You may be an excellent driver with years of experience and know the driving industry very well. However, now you want to be more than a driver of a single vehicle, and you intend to own a business with many trucks that run the roads. In short, you want to command a fleet of vehicles that conquer the roads.
Although there are numerous trucking companies in the U. S., there is still an existential demand. You can begin a small trucking company with limited vehicles, and increase your fleet as you earn a better return on investment. However, before you make a hasty decision, you must consider a few things.
Are You a Driver or a Business Owner?
Hundreds of drivers decide to transition from being a driver to a business owner every year. However, most of these dreams are crushed because people cannot shift their mindset from an employee to an employer. The first step to thinking like a business person is to make a business plan.
Prepare A Business Plan
Before starting any business, you need to create a plan for your journey ahead.
Most businesses fail because they have no idea where they are going or how they are supposed to get there. Taking a few moments to rethink your business plan can help you for 3-5 years down the road.
While preparing a business plan for your transport fleet makes sure to provide the following information:
- The function of your business along with its organization structure
- The market demography, the contenders, the present and prospects of the business, and what makes you unique
- Prepare a financial outlook of the business, which should include the initial business investment in terms of finance, equipment, and workforce. Have a suitable business plan in place which highlights your growth and revenue over the years.
- Learn your customer base and create a marketing plan to increase customers.
- Prepare a rough sketch of your driving team requirements, including ownership.
There are many state and federal regulatory requirements that you need to comply with and address while starting a new company.
- You need to apply to the U. S. Department of Transportation to get your USDOT number to operate across state lines.
- To operate on multiple states, you will require an International Fuel Tax Agreement (IFTA) decal for your trucks.
- During legal hearings, a BOC-3 filing can designate your company’s process agent.
Additionally, you may also need to comply with truck licensing agreements and follow health and safety standards.
Check CSA scores of your vehicles at the FMCSA website using the vehicle USDOT number. Better scores can help you get more customers since the score is proof of good driving.
1. Choose The Right Equipment
While choosing your truck, you need to take care of the following :
- Your truck may require different accessories, depending on the freight. You may require a refrigerator trailer, car- hauler trailer, or just some regular trailers.
- Before purchasing a semi-truck, make sure to check every part of the vehicle, including its chassis, fuel tank, brake pad, doors, and windows. Check for rusty surfaces as well; make sure to check the floor area. Take a test drive and take note of the ease of driving before purchasing your vehicle.
- You have to make an important decision between buying and leasing. While leasing can help you save time and money, since you do not fully own the vehicle, you can not work on its maintenance. Moreover, long term lease will get you stuck with an older model while still paying monthly fees.
- Short term lease, on the other hand, can help you harbor and learn to use different types of vehicles by operating them.
2. Choose A Sub-contractor or Hire a Driver
There are two ways to get a driver to operate vehicles for you on the road. You need to either hire a driver in your company or make them as sub-contractors.
Most new businesses use sub-contractors since you do not need to provide them with a car or any other maintenance costs. The only money you are paying is upfront fees. However, since s/he is not under the company payroll, you cannot do much to control his/her behavior.
When it comes to hiring a driver, you need to provide him with a vehicle, insurance, vehicle maintenance costs, fuel costs, as well as a bountiful pay-out.
3. Making The Right Bids
Since OTR trucking is highly competitive, you need to make the best bids.
For this, you need to know your operational costs. It includes costs for transportation, maintenance, repair, truck lease, purchase payments, insurance, salary, fuel, and other benefits.
Make sure that the bid is neither too high to lose a client, nor too low to incur losses.
4. Make Sure To Start With A Good Initial Capital
New fleet owners often live in an illusionary world and begin a business without factoring in the time to generate revenue. During the first few months, you will undergo a cash crunch since payment normally arrives a few months after delivery, although you need to pay all the operational costs.
One way to get around the problem is by working with a factoring company that will take a portion of the bill, but pay you on the spot. In any case, while entering into any business, you must always have a budget of at least six months of operating costs to begin the business.
5. Set Up Your Back-End Team
As your business grows, it will no longer be feasible for you to handle all the administrative processes alone. You need to gather up a team to help you with various back-end processes like invoicing, accounting, payroll, maintenance scheduling, dispatching, and regulatory compliance. Failure to facilitate a team can choke your business while it is spurting in growth since you will not be able to handle it alone.
6. Manage Your Costs
As a new fleet manager, you need to manage every minor spending and find ways to increase your savings. Search for maintenance deals, fuel card deals, and ensure to turn off electrical appliances when not in use. When you are just starting your business, every little saving helps.
Use the internet of things (IoT) to help you track vehicles of your fleet in real-time by using telematics. You can easily guide the drivers through smaller passages and little known routes, once you know their location. You can also track your drivers in real-time.