2018 is fast becoming a banner year for the trucking industry. The scales of supply and demand have tipped far onto the side of freight carriers. As reported by Bloomberg, in May, 2018, the shortage of drivers in the United States has risen to 280,000, compared to 78,000 just two years previously. The federal government’s increased requirements for electronic logging devices will keep many drivers in rest mode longer, cutting shipping capacity by an additional 2 to 5 percent. Both spot prices and contract rates have surged. With carriers in the driver’s seat, there has never been a better time to go independent.
How to start your trucking company
Unlike other businesses, starting a trucking company has relatively few barriers. If you are already working as a driver, you have the first step completed, getting your CDL and gaining experience. You understand how the job and industry works, how to plan routes, how to deal with difficult areas and conditions, and how to comply with regulations while maximizing your profitable driving time. These are the challenges you pride yourself on overcoming and part of the joy of life on the open road.
Running your own trucking business means you can make bigger money and enjoy the freedom of charting your own course. Less exciting but necessary, you need to incorporate and set up your business structure. This includes registering with your home state and getting your federal tax I.D. number. If you don’t want to do your own taxes, an accountant can help you decide on your business structure. You can choose to operate as a sole proprietorship, LLC, corporation, or partnership. After you set up your business structure and get your tax ID, you can obtain your MO or DOT number.
Now you are ready to buy your truck and obtain the permits and licenses. Before making these purchases, set up a business bank account. Freightship recommends buying a truck that is no more than 5 years old and has less than 600,000 miles. To set yourself up for success, you want to minimize the possibility of incurring expensive repairs. Freightship also recommends starting with a dry van trailer. 60 percent of loads are dry van, and they are easier to operate than reefers or flatbeds.
Physical damage insurance needs to cover the cost of the truck. Cargo insurance needs to be a minimum of $100,000 and liability insurance a minimum of $1 million. Before hitting the road, you’ll need to register for IFTA and IRP plates, which authorize you to transport cargo across state lines.
Many independent drivers get their first clients from load boards. Unless you already have clients, you will probably need to start this way, but don’t forget to cultivate your own clients. Though building a book of business takes time, you can land contracts that pay much better than work you obtain from the load boards.
Manage your cash flow
You’ve already shelled out a chunk of change for your truck down payment, licenses, and insurance. You need to buy fuel and pay maintenance expenses to stay on the road, and you have to eat and take care of your personal expenses. Cash flow is always a challenge when you start a new business. You may be hauling freight 6 days a week and building an impressive backlog of invoices, but those invoices don’t help you until your customers pay, and most pay in 30 to 60 days.
To make your new business successful and save yourself a ton of stress, register for freight factoring with Business Factors & Finance before you take your first load. Freight factoring with Business Factors & Finance allows you to receive payment for your invoices in as little as 24 hours. That means you can make your trucking business profitable right from the start.
Trucking factoring prevents new independent truckers from experiencing the heartache of red ink. Lack of cash flow can force you to turn down profitable opportunities, force you to work inefficiently, and mire you in crippling debt. It means the competition can get ahead of you, and it can put you out of business.
Get your trucking enterprise started on the right foot with trucking factoring by Business Factors & Finance. When you work with us, you have no worries. You focus on what you do best: logging the miles and planning your routes and workflow to maximize your profit. We not only pay you right away, but we take all the responsibility of collecting and processing payments. The money hits your account right away and you can continue down the road, your only concern being picking up your next load.
Your trucking business has many funding options beyond banks. There is no need to waste months waiting for bank approvals that may never come. You need that money now, before the competition speeds past. We get you the funds you need in as little as 24 hours. So don’t wait. We also provide unique invoice factoring and other alternative lending programs tailored to the needs of the trucking industry.
To learn more about how invoice factoring can help your business today, visit our learning center now.