Launching your own business can bring you a lot of satisfaction financially and professionally. But it’s important to be realistic about the challenges of operating on your own. When you run a business, you make all the decisions, and you’re fully responsible for the outcomes. However, the rewards can be very motivating, especially in a high-demand industry like trucking. Are you already working as a truck driver and want to transition to independent work as an owner-operator? Are you looking to hire other drivers and grow a fleet? In any case, you’ll be a small business owner with more extensive duties than just driving a truck.
Here are five things you should know about starting a trucking business.
1. You Can Start Small
Financing your business idea can be challenging, no matter what industry you want to enter. Not everyone has enough savings to buy a fleet of the newest trucks on the market. And not everyone likes the idea of a loan, especially if they are already making other loan payments. If you worry about finding the funds to purchase or lease business assets, consider starting small. You can find well-maintained second-hand international trucks for sale at reasonable prices. Choosing a truck from a leading manufacturer means you will not have to worry about costly repairs. And starting with a used truck will lower the upfront costs, facilitating a more comfortable beginning. Starting small is also an excellent way to mitigate the risks of failure. Once you feel that your trucking business is on the right track, you can gradually expand your business operations.
2. Startup Expenses Can Be High
A trucking business needs substantial financing in the beginning. Long before you can take your first order, you have dozens of startup expenses to cover. In general, starting a small business is difficult without access to significant funds, but things are even more complicated in the trucking industry. The essential equipment and business assets can cost the annual salary of an average worker. And then there are other startup expenses such as licensing and regulatory fees, maintenance costs, insurance, accounting services, fuel, and possibly employee pay. So, be realistic about what you can achieve with your available funds. Ideally, you should have enough money to get through the first six months of business operations. Having a good cash flow is essential for growing your business. Once your business starts making money, you will earn back your investment.
3. You Must Be Diligent About the Paperwork
Another essential thing to know about starting a trucking business is that you will have to handle a lot of paperwork regularly. From the very beginning, you have to set up your business structure correctly to avoid legal repercussions. So, begin by registering for the proper forms. As a business owner in the trucking industry, you must get all the necessary forms before your truck is allowed on the road. Without registration papers, licenses, permits, and proof of insurance, you cannot operate commercially. And the list of papers you need can get long. As you start your business operations, you will have to file tax returns regularly and do your bookkeeping. Since the legal requirements can be extensive, it can be helpful to hire specialists who can ensure that your business is 100% compliant with the laws. For example, having a good accountant will make your life a lot easier. An accountant knows precisely how to interpret tax laws and what deductions you can take advantage of as a trucking operator.
4. Good Cash Flow Management Is Essential
Even if you have clients lined up right from the start, it will take a while until your trucking business brings in money. It’s not uncommon in the industry for operators to wait one, two, or three months for their customers to pay. And running a trucking business can be costly. Fuel, fleet maintenance and repairs, back-office costs, payroll, insurance coverage are only a few of the expenses that you have to cover in order to keep your trucks on the road. Thus, having a good cash flow can be extremely helpful. To manage your cash flow efficiently, start by tracking your operating costs. When planning your investments, take into consideration payment delays. Consider asking your clientele for security deposits or advance payments whenever they place a substantial order.
5. You Will Wear Many Hats as a Business Owner
If you enjoyed your experience as a truck driver, you may think that being an owner-operator makes more sense financially. But owning a business is a lot different than being an employee. Consider this aspect carefully if your experience in the truck industry is limited to driving. As a driver, your only fundamental duty is to move your cargo from one location to another safely. What happens before or after is not your concern. However, as a trucking owner-operator, you have to wear many different hats daily. Your duties will vary widely, especially if you operate alone. You will have to attract clients and maintain communication, prepare paperwork, chase overdue invoices, answer calls, and file taxes. However, if your workload becomes a burden, you can outsource various tasks. Even so, you still need to be familiar with all the operations associated with running a business because you may have to fill in whenever an employee or contractor is absent. Considering all these aspects, it’s safe to say that running a trucking business is not for everyone. However, since there is a massive demand on the market, you can grow very fast once you learn to embrace the challenges.
Starting a trucking business can be very lucrative, but the industry is highly competitive. If you are a professional truck driver or have experience in the business world, you have a significant advantage. But if you are new to either trucking or business, you must adopt a learner’s mindset and be ready to develop entrepreneurial skills. Once you adapt to the fast-paced structure of the industry, growing your trucking business will seem easy.