In today’s economy, while many aspects of daily life are getting consumed by the Internet, the need to move products from one location to another remains. Trucking companies tackle the logistics of getting those trucks to and from their destinations, including the distributor or shipping location to the final recipient. This can be a lucrative industry, but as with any industry, the startup costs need to be carefully calculated to ensure accurate financing. If you are considering starting a truck business, here are some costs you will need to cover:
- Purchasing the Trucks
The trucks themselves are one of your biggest expenses. Determine how much horsepower and hauling capacity you will need, and how many trucks you will need to have in your fleet, then price the trucks to determine the cost. If startup money is tight, don’t neglect purchasing new trucks — the extended warranty available with a new truck is invaluable because of the truck’s increased lifespan. If you do need to buy used, avoid anything over 10 years old to lessen the risk of costly repairs.
- Administrative Needs
Administrative costs include all of the expenses needed to run the business. These might include:
- Business registration fees
- Local business permits
- DOT licensure
- Office supplies
- Computer equipment
Check with both the Federal DOT website and your state transportation department to ensure you have all of the correct licensure in place before starting your business.
- Fleet Management Program
While it could be considered an administrative cost, fleet management programming is so vital to the overall job of running a trucking business that it deserves its own mention. Your fleet management program or telematics system will give you insight into how well your trucks are performing, how safe your employees are driving, where you can limit fuel consumption and how to best route drivers to their next location. These systems use GPS technology to keep you in touch with your trucks and drivers. The price varies tremendously, so take time to find one that is a good fit for your needs and budget.
Commercial trucking companies need the right insurance to protect their investment, their drivers and other vehicles on the road with them. You will need to discuss your insurance responsibilities with a local insurance agent. Make sure you have coverage for your business as a commercial enterprise as well as the automotive insurance required by the trucking industry.
- Marketing Costs to Build Your Client Base
Having the right equipment and facilities is just the start to a successful trucking business. This industry is quite competitive, and you will need a game plan to market to your respective clientele and land the right contracts. Be sure to allot costs for flyers, business cards and a website, as well as the costs to put your name on your trucks and trailers and any signage at your facility. If cash isn’t available to market yourself, there are invoice factoring companies for truckers that can free up funds.
- The Facility Purchase or Rental
Your facility, whether you rent or buy, will be another major cost for your business. Not only do you need a facility to securely store your trucks when they are not in use, but you will need to have an office facility as well — at the same location or nearby. As you shop for a facility, make sure you consider the security features you will need, such as gated parking areas for your trucks or a covered, locked garage for storage.
- Driver Hiring Expenses
The final piece of the trucking business puzzle will be the drivers who drive the trucks that you disperse. You will need money to pay them, advertise openings, cover benefits packages and ensure proper insurance for the fleet drivers you hire.
The expenses for a trucking business can add up quickly, so it’s important to calculate all costs before seeking financing. With the right estimates in hand, you will be able to seek the financing you need for a solid start to your business.
Robert J. Hall is president of Track Your Truck, a leader in fleet management using GPS vehicle tracking systems and software for small and mid-sized companies.