For many truck drivers, their dream is to one day own their own trucking company. Who doesn’t prefer to be a boss rather than the person getting told when to be someplace? But the transition from being a driver to running a business can be daunting and prevents many people from making the leap.
While the costs for breaking into the industry in the first place can be high, there are a lot of training programs and financial services that make it easy to get your CDL and start driving a truck. And while there aren’t the same options for someone who wants to get started as a business owner, there are small business loans and grant programs that you might qualify for in the right circumstances. But before you start researching all the options, it makes sense to have a baseline understanding of how much it costs to run your own trucking company.
Don’t forget, smart business owners also look to team up with the right partners, such as a freight factoring company that can help you better manage your cash flow.
Every trucker should think of themselves as a business
Before discussing the costs of starting your own trucking business, it should be made clear that even individual drivers should think of themselves as a small business owner. That means instead of just relying on shippers and fleet managers to send work their way, they should be proactive about finding loads, building out their schedule, managing their expenses, and the like.
As independent contractors, truckers need to have keen business skills and be smart about the choices they make. A lot of the advice that applies to small business owners makes just as much sense for an independent driver. For example, it’s important that you cultivate clients and build strong relationships with shippers. Your goal with every job should be that they want to hire you again.
Likewise, even an individual driver needs to keep track of their expenses and formulate a budget, and then stick to it. By saving money where you can and setting aside your profits for reinvestment, you will have more freedom and room to grow. On the other hand, if you are unable to keep track of your costs as a self-employed driver, it’s unlikely you’ll have the right mindset to run your own business effectively.
What are the main expenses that a trucking company should expect?
Starting any business is tough, and the upfront investment you need to make is the biggest barrier for many people who would otherwise explore becoming an entrepreneur. The same is true in the trucking industry. Here are some of the initial costs you need to prepare for.
There are certain licensing and registration requirements you’ll have to account for. Some are part of running any business, such as acquiring a business license, trademark, and other business basics. The costs are not exorbitant, but whether you’ll be registering as an LLC, S-Corp, Partnership, or some other structure, you’ll definitely need to budget it.
You’ll also need to acquire a US DOT number, which will set you back $300. There’s also the UCR fee, which stands for Unified Carrier Registration. It runs $69 for one or two vehicles, and $206 dollars for 3 to 5 trucks. Depending on the type of cargo you’ll be carrying, you might also need special CDL endorsements, such as a HAZMAT endorsement to carry hazardous materials.
Speaking of vehicles, you’ll also need at least one, and probably more eventually. Some people would advise fresh businesses to invest in brand new vehicles, as the maintenance costs will be much lower and you’ll likely get better fuel mileage. But you can also save significant dollars by starting out with fully-vetted used vehicles, not only with a lower upfront cost, but also the insurance premiums.
That first truck, depending on the model, will set you back somewhere between $50,000 and $175,000, which will require a down payment and then monthly installments. Of course you’ll have to insure your vehicles, plus as a business owner you’ll need general liability insurance at the very least, which will add to your monthly expenses. When deciding on a policy, make sure that you cover all of your equipment, the cargo you’ll be carrying, your employees, and the premises where you do business.
There are also operating expenses you’ll need to plan for. Fuel and repairs are the most obvious, as well as salaries and health benefits for any full time employees you have. You’ll want to set aside a certain amount of money each month for marketing expenses, starting with a company website to help attract clients. Businesses also have general overhead expenses, such as rent, utilities, office equipment, and more.
How much does it cost to start a trucking business?
With all that said, when you add it all up, you’re looking at tens of thousands, if not over a hundred thousand, to get your business up and running. Just the expenses associated with registration, licensing, and insurance will run in the 6,000-15,000 range. Add to that the amount you spend on vehicles, though drivers that already own a vehicle and just want to start with one truck will have less of a barrier to entry.
All told, you’ll need to make a significant investment in your new business to get it off the ground. But the potential profits can definitely make it worth the money in the long run.
How much does a trucking company owner make?
Determining how much the owner of a trucking company makes depends on a lot of factors and can’t be answered with any certainty. The basic truth is that many new businesses never make any money, and there’s no guarantee your endeavor will be any different.
However, looking at the average salary of an average truck owner operator, the mean salary in the State of California is $113,000 as of 2021. The potential for serious profits is there, but it all depends on how well you approach running your business and your success as a manager.
How can you save money as a trucking company?
When running any business, the secret to success is reducing expenses while maintaining the quality of your products or services. This is especially true of an industry like trucking. So what are some smart ways to cut down on costs.
One of the obvious ways to save money is to spend less on fuel. This means not only driving efficiently and using fuel efficient vehicles, but also planning out your routes carefully and making sure you have return loads as often as possible.
It all comes down to logistics. Smart trucking companies carefully plan out everything they do, from what loads they take, who they hire, and how they formulate their budget. If you don’t have these types of management skills, it’s essential that you hire someone who does.
Keeping your vehicles well maintained at all times is also necessary. Poorly cared for vehicles are much more likely to break down, costing you both time and money in repairs.
Another way that businesses can save money is to partner with business service providers to fill in the gaps that you and your team don’t excel at. Examples include accountants, marketers, human resources, and administrative assistants. Working with other companies rather than hiring full time employees is a great way to keep your expenses down while ensuring that your business is being handled right.
Saint John Capital Understands The Trucking Business
After being exclusively focused on the trucking industry for almost 25 years, Saint John Capital knows what it takes to succeed in the trucking industry. Our entire business is built around helping truckers and fleet owners and operators succeed at what they do. We’ve built strong relationships over the years and have filled up a reservoir of deep knowledge regarding how to manage your assets and best utilize your cash to put yourselves in position to grow your business.
No matter what size your business, whether you have one or one hundred drivers, our customized services make it easy to meet your financial goals. The key to any business, no matter what the industry, is find value everywhere you can. Saint John Capital provides a full array of factoring options, fleet card programs, and complimentary services that make is possible for business owners to save both time and money.
Contact us today to learn more about how Saint John Capital can support your trucking business.