Trucks carry around 70 percent of freight in the United States. Coming at a distant second are trains, while ships come in at third place. This makes a trucking company an appealing option for entrepreneurs looking to start a new business.
Even though the industry was among the hardest hit by the pandemic when it started, the gradual recovery of the economy has allowed it to get back on track. So, if you are planning to enter the transport business, here are some tips you can follow.
Decide on the Business Structure
You can decide on the business structure you can use when you state the business. The business structure options are sole proprietorship, partnership, and limited liability company. Each business model has advantages and disadvantages. So, you need to decide which one meets your needs.
Sole proprietorships give you flexibility since you do not need to consult anyone if you implement policies in the business. However, you also absorb any losses that the business has during its operations.
Partnerships allow you to share the risks and debts of the business with your partner. It also means you have to share the profit with your partner. If you have more than one partner, the profit shared will be smaller.
If you opt to form a limited liability company, your personal assets are not at risk if the company suffers losses during its operations. However, profit is considered your income, so you should make sure to do the necessary paperwork in terms of taxes.
Get the Necessary Legal Documents
After selecting the business structure, you should start securing the necessary documentation for the business. You should get a federal tax ID number or an employer identification number (EIN). This allows you to file taxes, protect your business from identity theft, and hasten loan applications.
Aside from the EIN, you also have to get the necessary permits and licenses to operate a transport business. These permits and licenses include a commercial driver’s license (CDL), heavy load permit, insurance, and fuel carrier license, among others.
Create a Budget and Projections
You should also create a budget and projections for the business. The budget should cover all initial expenses, including the vehicles and equipment you’ll acquire for the business. You can also look for funding sources for the business. One place you can check for potential loan sources is the Small Business Administration. You can also include credit unions and local banks as possible sources of funding.
Creating revenue projections is also something you can do at this point. These projections give you goals to achieve for certain periods. It also gives you a guide on how much revenue you need to have to pay off any loans you will get for the business. Additionally, you should also consider the amount to set aside for the advertising and marketing efforts of the business.
Acquire the Equipment
The equipment you acquire for the company can determine the profitability of the business. If you purchase a panel van, you will not be able to offer your services to companies requiring flatbed trucks. On the other hand, if you have a semi-trailer, it would not be cost efficient if you only deliver small packages. So, you should plan before you buy the trucks you need for the business.
Aside from the trucks, you also have to consider the other equipment you need for the business. A hanging crane scale is a useful tool to have in case you want to check the weight of the items you are carrying. These scales are easy to store, and they have accurate readings. Lifting equipment is also necessary, especially if you plan on transporting heavy loads across the country. In addition, a portable ramp is useful in case you need to roll cargo into the truck.
Hire Suitable Employees
If you opt to set up a small trucking business, you may not need employees at the start. But once the business grows, having a hiring system may be necessary so you can get qualified employees for your business. You should make sure that the system complies with local and state legislation to avoid any employment-related issues in the future.
To grow, you need to hire drivers for the trucks you will acquire. Getting administrative and office staff also take a load off your shoulders when it comes to administrative and office work. In addition, maintenance technicians are essential to ensure your trucks are in tiptop shape. Human resource staff can also help you in the hiring process. To increase sales and revenue, you need to get marketing and sales professionals to promote the business.
A trucking business can be lucrative for entrepreneurs who want to take advantage of the continued recovery of the country’s economy during the pandemic.