those services that will help you win in your industry. This includes deciding on aspects of the business such as “local or national” and “commercial or residential” ahead of time.
Once identified, find out who your competition will be in this space. Is the market saturated? Why will customers choose your business instead of an established competitor? What are their strengths and weaknesses? Your competitor’s areas of weaknesses or services they have overlooked could represent places where your new trucking company could make inroads right out of the gate.
Is your target audience already well-defined?
You may plan to provide services that are already in demand, but you may also be a visionary who sees an as-yet unaddressed need in the marketplace. If your target market is already well-defined, it may be easy for you to reach out to prospective clients. If not, you will need a marketing plan that helps you reach and persuade those who need your services (or who will need them soon) but who may not be fully aware of their need yet.
How will you reach your target audience?
Here’s where your main focus and your target audience meet! Having identified those companies or individuals who need what your trucking company will offer, you need to lay out a plan that will help you reach them effectively and efficiently, and come up with the features and benefits that will help you persuade them to patronize your business. When starting a trucking company, knowing who your ideal customer is and how to reach them is critical.
How big do you want your fleet to be?
There’s always room for growth as you find success, but deciding where you want to start is a big key to your growth. Start too big, and you may run into problems with volume and waste. Start too small, and you may not feel like your company is living up to its potential. Based on the need in your niche – or area of focus – and the size of your potential customer base, you need to know how many trucks you need now and how many you will need to acquire in the future In order to fulfill demand and stay ahead of the competition.
In addition, knowing whether you have enough start up capital and anticipated cash flow to keep up with licensing and compliance as well as all of the costs of maintaining, operating and repairing trucks may also affect your decision about fleet size.
What equipment do you need?
Even if you plan to work independently as an owner-operator, you will still need equipment, and it’s not just about semi-trucks and trailers. When starting a trucking company, you may also need tools and maintenance equipment, supplies, office equipment, a sophisticated smartphone, a laptop with Wi-Fi or tablet with wireless service plan, equipment that improves driving ergonomics, facilitates breaks and sleeps, and more. Talking to other owner operators who have already established their trucking companies can help you identify the equipment and furnishings you want to have right out of the gate.
How will you keep the books?
One of the main things small business owners wish they had known or done better when starting their companies is the financing. Bookkeeping can be complex, especially when you factor in items like taxes, payroll, tolls, fees, gas, oil, tires, and other expenses. Before you take on your first load, it’s smart to have a bookkeeping system in place that enables you to keep track of expenses, generate invoices, track receivables, and (if needed) pay yourself and other employees.
Many trucking companies choose to factor receivables with freight factoring companies. If you choose to factor freight bills instead of waiting on customer payments, you may be able to turn all of your receivables work over to your freight factor, which can free you up to stay focused on growing your trucking company instead of worrying about how long your customers are going to take to pay. The other benefit to you is that you can expedite cash flow from day one when starting a trucking company – you don’t have to wait until you’ve built up a long sales history to speed up cash flow.
What will you charge?
The rate you charge for transportation services must cover the expenses you need to pay monthly, ranging from installment payments on your semi-truck and trailer (or other equipment) to payroll, employee benefits, commercial insurance, repairs, and operating costs of maintaining and running your fleet. While those costs all add up, you’ll also have to set your rates in light of marketplace rates and what customers are willing to pay. Another aspect of rates to keep in mind is that they change. As fuel costs and other expenses rise, raising your rates in light of input costs as well as strong demand annually (or even more often) may need to be considered.
What will your payment terms be?
This is a very important question! You may be able to use generous customer terms as a competitive advantage or you may be required to grant important customers long payment terms – in fact, they may have the power to set their own terms with transportation companies. You can offer flexible payment terms and work with large customers without worrying about cash flow by factoring trucking invoices with a company like ours. You can also choose to extend early-pay discounts to your customers to encourage them to pay more quickly, which can also help you expedite cash flow. In either case, you need to take the cost of extended terms, discounts, or factoring fees into account when setting your rates as well.
Who will your drivers be?
If your goal in starting a trucking company is to build a fleet, you need to think about the types of drivers and other employees you want to hire and how you will go about finding the right people to work for your company as it grows.
When it comes to drivers, you have a couple of options when deciding how your trucks will operate: private drivers or sub-contracted drivers. In the case of private drivers, your company is responsible for 100% of licensing, insurance, vehicle purchases, maintenance and operating costs, payroll taxes, employee benefits, and so on. Private drivers are employees who work directly for your transportation business. In the case of sub-contracted drivers, many are independent owner-operators themselves and are usually responsible to buy and maintain their own vehicles, licenses, etc. As with anything there are pros and cons to either working with independent business owners or hiring your own employees.
How will you set your trucking business apart?
Other than having a great name and business plan, you’ll need to think; what will make my trucking company different than the others? This is what is referred to in marketing as “differentiation.” It’s the one thing that sets your company apart from competitors, or the main reason people should choose to do business with you instead of the other options they could select. Here are some examples of ways you can set your trucking company apart:
- Customer Service
Let’s face it: Many business owners say customer service sets them apart but can’t give you specific proof (or worse, the customer experience is often sub-par). If customer service is going to differentiate your trucking company, prioritizing customers will need to be job one.
Like Nordstrom’s return policy or Amazon Prime’s customer care, you must put your money-time-effort where your mouth is in order to take the phrase “We provide great customer service!” from cliché to reality. This might even mean making decisions that hurt your trucking company on occasion to keep customers happy. Put yourself in the shoes of your customers at each and every touch point to ensure you are effectively anticipating and meeting their needs.
One way you can prove your transportation business provides superior customer care is through customer testimonials. With each newly-satisfied customer comes an opportunity for you to capture their happiness in reviews, ratings, testimonials, and videos that you can use as social proof.
- Technology
When starting a trucking company, especially if you have the ability to purchase new or cutting edge equipment, you may be able to create an immediate competitive advantage with technology. Using technology in your trucks, apps for your drivers, and supply chain technology to streamline your process will not only help set you apart, but also helps your bottom line.
Who do you want to partner with?
Although you may hope to have an actual business partner, this is not the type of partnership we’re referring to. Strategic partners can help you when starting a trucking company or when you want to grow your business to the next level. These are partners who provide services such as vendors and suppliers, insurers, equipment and vehicle financing companies, freight factoring companies, landlords, service companies, maintenance providers, fueling stations, trucking fuel cards, transportation industry associations, discount purchasing programs (like TruckersB2B) and so on.
While your company is ”the customer” in these cases, you should think strategically and choose to do business with companies that share your values and whose programs and people truly want to see your new company succeed. Look for partners who understand the needs of startup transportation businesses and view partnering with you as a long-term investment instead of just a short-term sale.
How will you get the capital you need?
Whether it’s $100 or $10,000, every business owner usually needs some kind of capital to start-up a company. When you’re starting a trucking company, make a list of what you need to purchase and what you need to be able to pay for to effectively operate your new transportation business. This includes things like a semi-truck and trailer, but might also include money for marketing and advertising, bookkeeping expenses, and other operational costs.
After answering the questions above, you’ll have a strong idea of what you need for equipment, licensing, supply chain, operations, and day to day costs for your business. Whether you plan to invest and borrow money or use your own capital, a detailed plan will set you up for success down the road. Best case scenario, you’ll know what you need to startup and even run your new company for a few months with the startup capital you have, so that you can gain momentum and get customer payments coming in on a regular basis.
How will you grow?
Depending on how large you hope your trucking fleet will grow to be, it’s important for you to have thought through the types of services you could add to grow your business, the type of equipment you need to expand transportation services or take on bigger customers, office and operational employees you will need to hire, and how you will promote your trucking company to make your plan for growth a reality.
Depending on cash flow and reserves, you may even want to explore potential financing options or investors you could tap into when you need to purchase capital assets (such as semi-trucks, trailers, office, garage or storage space, etc.) to grow your company, or when a fast-emerging opportunity presents itself. The clearer your vision when it comes to your trucking company’s focus and future, the easier it will be to write a business plan that accounts for growth so that you’re ready when the time is right.
There are many success stories about successful transportation startups, but they often have this in common: A detailed startup plan, a clear vision, and relentless execution. As you answer these questions about your trucking company, take the time to finalize everything and don’t rush. The trucking industry is changing and evolving, so make your plan better than the rest.
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