Table of Contents
With the trucking market in America being worth well over $800 billion a year, it may be time to get trucking and start a trucking business. The growth of online retail in recent years means that now, more than ever before, goods are being transported from manufacturing plants to retail distribution centers and then direct to your home.
America would come to a commercial standstill were it not for the variety of trucking options available, ranging from full truckload (FTL) to less-than-truckload (LTL), and finally, couriers. When you consider factoring as a way to finance your trucking enterprise, now might well be an excellent time to start your very own trucking business.
The Basics To Consider When Starting A Trucking Company
The chances are that if you want to start your own trucking business, you have experience as a company driver. You understand the routes and the long hours, and now you’re looking to be your own boss.
The most significant benefit is that you stand to make your own money. As an owner-operator, you can decide who you want to work for and what hours you wish to work. Starting your own trucking business does come with its own set of challenges, though. There’s an added level of responsibility that comes with the prospect of making more money. How you rise to that challenge is what will define your success. Here are some things to consider:
Requirements: If you want to own your trucking business outright, you’ll need an ‘MC number’ (a ‘Motor Carrier’ number is a requirement for all interstate carriers), a USDOT number (a number the Federal Motor Carrier Safety Administration assigns to all registered commercial vehicles), and the appropriate insurance coverage. This takes time and adds up to a significant cash outlay.
Leasing vs. Owning: The alternative is to work as a ‘leased-on-operator,’ whereby you lease equipment and find your loads and don’t have to sweat about compliance issues. This might be the appropriate step if you’re looking for a little more freedom and autonomy without immediate overheads.
Load Boards: A trucking load board is where you go next. This is an online interactive marketplace that matches live loads with available trucks. Here you can communicate with shippers and brokers directly to book loads, negotiate rates, and keep your vehicle (s) full. Some load boards are free; others charge a subscription fee of up to $100 a month. Spend time on a load board to understand lane averages and the number of loads going in and out of a state. This will help you plan for the return leg of a delivery.
The Costs Involved In Starting A Trucking Business
Assuming that you have a new or used truck to start with and that you’ve jumped through the regulatory hoops and are above board with your local trucking authority, your subsequent costs are insurance and then the costs of running your day-to-day trucking business.
As a ballpark figure, you are looking in the region of $30 000 to get started. If this sounds daunting, consider, too, the time you will most likely wait for your invoices to get paid. Cash flow is crucial – especially when you’re just starting – and most broker payments take up to 90 days to reflect in your account. And that’s assuming that they don’t need to be chased up for payment.
If you’re just starting out, the chances are that you will be facing many financial challenges as you get your business up and running. This is where the beauty of a freight factoring company comes into play.
How Freight Factoring Can Help
A factoring company will offer to buy your invoice and advance the balance of the amount almost as soon as you have delivered the load. All you have to do is submit the paperwork.
They will then work with your broker or the shipper you made a deal with on a load board and ensure that they get paid. Of course, there’s a fee for this (usually a set commission percentage), but the peace of mind that comes with not having to chase up payments when you should be chasing new business is unparalleled.
The other benefit to working with a factoring company is that they do credit assessments on the brokers that you plan to do business with. When done in advance, this can root out the chance of you doing business with any notoriously bad debtors. The right factoring company can be seen as a strong business ally for you, especially when you’re just starting out, as they will keep you and your clients accountable. These checks and balances are crucial to surviving as a start-up trucking business.
Final Considerations
There is still much planning and preparation to undertake before starting your own trucking business. Have you spent time creating a trucking business plan where you’ve considered everything from your name to your target market? How will you set the rates per mile that you want to charge?
There are also the legal and insurance requirements that we have mentioned. And right at the top of the list is managing your cash flow once you get started. Factoring is a practical way to do this to ensure that your best-laid plans don’t come unstuck simply because of someone else’s delays in paying you for your hard work.
If you are looking to bring financial stability, growth, and success to your trucking business, contact Business Factors & Finance at (800) 672-3844 or find out more about our services on our website.
Improve Your Cash Position
Get a Risk-Free quote from Business Factors for immediate working capital and 24/48 hour invoice factoring
in 4 quick minutes.
