In an industry that generates over $700 billion in revenue annually it is easy to see why many people think of starting and running their own trucking companies. Much like every other business, a trucking company has its own industry-specific costs, which vary greatly depending on whether you run a trucking company as an owner-operator or a fleet.
Starting a Trucking Company as an Owner-Operator
There is a great appeal to becoming an owner-operator. Hours are usually more flexible, the rate of pay is typically higher than being a direct employee of a large carrier, and the jobs are more varied. To start a trucking company as an owner-operator, you will need your own truck, which can cost anything from $15K on up to $200K and above, depending on how many bells and whistles you want on your rig. The next step is to get a commercial driver’s license. While the cost of a CDL varies from state to state, the price ranges from $3K to around $8K. Insurance is a variable cost, and is structured around the age, condition, and location of your business. Installing an ELD approved by the FMCSA can reduce insurance costs. After the basics are out of the way, owner-operators need to acquire a US DOT number, a Unified Carrier Number, and register the name and corporate structure of the business. Those three items together come in just under $900. Special CDL endorsements, such as for carrying hazardous materials, cost about $100 plus additional money for screening and testing. All-in-all, to start and run a trucking company as an owner-operator – truck and insurance excluded – costs roughly $10K to $15K.
Starting a Trucking Company as a Fleet Owner
If a single truck can generate a good amount of revenue, then starting a trucking company with multiple drivers and vehicles can bring in even more. Starting and running a fleet of three or more trucks takes considerably more startup capital. Insurance is higher, but fleet owners can lower the cost of vehicles and equipment by opting to lease instead of purchase. Plates per active truck can run up to $3K. Additionally, there are Heavy Vehicle Use Tax Obligations, which can cost up to $500 per vehicle, as well as state-specific taxes for operating heavy vehicles, which can be up to $500 per truck, depending on the state. As with owner-operators, fleets must get DOT numbers, Unified Carrier Registrations, and a federal tax ID. There are additional registrations and costs depending on if your fleet is only going to operate within its home state, or if you are providing interstate services. Then there is the matter of payroll, benefits, and keeping with quarterly IRS liabilities. A small trucking company should expect an initial investment of $20K to get up and running.
Starting Off with a Healthy Cash Flow
Whether you are starting a trucking company as an owner-operator, or if you are launching a fleet of trucks, cash flow will be crucial from the first day forward. Between fuel, insurance, equipment, maintenance, payroll, and other costs, waiting 30-90 days for payments on receivables can put a trucking company in the red. At Single Point Capital, we specialize in factoring for trucking companies of all sizes. Our team will turn unpaid receivables to cash in a single day, so truck company owners can maintain a healthy cash flow, meet all financial and tax obligations, and build up capital for long-term growth and success. If you are starting a trucking company, contact the team at Single Point Capital and learn more about our factoring services.