Trucking companies are vital to the American economy and support businesses big or small throughout the country. By picking up and delivering billions of tons of goods each year, trucking companies enable these businesses to thrive. However, owning a trucking company requires specialized knowledge and a lot of hard work. If you are thinking about starting a trucking company, Integrity Factoring would like to provide you with the following invoice factoring tips to help you plan for success.
LEARN & UNDERSTAND THE INDUSTRY
There is a strict rhythm to how the trucking industry operates. To start your own trucking company, it’s important to learn and understand the industry. This includes all the many rules and regulations involved. The FMCSA (Federal Motor Carrier Safety Administration) regulates almost every aspect of the trucking industry in the United States.
The first step to starting a trucking company is to identify what items you will be transporting and where they will be going throughout the country. Certain products and goods have different requirements that require various loading and unloading practices. Furthermore, if you’re transporting certain goods to other states, you will need to obey various interstate transport laws. Take the time to sort out all the details of your trucking company and learn as much as you can about all the industry rules that apply to you.
OWNER OPERATORS VS. OWNER SUBCONTRACTORS
In the trucking industry, there are two different types of owners – owner operators and owners who subcontract their drivers. An owner operator owns and drives their own truck(s). This provides them with more freedom in how their trucking company operates as a privately owned business. However, as an owner operator, you will often need more working capital in order to maintain certain small business requirements. Owner subcontractors, on the other hand, hire and subcontract different drivers. This can be a better choice for you if you prefer having others handle specific jobs and do the driving while you handle the business side of things.
Keep in mind that there are certain pros and cons to either business model. While hiring drivers can cut into your profits, doing so can also make your trucking company more scalable. At the same time, driving your own truck will put you in control of your own rig. However, you may not want the responsibilities that come along with it. Either way, it’s really up to you to decide which method is right for you. Once you make the best decision, it’s important to create a business plan. Click here for helpful tips from the Small Business Administration.
Keep in mind that it’s important to address certain expenses in your business plan for your trucking company. These can include the number of trucks you plan to own or lease and the returns you expect from your business. Take the time to factor in maintenance expenses and the cost of hiring drivers along with any marketing and advertising costs. You will also want to think about your projected cash flow and come up with a plan to cover your costs during cash flow shortages. Ideas include applying for traditional bank loans or covering your bases with invoice factoring. Planning ahead with a solid business plan will provide you with peace of mind knowing how you will manage certain challenges and setbacks.
WORK OUT THE DETAILS
Since the trucking industry is highly regulated, you will have to work out important details before you start your own business. If you plan on driving your own truck(s)s, you will need to acquire a commercial driver’s license. You will also need to file the LLC (limited liability company) paperwork necessary with your state. Furthermore, you will need to purchase or lease a truck(s), obtain business insurance, meet state requirements for vehicle registration, permitting, taxes, and car insurance. While it takes a lot of paperwork to start any business, there are more requirements than most in the trucking industry.
Last, but not least, you will need to obtain clients. When it comes to finding customers it’s important to be proactive in your search either in-house or by hiring an outside marketing firm. As a demanding and competitive industry, you will need to be aggressive when it comes to contract bidding for client accounts. Most of all, a little hard work goes a long way when it comes to having fun and enjoying your new business.
Things change quickly in the trucking industry. That’s why it’s important to be prepared for certain fluctuations and take advantage of new opportunities to grow your business. To learn more about how we can help you, contact Integrity Factoring today by filling out our online form or call us at 1.866.834.7338.