Trucking is one of the most vital parts of the logistics system in the United States.
Even with advanced technology, moving freight overland via trucks is still one of the most effective and efficient methods to balance supply and demand.
Because there’s still a lot of demand for the use of truck drivers and moving freight, you may have an interest in starting your own trucking company.
In 2020, the trucking industry had a value of $732.2 billion.
There’s clearly space in the market for your company.
However, you may not have an interest in driving yourself, but rather in owning a fleet.
Here’s how you can start a trucking company without driving.
How To Start A Trucking Company Without Driving
1. Determine Scope Of Business
Running a trucking company isn’t as easy as hiring drivers and sending them off to deliver loads.
Like any business, it requires a business plan.
There are a few questions you should ask yourself to start laying down the foundation for your business.
One of the most important is the scope of your business.
Do you intend to carry freight over long distances or within your own state?
Running a trucking company that delivers across state lines comes with its own regulations and requirements.
After all, state laws vary, and each has its own requirements for commercial drivers.
Staying within your own state is easier and not a bad idea for new trucking company owners.
However, you’re also limited in your growth and competition may be stiff.
While traveling across states is more complicated and expensive, it also allows you to grow and scale your business.
Finally, you also need to determine your own strengths and weaknesses.
As the trucking company owner, you’re essentially an entrepreneur.
Every entrepreneur needs to know their strengths and weaknesses.
This allows them to hire other individuals who can cover their weaknesses while they play to their strengths.
For example, you may be great at marketing, but you may not be good at organizing or delegating.
Hiring an assistant or general manager may be able to help you cover these other aspects of your business.
Once you have your business plan set, you’re ready to move on to the next step of running your trucking business without driving.
2. Filing Necessary Paperwork
Although you won’t be driving the trucks yourself, you still need to file a lot of paperwork to be a legal trucking company.
Without various licenses and permits, you won’t be able to carry freight.
Here are some of the pieces of paperwork and registrations you’ll need.
An EIN is an Employer Identification Number.
It’s also called a Federal Tax Identification Number.
It’s used during tax season to help the IRS identify your business.
Otherwise, you may find yourself paying business taxes but not having it count since the IRS doesn’t recognize you.
Thankfully, the IRS has made it simple to obtain an EIN.
You can apply for one online through the IRS website.
Before then, you had to fill out a form called Form SS-4.
Filing for an EIN is also free.
The next step is to obtain an MC (Motor Carrier) or DOT (Department of Transportation) number.
Not every trucking company needs an MC number, but every company does need a USDOT number.
A USDOT number is a unique identifier that gives the company authority to transport goods across state lines.
The goods they can transport aren’t regulated.
An MC Number, on the other hand, covers the transport of regulated goods.
It also covers passengers.
You can file for either or both of these numbers through the Federal Motor Vehicle Standards website.
Keep in mind that you’ll also need to hire an agent to represent your company in every state that you operate in.
The agent gives legal representation to your drivers and your company should there be an accident or crime committed.
Not every new business owner knows they need a DUNS (Data Universal Numbering System) Number, but it’s another piece of paperwork that needs completion.
A DUNS number is a unique number attached to your business.
It keeps track of various information about your business, like contact information, the various corporate family relationships within the company, and different financial assets that determine the financial health of the business.
It’s helpful if you ever wish to partner with another company.
Most other individuals will ask for a credit rating of your company to determine if it’s worth partnering with you.
They can receive your DUNS number and receive all the information they need through it from there.
You’ll also need to make an account and file through the Federal Motor Carrier Safety Administration.
They have various pieces of paperwork that you’ll need to finalize.
This department of the government oversees the compliance and safety of the truck and its drivers.
They’ll be the ones ensuring and enforcing your right to transport goods within a state and outside of a state.
One of the steps you need to take to satisfy the FMCSA is to hire a processing agent for your company.
This gives you the authority from the department to transport goods.
The processing agent resides in all the states that you intend to operate in.
Because of that, you may need to hire several processing agents.
For each agent, you’ll need to add to your BOC-3 document.
The BOC-3 is a form that the FMCSA requires you to fill out to determine who your processing agent is.
It proves to the department that you’re compliant and have an agent available.
Filing a BOC-3 is also relatively easy since you can fill it out online through the FMCSA website.
3. Financing Or Buying Your Truck(s)
You can’t operate a trucking business without a truck.
There are a few options that can help you get your hands on a truck.
The first is to rent.
Some businesses out there rent trucks out for extended periods.
They tend to have various regulations on the types of load you can carry or the duration of your rental period.
They don’t always offer insurance or other legal protection, however, should your driver find themselves in an accident.
That said, renting is usually a cheaper option in the short run.
It can help you build enough capital to buy your own truck in the future.
The next option is to lease a truck.
Many new trucking companies will choose to lease a truck because it’s cheaper than buying a new one.
It also tends to be cheaper than renting trucks in the long run.
Leasing companies often do offer insurance or other protection plans for the truck if you run into a problem.
The average price to lease a truck is around $1,600 to $2,500 a month.
Keep in mind that you also usually need to put down some form of down payment as well.
The final option is to buy your own truck.
This is the most expensive option, but it could prove the most cost-effective over the long term.
It all depends on how you obtain financing for your purchase.
A new truck tends to cost around $80,000 to $150,000.
Those who want extra features on the truck can look to pay around $200,000.
However, you can find cheaper options if you’re looking to buy a used truck or a refurbished one.
The price drops between $15,000 and $100,000 depending on its age, size, and condition.
4. Obtaining Insurance
Before you can file some of the paperwork listed above, you need to have proof of insurance first.
For example, you won’t be able to obtain your USDOT number until you have insurance.
That’s because the USDOT checks for compliance and having insurance is one of those clauses.
Insurance can be expensive for trucking companies.
The bare minimum that you’re allowed to have is policies that cover $750,000 with a $75,000 surety bond.
Some leasing companies require you to have maximum coverage.
That can make your monthly payments incredibly expensive starting out.
Once you have your insurance policy, you’ll want to ensure you have a copy of it.
The driver will also need to have a copy to show anyone who might pull them over.
5. Hire Drivers
Once you have your paperwork handled and your trucks and insurance, you’re ready to start hiring drivers.
There are a few different ways that you can source your drivers.
You can hire them as employees.
As employees, they’re guaranteed a few rights from you.
In most cases, you’ll need to provide health insurance and other benefits.
Hiring truck drivers as employees is beneficial since you can attract several.
With driver shortages causing many trucking companies problems, you can offer benefits to them that can make working for you worth it.
They’ll remain loyal to the job because you treat them well.
Another way that you can hire a driver is to look for independent contractors.
These drivers are not official employees and thus don’t need to receive benefits like health insurance.
Many drivers offer their services as independent contractors because it allows them to have better control over their schedules.
Before hiring an independent contractor, it’s a good idea to talk about availability and expectations.
Once you’re both happy with how much the driver is going to work and what days, then you should make a formal agreement with a contract.
This protects both parties.
When you hire an employee, you’ll need to send them a W-2 form for tax purposes.
When you hire an independent contractor, you’ll need to send them a 1099 form for tax purposes.
Hiring either an employee or an independent contractor has its benefits and drawbacks.
Hiring an employee may cost you more money, but it usually means you can rely on the driver more.
You’re able to control their schedule.
Hiring an independent contractor can save you money and it’s usually helpful for businesses who are just starting.
You can also always transition the contractor into an official employee down the line if they’re interested in the official role.
Keep in mind that no matter who you’re hiring, they need to have a CDL.
A CDL, or commercial driver’s license, enables them to drive commercial vehicles.
Without a CDL, it’s illegal for them to operate trucks or move freight.
6. Find Clients
Perhaps one of the hardest steps of starting a truck company without driving is finding clients.
Unless you’re already established in the trucking world, it can be hard to find who needs a transport company.
Luckily, there are a few services that can help you find your first clients.
The first is a freight broker.
There are websites as well as brick-and-mortar businesses that act as freight brokers.
A freight broker works with several businesses across a state, or several states, and then lists jobs on a database.
They may also try to find private contracts for your business.
A broker is ideal for beginning businesses because they’ve already done the hard work of finding clients for you.
Once they understand a few details about your company, they can go through their database and find the client that fits you best.
They’re also usually among the first to hear about new clients needing transport
Another option is to use a trucking consultant.
A trucking consultant can help you with various aspects of your business.
If you’re unsure whether to hire drivers or to hire independent contractors, for example, then they can advise you based on your needs.
They also have information about how to find clients.
They may even have a few clients that they can offer you immediately.
A final way to find new clients is to keep your eye on local businesses.
Any time a local business starts to grow, you can be sure that they’re going to need transport.
Even smaller businesses still need someone to bring them inventory.
Working with new businesses or growing businesses can help you get started in the field.
Once you start to establish yourself, you’re going to need to keep growing.
The only way that anyone is going to hear about you is through marketing.
Billboards, TV ads, and website ads are all effective means of finding new clients and drivers.
With several trucking companies in the industry, it can be difficult to set yourself apart.
When planning your marketing campaign, you’ll want to establish your niche in the market.
What makes your trucking company different than the others?
Why should clients choose you over others, especially those who are already established in the field?
Finally, what services can you offer that others don’t already offer?
Being able to answer these questions in a marketable way is sure to attract the attention of new clients.
Once you’re finally in operation, you’ll need to manage your company.
This is where hiring other non-drivers in supportive roles can be handy.
One of the most important aspects of your company is the management of your fleet or single truck.
Before the truck hits the road with the delivery, it should always undergo several checks.
Someone should check the tire pressure, the oil level, the radiator coolant, and other aspects of the truck to ensure it’s ready to drive a distance.
This might be something that falls to the driver to do, but it’s usually better to have someone whose job it is to look at the trucks to do it instead.
Drivers are usually occupied with the destination ahead.
Ensuring that the truck has fuel and is ready to operate can avoid headaches down the road.
Another aspect of managing your company is maintaining your relationship with your clients.
Customer satisfaction matters in the trucking industry.
If customers aren’t satisfied with the service they’re receiving, then you can be sure they’ll drop you and find another company.
You should always ask your customers for feedback every month.
Then make sure you implement the changes that they suggest if it makes sense.
Creating a close relationship with your clients can make them loyal to you.
Finally, you’ll need to be able to manage your finances.
In this instance, it’s usually a good idea to hire an accountant or someone who understands business accounts.
You need to be able to understand how to take your capital and split it into wages for your workers, investments for the business, and ensuring that you can take home a paycheck, too.
Because the trucking industry uses assets that depreciate with time, like the trucks, you need to have funds available to make repairs or buy new trucks over time.
Do You Need A CDL To Start A Trucking Company?
One of the most common questions about starting a trucking company is whether you need a CDL or not.
If you do not plan on driving the truck yourself in your company, then you do not need a CDL to start the business.
You only need a CDL if you intend to be driving.
That said, any driver you hire needs to have a CDL.
There are some benefits of having a CDL, however, even if you don’t intend to drive.
A CDL can help you understand your drivers better.
If they have a question about something, then you can give them an informed answer rather than relying on someone else.
It also allows you to hop in the driver’s seat if something happens to your regular driver.
How Much Money Do You Need To Start A Trucking Company?
As with any business, you need a good amount of money to start a trucking company.
The average amount of money you need to start a trucking company is between $6,000 and $15,000.
The rest of your funds can come from bank loans.
These are costs that aren’t associated with equipment.
When you’re ready to buy trucks and other loading equipment, then you’ll easily need double or triple that amount.
Starting a trucking business is possible even if you don’t have a CDL or want to drive.
You’ll take over the business part of running the company while the drivers you hire will take over the actual transporting of goods.
Like any business, it’s a good idea to have a business degree or understand how to run a business to find success.
The steps above can give you a basic outline of how to get started developing your own trucking company.