Starting a trucking company is not an easy task. It requires many steps and can be costly to get started. Because of this, you need to understand the cost before you begin!
There are three main costs associated with starting your own trucking business: initial investment, ongoing expenses, and hidden costs. We will break down everything you should consider before leaping to start your very own trucking company.
To start a trucking company, typically, will cost you around $50,000. You can create your very own trucking company for as little as $25,000 and go all the way to $1 million, depending on the number of drivers and trucks you choose to start with.
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Different Types of Costs Are Involved
To get started with your very own trucking company, you must first evaluate your situation and financial status. This primarily means that you should determine whether or not you have the financial stability to invest in such a business.
To begin this process, we recommend creating a budget for all of your ongoing and initial expenses. That way, you can start deciding how much money it will take to start a trucking company.
Initial Investment
To start a trucking company, you must have enough money to fund the following items:
- Capital Expenditure
- Operating Expenses
- Hidden Costs
Capital expenditure
This includes the cost of buying assets such as your big trucks and trailers for transporting goods. Expenses such as licensing, branding, and advertising also fall under the category of capital expenditure.
Operating expenses
These are the day-to-day expenses that come along with running any business. Everything from trucks, equipment, and fuel costs will be included in operating expenses.
Hidden Costs
The hidden costs that you may not consider at first glance include:
- How Much You Make
- State & Federal Taxes
- Mandatory Deductions
- Job Hunting Costs
- Benefits for Employees
- Renting Space
- Office Supplies & Expenses
- Fleet Expenses
- Training & Education Expenses
How Much You Make
It’s important to understand that in this role, you’ll be working on commission. There will not be a set wage each month or year that you can rely on.
State & Federal Taxes
These taxes vary by state but will be around 10% of your earnings. Keep in mind; that this is money that you won’t be seeing again since it goes directly to the government for taxes!
Mandatory Deductions
If you think taxes are a hassle (they are), you should investigate exactly what mandatory deductions are. These include fees for licensing, registering your big trucks with the DMV, and more!
Job Hunting Costs
It doesn’t matter how good of a driver you are. Finding drivers can be difficult if you don’t have the initial funds to start your own trucking business. And it’s not just about hiring and training new drivers either.
Benefits for Employees
While you may initially think this isn’t a hidden cost, it is! It can be difficult for business owners to understand how much they should budget each month to cover their employees.
Renting Space
You will need a place for your business to run.. At this point, you should start thinking about where your trucking company headquarters will be located.
Office Supplies & Expenses
These items are often overlooked by new business owners but can quickly add up. You must know how much you should budget for office supplies and expenses.
Fleet Expenses
This includes your big trucks, trailers, fuel, etc. Make sure you have a plan to finance these costs, as they can range from a couple hundred to a few thousand dollars per month!
Equipment Cost
You need to have at least one truck for your trucking business. But you might want to consider more if you plan on hiring employees. Remember, your drivers will be using these trucks every day!
On average, a used rig will run you $25,000 – $100,000, while a new rig will cost you upwards of $300,000. You want to make sure you have a reliable rig, and you won’t have to be making repairs every day.
When you first get started, you may not have the resources to get the best truck or even one with a sleeper in it. As you continue to grow your company, you may decide to upgrade to a newer truck or even one that offers a bed and a mini kitchen.
A truck with a sleeper will cost you an extra $15,000 – $50,000 depending on the comfort level of your requirements. Again, you want to make sure you have what you need to get jobs done successfully!
Downtime in the trucking business can lose contracts, cost you jobs, and put you out of business.
Training & Education Expenses
If you have never driven a big rig before, you will have to do some training. You will need to get a basic CDL license which can cost $2,500 – $10,000.
Also, you will want to make sure your drivers are trained and not putting the business in jeopardy by breaking any regulations or laws while they drive. Depending on what you plan on hauling, you may need to receive special endorsements, costing an additional $500 – $3000.
You might also think about how much it will cost you to attend seminars or workshops on business management. You want to maximize your trucking company’s revenue every month by having systems in place for maximum efficiency.
If you decide to take on new drivers, it may be a great incentive to offer to pay for their training. This will ensure they are prepped and ready to go when they start and create more loyalty to your organization.
Finding Office Space
When you first get started, you may be primarily operating out of your home. You may think that this won’t cost you anything, especially if you live in the place for free or at least the rent is very low.
However, there’s more to it than you might think. You will want to set up your workspace, which can cost $300 – $2000 depending on the technology and space you want to create.
As you take on employees, you may decide to find office space outside of your home. For office space, you will typically pay $700 – $2000 monthly rent.
Office Supplies Expenses
Office supplies are all the things you need to run your business. This includes everything from staples and pens to envelopes, paper, and even filing cabinets!
Here are some items that you should keep in mind before starting your trucking company.
Laptop $300-800
Desk $200-500
Chair $100-250
Phone $100-200
Fax machine $50-150
Printer $75-300
Laminated wall map $20-75
Filing cabinet $150-400
Finding Work
It may be hard to find work when you first get started, especially if you don’t have the right connections or high-profile clients that will give you a chance to prove your worth as their trucking company.
It can take time for this process to occur, and it doesn’t happen overnight – so make sure you plan accordingly. You might want to start an ad campaign or hire a marketing company to help you get the word out there about your new trucking business.
You may want to consider working with another established company to build up your clientele and learn how they perform their transportation needs before going on your own.
If you decide to pay for leads, you can pay anywhere from $60-$250 per lead. You can also join trucking platforms which cost an average of $75/m.
You can also use trucking load boards to find companies that have the loads you need to run. You pay a monthly or yearly membership fee on most of these websites; however, it is worth it in the long run because you get access to all the available loads in one place instead of having to go from website to website.
These fees can cost $75-$300/m or more depending on the service.
Driver Wages and Salary
First-year truck drivers typically make anywhere from $35k – $45k depending on their experience and if they have an A or B CDL. After your first year, you can expect to make between $45k – $75k.
Having employees is a business’s responsibility, and you can expect to have additional costs such as employee compensation and HR costs.
Employee compensation can cost between $50k – $75k a year per employee. Salary may vary depending on the type of company you have and how many miles they have been driven.
HR costs which include registering your employees with the government, tax payments, and benefits, can cost anywhere from $5k – $10k a year.
Depending on how you set up your company, you may be required to cover insurance for each of your employees. This can include health, dental, life insurance, and more.
This will average out to $500/employee per month. You will also need insurance for your staff if they are driving company-owned trucks and trailers. You can expect to pay around $100 – $1750 a month to protect your equipment and company.
For your trucking company to succeed, you will need a strong foundation that can stand tall in any situation.
Insurance Expenses
If you have many clients, it may be a good idea to invest in an insurance broker for your trucking company. Insurance brokers can help you get the best deals on liability, cargo, and any other types of insurance you will need.
An insurance broker will help you get the best coverage for your trucking business. The costs associated with insurance are never-ending, so be sure to figure this into your budget.
You will have to pay premiums, licenses, and other dues, which average around $3000 – $7500 per year, depending on what type of insurance you need.
Maintenance Costs
Your trucking company will need to pay for regular maintenance on your vehicles. This can include everything from oil changes, brakes, and other parts you may need to be replaced over time.
The average maintenance cost is $250 – $2500, depending on what needs to be repaired.
Tires
Tires can cost $300 – $700 depending on what type and size you need. Investing in good tires is essential to keep your business moving and able to make money.
Fuel
Although fuel is something we all need, this can be a massive expense for trucking companies who burn through it quickly while also paying for the driver’s salaries and wages.
You can expect to pay around $1.20 – $2 per mile depending on your engine’s needs.
Oil Change
Oil changes can cost $100 – $300. While this might not be something you need to do every week, it is essential for keeping your rig in top-notch condition.
Miscellaneous Expenses
Depending on how long your hauls are, you could encounter expenses such as hotels, dining, and tolls. These costs can add up quickly, so make sure you factor these costs when bidding on jobs.
Expect to spend an average of $75 per night for a hotel if your truck doesn’t have a sleeper.
Dining can average $25 a day depending on what and where you choose to eat.
Tolls for a big rig will average $4 per toll.
You may also have parking fees associated with your truck. These fees can average around $100-$400 per month, depending on where you live. If you decide to have your own trailer, these costs can be even higher.
These are expenses that should not be overlooked. They can be the difference between making money and being upside-down on jobs.
Fines and Fees
Expect at some point in your trucking journey to encounter fines and fees. These can be simple things like speeding tickets, an overloaded trailer, or even penalties for missing a weigh station.
These can cost anywhere from $1 – $1250, depending on what you are charged.
Depending on the state you live in, your trucking company may also need to pay for CDL (Commercial Drivers License) renewal every 2-3 years at an average of $25-$125 per year.
It is crucial for you to research the cost of these items before you start a trucking company.
Profit
Running a trucking company is not easy, but it can be gratifying. The best way to ensure you are getting the most out of each job is to ensure you are profitable on each job your company takes on.
On average, you should be running around a 50%- 60% margin on each job. This means that you should be making a profit of $1 for every $2 you’re paid for each job.
The more experience you have, the easier it will be to improve margins and be profitable on most jobs.
Conclusion
As you can see, there are many different costs associated with starting a trucking company. It is essential to plan accordingly and make sure your budget leaves room for these costs.
Being successful in the trucking business takes hard work, dedication, and an understanding of being safe no matter what situation comes about. Make sure you do your research and understand the cash you’ll have to dish out before taking on this venture.
