Depending on where you get your information and who you talk to, and even then, the specific conversation – you will get different answers on what to do first.
Some will tell you to choose and set up your business entity. Others will tell you to get your authority.
If you want to be successful in your new trucking business the truth is that there are many different things that you need to consider and make sure that you are well prepared for before you just leap in on a hope and a dream.
To be sure all those other recommendations are important and you will need to handle each one. But there is something I think you should do BEFORE you do any of those other things.
Become Informed on Running a Trucking Business Successfully!
Trucking is a dynamic fast-paced business with many moving parts and with both low percentages and high risks. Risk management, operations efficiency, fuel management, maintenance management, personnel management, and many other things need to be understood and prepared for – in accordance with your specific PLANS.
Every mistake you can possibly imagine and thousands more that you can’t even conceive at this point have all been made over and over by other people and other companies.
Successful methods, tactics, and systems have also already been formulated, refined, proven and they are working every day for those who use them.
You can study and learn from them all – learn and use what works and at the same time learn what has caused failures and problems and avoid those things!
By doing so you will dramatically improve the chances for your own success and you will reduce your learning curve by years – maybe even decades and moreover what it would take to learn by trial and error. Sadly many take the trial and error path and they do not survive in trucking long enough to learn many lessons before they go under and right back out of business.
Here are a few common problems for you to consider;
- Lack of Knowledge – Starting a trucking company without understanding the basics and without having adequate plans, systems, and resources in place.
- Choosing the Wrong Truck – You do not need nor can you afford and ego trip truck when you are just starting out. You do not need a brand new truck either of any kind. You need a good solid used truck that will get the job done and which you can actually afford to own.
- Acquiring a Truck the Wrong Way – Consider paying cash upfront in full if you can for a good used truck or finance it through your own bank or credit union or another source with reasonable and affordable rates. Many instead go into an EXPENSIVE lease-purchase plan and do so on a new or nearly new truck. Others choose some other high interest and high overall cost method to buy a truck that is overpriced, to begin with. Be very careful here – the impact is huge to your bottom line. Make and type also affect maintenance availability and cost as well as repair costs which can be substantially different. Choose your first truck wisely and carefully!
- Getting Your Own Authority or Leasing On to a Carrier – There are pros and cons to both. There are also significant cost and complexity differences to both aswell. Choose wisely.
- Failure to Set Up and Maintain a Drug and Alcohol Testing Program – DOT has no sense of humor. Pleading ignorance will not help you much either. Drug and alcohol testing-related violations carry some of the highest fines and penalties applied – and though it isn’t overly complicated to be in good standing if you have the right information – it is very easy to screw this up if you don’t!
- Failure to Handle Taxes Properly – Lots of new owner-operators are excited by the revenue they generate – until they get a painful and expensive lesson from uncle Sam – he wants his cut! There are all kinds of taxes from fuel taxes to income taxes to permits and fees (another form of taxation) and on and on it goes. Agree or disagree – the realities are that all taxes due according to the government must be paid – and will be paid – or they will shut you down and seize your assets.
- Emergency Reserve Funds – Crap happens. Count on it and prepare for it. This is part of being in a Trucking Business and this is widely known – yet too many new entrants and some older companies too, fail to completely understand the need for setting up and maintaining adequate Emergency Reserve Accounts and then building them and keeping them funded at all times.
- Operating Reserve Funds – Freight runs in cycles. It always has and always will. There will also be times when you just want a day or a week off. There are still business expenses occurring whether you are running loads of not. You handle those expenses with Operating Reserve Funds from your Operating Reserve Funds account.
- No Idea How to Get Freight – There are a variety of ways to get loads, including direct from the shipper, from brokers, agents, and from load boards. If you are INDEPENDENT you will need to learn about them all and use most if not all of them to get your freight. If you are leased on to another carrier then you are CAPTIVE and you can not haul freight for others unless it goes through your carrier. Even then there are still many things to know and do to maximize your revenue. The best companies – in my opinion – have an internal load board of some kind and you go there and pick your own loads. Knowing how to do this effectively dramatically affects your revenue. The opposite is a carrier that treats its owner operators much like company drivers and assigns them loads. Too often they have little if any choice in load selection (this results in lawsuits against carriers as it should but it still happens!) and as such have little to no control over the revenue and their own business which largely negates most of the reasons for being a trucking business owner/owner operator to begin with. In fact, these unfortunate drivers really are NOT Owner Operators at all but are self indentured servants of the company they made the mistake of leasing on to! Don’t do that!
- No Specific Business Plan – What are the goals? What are the Plans to get there? What is the time frame? How will it be accomplished? Many want to be a trucking company owner – Owner Operator – because it is an ego thing. I get that too. And that is not completely a bad thing – so long as it is backed up in reality and informed decision making. Often it is not. It is just a company driver who decides they want more freedom and more control and more money – and that title – OWNER OPERATOR. It sounds cool, doesn’t it? Yet so many fail because they make all the mistakes listed here and so many more. The way to avoid that is GET INFORMED and develop sound PLANS!
Trucking Business Success is up and running on YouTube and our Facebook group has several hundred members and is continuously growing! Come join us all in the group subscribe and watch the Trucking Business Success YouTube channel.
You can also check out some of my courses on Udemy – and soon we will have courses available in our own Trucking Business Success Academy. There will be links to it all available soon inside the group and also on this site.
In the near future I want to start interviewing people who have specialized trucking-related knowledge to share – so if you already have a trucking business up and running and want to be interviewed let me know! The best way to do that is to join the Trucking Business Success Group and send me a message or just post it in the group.