You Can Run A Successful Trucking Company: Here’s How

If you’re a truck driver thinking of starting your own business, or if you just have an entrepreneurial spirit and want to start your own trucking company, you’ll want to proceed the right way. While there’s certainly much to be gained by having your own business, you’ll want to have the right info for starting a successful trucking company rather than a company that’s destined to be an expensive failure.

Make Sure You Have Quality Equipment

No matter how great of a business plan, name or location you have, you’ll need to have it all backed up with the right equipment as you learn how to run a trucking company. Once you’ve compiled a list of all the equipment your company will need, you’ve got to decide whether you’ll be better off renting it all or buying it outright. While buying equipment guarantees you’ll be the owner, you might prefer to lease equipment that’s bound to become obsolete in the next few years. There’s also the fact that you might not be in a financial position to buy what you need, especially if you hope to grow your trucking company as much and as soon as possible.

Identify Your Customer Base

After you’ve decided how to take care of your equipment needs, it’s time to turn your attention to finding customers to deliver to and work with. Load boards are most certainly a great place to start while getting your feet wet, but one of the main problems with these boards is that you’ll probably have to be the lowest bidder. There’s also the fact that you’ll find load boards are quite competitive, making it hard for a new business like yours to get a good foothold.

You’ll be better off splitting your time and focus between load boards and making sales calls to find customers on your own and start forging relationships and business connections that way. Once you’ve managed to prove yourself to customers through sales calls and solid customer service, you could find you no longer need to even think about looking at load boards.

Learn How to Bid and Handle Common Expenses

When it comes to biding, you’ve got to learn how to find the balance between offering customers a good deal and actually making money. This is likely to take some getting used to, so give yourself plenty of time when you’re first getting started.

To help strike an equilibrium, get to know your expenses. For instance, how much do common truck repairs cost? If there are any trucks that will soon need maintenance, how much do you think that will cost? What do fuel prices look like right now, and how might they change in the future? You might also have to charge more depending on where you deliver and how difficult it is to get to your final destination. Always have enough for unexpected emergencies, because there are bound to be more than a few when you least expect or want them.

Don’t Forget About the Back Office

What happens in the background of your business operation is just as vital as what’s going on in the foreground. If your trucking company has more than one employee, you might need office space to keep things running smoothly. If so, decide the size of office you’ll need to accommodate the size of your business, the office equipment you’ll require and what needs to take place in the office.

Should your business grow large enough, you may have to bring on additional employees, like a secretary. Be sure to account for this in your business plan as well as your expenses. In addition to paying a salary, you also have to think about taxes, benefits and the like. Even if you’re just getting started as a single owner-operator trucking company, it won’t hurt to do some research to see what you’ll be expected to handle should you decide to expand.

Anticipate Cash Flow Problems

Even when business is booming, there’s always a chance your business will bust in the future. Rather than wait for that to happen, go ahead and start planning for it now. Something else to consider is the fact that just because you deliver something today doesn’t mean you’ll get paid for it anytime soon; you might have to wait as many as 90 days to receive payment, which can throw your cash flow off track.

Look into freight factoring as a way to keep cash flowing in while still allowing your customers to pay in 40, 60 or more days. This gives everyone the best of both worlds without ruffling any feathers.

There’s a lot to being the owner of any kind of business, but there are special considerations to make when it comes to owning a truck company. Be sure to keep the above info in mind as you get started.

Owner Operator Semi-Truck Financing

Getting a loan on a commercial vehicle can be a complex process. Lenders tend to be more lenient with semi truck loans, because the vehicle possesses high collateral value and is typically only used for business purposes. However, getting semi truck financing isn’t going to be a walk in the park either. You will need to show the commercial lender that you can make loan payments. Here are six things you can do to improve your chances of getting commercial truck financing:

1. Have a registered business.

Most states require an LLC or corporation to register through the Secretary of State. If  you are a sole proprietor, you should be able to show business income through your taxes. As a new sole proprietor, you may want to get an employer identification number (EIN) or have a doing business as (DBA) name. Your lender may also want you to have a CDL, a Motor Carrier (MC) number and USDOT number. Some lenders want to see some experience, at least two years, in the industry.

2. Work on your personal credit.

For new owner operator financing, you may need to have a personal credit score of 600 or more to qualify for financing. If you’ve been in business for a couple of years, you may have a little more leeway. As a sole proprietor, you are probably relying more on your personal credit than your business credit. The higher your score, the better chances you have to qualify for a loan and for a lower down payment.

If you have a lower credit score, you may want to find a co-signer or work on your credit score before applying for a loan. If you are behind on child support, have had a recent bankruptcy or repossession or have a tax lien, the lender may refuse financing. Take care of your finances before applying for a commercial loan.

3. Find a good truck to buy.

The lender may have specific requirements about the truck, for example, it may need to be less than 10 years old, or have less than 700k miles on it. This is to protect their investment as well as your business. Older trucks break down more frequently. The collateral value isn’t as high. However, provided the truck is in good condition, it’s easier today to purchase the truck through a private party or even an auction. Generally, you will need this information

  • Make, model, year and mileage
  • Serial number
  • Pictures of the truck
  • Condition report
  • Specifications of the sale, the seller, new or used truck, etc.
  • Check with the lender for everything you need to finalize the purchase

4. You will need money for a down payment and cash reserves.

Most of the time, you won’t qualify for 100 percent financing. Having a down payment of 10 to 30 percent will reduce your loan payment quite a bit and make the lender feel more confident in your ability to repay the loan. Your lender may also want to see a cash reserve of one to three months to cover repairs, insurance and expenses in case you have a slow month. It makes good business sense to have a little extra in the bank. You never know when you may have to wait for payment or have to take time off because you have the flu. Unexpected things can often upset your finances more than you realize.

5. Have insurance lined up.

Generally, you will need insurance to cover the truck before lender releases the money to pay for the truck. The type of insurance your business requires will depend on many factors, as does the cost of insurance. Make sure you have a policy lined up while you’re working with lenders.

6. Work with your lender.

Traditionally, owner operator loans were only available through financial institutions, such as banks or credit unions, but there are many more lenders in the marketplace today. Many online lenders have almost instant credit decisions, allowing you to have more options for commercial truck loans.

You may want to consider each company carefully before applying. First, lenders may have different qualification requirements. They may also specialize in different types of loans or only work with certain leases. Every lease application can affect your personal credit. Do your research first. Don’t just take the first approval you get. Read all the terms and conditions of the loan application before signing.

Enjoy Financial Freedom

Owning any type of business doesn’t mean that you will be free from responsibilities. You may not have a boss looking over your shoulder any longer, but your stakeholders will be expecting you to make payments on time. However, when you purchase your own new or used semi truck, you are on track to having financial independence. It will take hard work, but you can do it. Just make sure you take the time to understand the requirements of owning your own truck.