Trucking Business Plan – Tipps and Advice
How to Write a Great Trucking Business Plan
There are many things to consider when deciding to start a trucking business. One of the most important decisions however will be a good detailed trucking business plan. According to Volvo as laid out on their website, the trucking industry is a 650 Billion dollar industry.
This business is likely to grow since more and more people consistently rely on the Internet to order their goods and someone has to deliver those goods to them. Like many businesses however the trucking industry is dominated by the big for-hire companies who own the largest share of the market. A detailed list of these companies who dominate the largest market-share can be found here.
1) Trucking Business Plan: Your Competence
The next important question that needs to be asked is what is my competence level in this industry? If you think about it, a former trucker with 20 years of driving experience will be more likely to succeed in this industry than someone who has never seen the inside of a truck.
And the business side of things: It is off course always possible to hire the right consultants to guide you in the right direction, but keep in mind that you are already looking at a significant investment with buying or leasing the trucks to get you started. The average cost of a new truck is about $115,000.
The flip-side to the topic of any craftsmen wanting to be his own boss is always the same. An experienced trucker might have the know-how on what it takes to operate a truck but can on the other hand be a terrible businessman. So these cases will need to be evaluated individually. At the very least, it’s good to know a professional business plan consultant should be able to help you draft up a detailed trucking business plan.
2) Trucking Business Plan: Choosing Your HQ
One topic that is slightly easier to consider in the trucking industry is the question of where you are going to have your headquarters. You need a lot of space to start a trucking business depending on how many trucks to decide to start out with. This will work in your favor because you can have your headquarters in a very remote area since your employees need to drive to your customers.
There is one thing however that can’t be overlooked and that is what state (or region of your country if it doesn’t happen to be the United States) will give you the best tax benefits for starting a trucking business. The resources for these specific kinds of questions can be for example found for the US on the US Small Business Administration website.
3) Trucking Business Plan: Your Management Organization
One of the most important questions in the trucking industry will be how the business is managed from an operations point of view?
There are two approaches:
The first one is having sub-contracted drivers: You run your business using sub-contractors as drivers. In this case, the business owner, runs the business and receive the contracts, your drivers are not actually employed by your company. This cuts down on start-up costs, insurance costs, and required equipment. This option gives you less control over your drivers and cuts into your profits a little.
The second option is having privately-owned drivers: This option requires a great deal more start-up capital and operating costs. Here, you privately run your business and all operations. You use your own equipment, pay higher insurance prices, and hire a fleet of private drivers as employees. This option gives you more control over your business and its employees, and also the most return on profits.
4) Looking at the Marketing Plan for Your Trucking Business Plan
The best marketing in this type of business is basically performance. The cheaper and faster you can deliver the goods the more likely you will be able to secure bidding contracts. Proof in the form of word-of-mouth, standing references and testimonials go a long way.
Most people in this business get their shipping customers from what is called a “load board” form of bidding. This form of bidding is extremely competitive and should not be a long-term strategy. There are two forms of load-boards. The free boards where you do not pay a monthly membership-fee, which again is more competitive than the paid membership load-boards.
The unique challenges to operate a trucking business in the areas of note legal setup, mega-trends, patents, certifications, promotions, partners, capital requirements are mostly answered by the Federal Motor Carrier Safety Administration and should be consulted in depth on what the requirements are based on your specific need.
5) Trucking Business Plan: Typical Cost & Hiring Challenges
The largest cost in this business is divided up between gasoline and driver compensation and accounts for about 70 percent of your operating cost.
Hiring the right drivers for this business will also become a challenge. In order to keep your insurance cost low you need drivers that are not high risk drivers. That means finding drivers with immaculate driving and criminal background history. This will prove to be a difficult task. According to an article in the Wall Street Journal, there is a significant shortage of truck drivers in this country that will soon start to have a ripple-effect in this industry.
To make matters worse in finding good quality driver the Federal Motor Carrier Safety Administration has created the Compliance Safety and Accountability Program in 2010. This program is designed to improve driver safety, reduce traffic fatalities and enhanced data sharing collection to avoid high risk drivers. Adhering to the program is necessary to keep your trucking authority.
So, as one can see there are significant challenges to start a trucking business and being able to compete with the established companies. With this detailed summary of what it basically takes to operate a trucking business you should have a better idea as to what challenges need to be overcome and compile a professional trucking business plan. This should also help you prepare more in writing up a detailed narrative loan document for the place where you plan to secure your financing.