There has never been a better time to start your own business. With potential driver shortages and increasing freight demands, there is definitely room in the market. Of course, starting a new venture can be overwhelming: where do you even begin? What are the first steps? How do you find commercial truck insurance? Luckily, you do not have to go it alone. Here are some tips on starting a small trucking business and finding truck insurance.
1. Buy or Lease a Truck
The equipment that you use will make up the most considerable expense in starting your business. If you have the capital, purchasing a truck outright may be the best option. New vehicles can cost well over $100,000. If that seems like too much to spend upfront, you might consider a used truck. Don’t forget, however, that you’ll also need to purchase a trailer.
Another option is leasing. Leasing allows you to get started with little to no down payments and no long-term commitments. With your start-up costs being lower, you can focus on other aspects of starting your business. Of course, leasing can be more expensive in the long run. Spend some time going over your business plan and finances before deciding how to proceed.
2. Obtain the Necessary Licensing
New trucking companies have to deal with a lot of paperwork. Double-check your state’s requirements and consider working with a small business attorney to ensure you get everything right. Here are some of the more common pieces of paperwork that you’ll encounter:
- FMCSA Number and Registration: The first step before you can officially start your company is to register with the Federal Motor Carrier Safety Administration and the Department of Transportation (DOT).
- IRS Form 2290: All trucking owners must fill out the “heavy use tax form” to ensure compliance with IRS policies.
- RP Tag and IFTA Decal: Your truck will require an International Registration Plan Tag and an International Fuel Tax Agreement decal. Requirements on obtaining these vary from state to state.
- CDL: Anyone who drives for your new company will need to have the appropriate commercial driver’s license.
- Business License: Most new trucking companies start out as limited liability corporations (LLCs). There are other structures you can consider, especially if you are starting your company with a partner.
- BOC-3 Form: When businesses plan on doing business across state lines, they need to establish the legal ability to do so.
3. Obtain the Necessary Insurance
There are a variety of cheap commercial truck insurance options for your new trucking business. It is essential that you fully understand your company’s needs and your state’s requirements. Operating without the necessary insurance could put your company at risk. Here are some of the significant kinds of insurance you should consider:
General liability insurance: The action of a driver on someone else’s property loading docks, truck stops, and mistakes made in delivery.
Primary liability: The damage your driver causes while operating your truck.
Physical damage: Property damage to your equipment from an accident or theft.
Non-trucking liability: Physical damages or injuries to others while your commercial vehicle is not under dispatch.
Motor truck cargo: Shipment in case of theft, wet/damaged, a breakdown in refrigeration, etc.
Trailer interchange: Non-owned trailer being used under a trailer interchange agreement.
Medical payments: Medical bills for your driver or passenger who is injured while traveling in your truck.
Un/Underinsured motorists: If someone else causes an accident to your vehicle and does not have sufficient insurance to cover damages.
4. Find a Customer Base
Now that you have a truck, have completed all of the necessary paperwork, and have the appropriate insurance, you are ready to get started actually working with clients. Finding work can take a bit of time at first, but after awhile, you can develop consistent customers that will keep you busy.
The first place you can go when starting out is an online load board service. These services are essentially online communities that help match truck services with customers. Some of these services require a monthly fee while others are free. It’s wise to sign up for multiple boards at the same time.
When starting out, consider accepting any request with a reasonable load. Your profit margins may not be as high in the beginning, but you need to take time to build a reputation. Any job you take is an opportunity to show off your professionalism.
To get more consistent customers, you’ll have to do a little marketing. The first step is to identify the exact kind of customers you want to target. Once you have a list of potential customers, try to set up meetings or make contact in another way.
You might consider joining a local trade association and attending industry events. Spent a little money on creating at least an essential website so customers can find you and so that you appear professional.
5. Plan for Growth
As your business grows, you’ll need to expand to keep up with the work. Expansion may mean hiring administrative staff to help with office tasks or bringing on additional drivers. To ensure that you find and keep great employees, create a recruitment plan. Make sure to pre-screen anyone who will work for you.
If you’re looking for drivers, make sure to check their driving history for at least five years. Finding great employees isn’t enough; you also need to retain them. Focus on driver happiness, along with cash-based incentives.
Growth also means making sure you are tracking everything appropriately. One of your first hires should be someone who can help with accounting issues, even if only on a part-time basis. Make sure to keep a cost sheet of how you are spending your money: fuel, upgrades, repairs, parking, taxes, supplies, and so on. Proper tracking will not only help you know exactly how much your company is making but will allow you to make decisions on how money is being spent.