Unless you have rich relatives willing to finance your trucking business with no questions asked, it’s in your best interest to write a business plan to aid you when approaching lenders, investors or partners.
A comprehensive, detailed and properly structured trucking business plan can help you get the financing you need to purchase trucks, truck equipment and other necessities. But more importantly, it also provides a critical road map of practical and logistical steps you’ll take when starting a trucking business.
What to Include in a Trucking Business Plan
A trucking business plan should contain much of the same information as any other type of business plan, regardless of the product or service the business provides. According to the U.S. Small Business Administration (SBA), a good business plan “guides you through each stage of starting and managing your business … [including] how to structure, run and grow your new business.”
For truckers, the business plan should include industry-specific information that displays a thorough knowledge of what it takes to be competitive and profitable, according to the Owner-Operator Independent Drivers Association (OOIDA), a Missouri-based organization that advocates for the rights of professional truck drivers.
The first thing you’ll want to do before sitting down to write your business plan is figure out what potential lenders, financiers or investors need to know to ensure your funding requirements are met.
You will need to include some customized information in your business plan that is specific to your company’s individual needs. However, just about all business plans should include the following, according to the SBA:
- Executive Summary
- Company Description
- Market Analysis
- Sales and Marketing
- Funding Request
- Financial Projections
The details in each section will differ depending on whether you want to be an independent owner-operator or company owner with a fleet of trucks. There will also be variations based on the type of freight you’ll be hauling and where your trucks will be travelling. As a general rule, though, each section should contain detailed and accurate information that lets potential investors or partners know you’ve done your due diligence on the trucking industry and have a clear understanding of what it takes to be successful.
Looking for truck financing to start and grow your own trucking business? Contact Seek Business Capital today to see how we can get you the financing you’re looking for.
Steps to Take Before Writing a Business Plan for Your Trucking Company
As you begin the process of obtaining financing, it’s a good idea to do as much legwork as possible ahead of time so you’ll be ready to hit the ground running when your financing comes through. Linda Finch, a compliance specialist with the OOIDA, recommends taking the following steps:
- Register your business as either a sole proprietorship with a DBA, a Limited Liability Company (LLC) or a corporation.
- Obtain an Employee ID Number (EIN).
- Register your business with the U.S. Department of Transportation to get a federal DOT number. You’ll need to provide information on where you’ll be operating, how many trucks you plan to have and the types of trucks, whether you’ll haul hazardous materials, your vehicle weight, the type of cargo and whether you’ll be a freight forwarder.
- Apply for a Motor Carrier (MC) number. This can be done online via the Federal Motor Carrier Safety Administration (FMCSA).
- File a BOC-3 with the FMCSA. This form “gives motor carriers, brokers and freight forwarders a legal presence in any state where they do business,” according to the RTSFinancial website.
- Obtain truck insurance. Finch recommends $750,000 in primary liability insurance, $100,000 in cargo insurance and $1 million in liability insurance. Primary liability covers damages to people or property caused by your truck or trucks.
- Get your apportioned plates and set up an International Registration Plan, or IRP. According to the IRP website, this is a an agreement between the states, District of Columbia and Canadian provinces that recognizes the registration of commercial motor vehicles registered by other jurisdictions. It provides for “payment of apportioned licensing fees based on the total distance operated in all member jurisdictions.”
- Set up an International Fuel Tax Agreement (IFTA) account, which is another agreement between the U.S. and Canada that simplifies fuel use taxes by interstate carriers, according to the California.gov website.
- Get a Unified Carrier Registration (UCR). This requires carriers and other businesses involved in interstate commerce to pay annual fees based on fleet size to supplement funding for state highway motor carrier registration and safety programs, according to UCR.gov.
Information to Gather for Your Trucking Business Plan
The OOIDA also recommends that truckers educate themselves on industry and financial basics before putting their business plans together. To that end, the OOIDA offers business education training seminars designed to help those who are starting a trucking business. The seminars cover everything from obtaining financing and developing the right financial plan to ensuring that all the right boxes are checked in terms of permits, licensing, taxes and compliance.
When developing your business plan, the OOIDA offers the following guidelines:
- Determine what your operating assets are in comparison to your liabilities.
- Learn about managing costs to realistically project your financial success.
- Determine your cost of operations, including the fixed and variable costs.
- Determine how much cash flow you will need in order to succeed.
- Develop realistic operating procedures that reflect the freight you will be hauling and the demographics of where the freight originates and where it is delivered.
- Research the different rates required by different freight lanes, and why they differ.
- Learn where to get freight and when to use or avoid load boards. Load boards, also known as freight marketplaces, are online load and truck freight boards used by owner-operators to find their own loads.
- Educate yourself on spot market versus contract rates. Aborn & Co., a Massachusetts-based provider of managed freight solutions, describes a spot rate as “a one-time single-use rate quote that is valid for a short period of time and is issued to a shipper at or near the time of their shipment.” A contract rate is “a fixed price that is valid for a predetermined period of time and is negotiated with a shipper in advance of any freight moves.”
- Research the advantages and disadvantages of adding fuel surcharges to your pricing.
It’s also important to familiarize yourself with the basics of accounting, regardless of whether you plan to handle this function yourself or contract it out to a third party. Courses are offered online and at community colleges that can help you learn about balance sheets, profit-loss statements and how to calculate total assets and total liabilities.
If you are looking for truck financing to take your company to the next level, contact Seek Business Capital.
How to Write a Trucking Business Plan
When you’re ready to start writing your business plan, using a template or outline like the one below will ensure your business plan is properly structured and organized.
Trucking Business Plan Template
To expedite the trucking business plan process, utilize a basic business plan template and customize it to your needs. Regardless of your industry, all business plans should cover the same key sections.
Here are key sections to include when writing a business plan for a trucking company:
This section should provide a short overview of your company and its plans for the future. Include details on your company mission, financial information and performance and growth plans.
Ideally, the executive summary will be no more than one or two pages. Because it’s the first thing someone will read, you need to make a strong impression here. Keep the wording crisp, compelling, precise and to the point. If you don’t catch the reader’s attention and make a strong case for why you’re starting a business and why it will succeed, your business plan might get pushed aside before anyone has a chance to read the rest of it.
The next section of your trucking business plan is the company description. This is where you write about the background of your business and your connection to the trucking industry. You can go into a little more detail here about the company mission, how your business will differ from the rest of the playing field and who’ll make up your client base.
Use this section to outline the advantages you have over competitors. For example, you might have expertise in a particular type of freight or market, or a strong network of logistics companies, shippers and freight brokers. Provide details on your experience in the business, including everything from starting out as a truck loader to managing a fleet of truckers.
This is also where you’ll provide key facts about your trucking business, such as the owners and management team (if applicable), the year of incorporation, where you’ll operate and the states your business is registered in. You will also provide details on employees (if any), their roles and responsibilities and your plans to hire more as your business grows.
Seek on Forbes: Is Silicon Valley Going After America’s Truck Drivers?
In this section, you’ll outline the services you plan to offer, how you’ll go about executing them and how they will meet market demand. If you are licensed to haul hazardous materials, for example, explain how this is a competitive advantage and what kinds of customers will require your services.
Provide information on where you’ll be operating and how that will impact your services. A trucker in the Southeast, for example, would probably haul more construction materials than one in the Northeast. Similarly, a trucker in the prairie states would probably have more seasonal business tied to farming.
The services section should also include details about your pricing structure, the types of freight you plan to haul and the industries you’ll serve.
In many respects, the market analysis portion is the most important section of your trucking business plan because it’s where you can wow lenders and investors with your market knowledge. The goal here is to provide the kind of data that shows you’re well-versed in industry trends, market demand, what works well and doesn’t work well in winning new business and the techniques you’ll use to gain an edge over rivals.
Your market analysis should include the following information:
- Industry Description and Outlook: Provide data on the size of the trucking industry in both dollars and carriers. Include the number of competitors, the biggest players, the biggest shippers and the annual revenue the industry generates. Also, provide data on how the industry is expected to grow and evolve over the next five to 10 years.
- Target Market: This is where you’ll narrow down the data to your specific niche market (e.g. tankers, refrigerated loads, flatbeds, etc.). Use this space to provide information on the market size in dollars, the number of competitors, the biggest shippers and carriers and the market outlook over the next five to 10 years. Explain how you plan to stand out from the crowd in terms of services, expertise, price and reliability.
Also, provide data on how much market share you expect to carve out during a specified time period and how you plan to grab it. Be specific here. Instead of saying, “We plan to gain share by providing exceptional service,” explain what makes your service exceptional, how it differs from the competition and why customers will migrate to your company.
- Pricing and Margins: Provide details on how you intend to price your services, how those stack up against competitors and what kinds of margins you’ll need to operate on to be profitable.
- Competitor Analysis: Potential lenders and investors will want to know that you have a deep knowledge of the carriers and owner-operators you’ll be competing against. Provide detailed information on competitors, who their main customers are, what they do well, where their weaknesses lie and how you plan to exploit those weaknesses.
- Regulatory Environment: The trucking industry is heavily regulated by the federal government (and some state governments) in terms of the number of hours you can drive in a day and a week, the types of material you can haul and where you can haul them, your vehicle’s fuel emissions and the types of permits and licenses required to operate. Explain the regulations you’ll need to operate under and how you plan to comply with them.
You can touch on operational risks here as well, particularly as they pertain to how pending legislation or regulations could impact your business.
Need truck financing to get your business up and running? Contact Seek Business Capital today to see if you qualify.
Sales and Marketing
Reaching the right people at the right time and in the right way will be a key element of your trucking business’ success. So will convincing prospects to do business with you once you’ve established a relationship. The sales and marketing section of your business plan is where you outline strategies to find potential customers and sell them on your services.
- Marketing Strategy: Use this section to explain what you’ll do to build and grow your client base. Provide details on how you’ll market your business, whether through traditional advertising on industry websites, through social media, by purchasing phone and email lists, by visiting trade shows or some combination of the above or other means. Be specific about the types of clients your marketing will focus on and where they’re located. Also, provide details about the budget you plan to set aside for marketing.
- Sales Strategy: This section will mainly focus on the type of sales operation you plan to set up. If you plan to hire your own sales force, provide details on how many sales agents you expect to have on staff, what their pay structure will look like and what kind of weekly or monthly sale quotas you’ll implement. If you plan to use an outside third party to handle sales, identify companies you might use, why they’re successful and how much you’ll budget. Also, provide details on the process of finding and calling on prospects.
This section provides details on the financing requirements you’ll need to get your trucking business off the ground and keep it operating at full strength in the future. Be very specific in terms of the amount of money needed over the next several years and how it will be used. For example, you might use it to purchase a truck and truck equipment, pay salaries and bills and grow your client base. Also, specify whether you will require debt or equity, for how long and at what terms.
This is where you’ll disclose your company’s financial details and its ability to meet its fiscal targets. Include basic financial documents such as the balance sheet, profit-loss statement, cash flow statement and sales forecast. You can also include a break-even analysis explaining what you need to sell, either monthly or annually, to cover your costs of doing business. Provide an outlook of how the business is expected to perform over the next five years.
How to Get Financing for Your Trucking Business
Now that you have a trucking business plan in place, where do you go for financing? Banks and other traditional lending institutions are an obvious option, but they often won’t finance brand new businesses. Similarly, the Small Business Administration requires three years of business tax returns, which means startups have limited financing options.
One option, however, is Seek Business Capital, which specializes in helping startups and early-stage business obtain the funding they need to get their businesses up and running regardless of time in business. To get pre-qualified for trucking business financing or to just learn more about your options, check out the ultimate guide to truck financing.
More From Seek
- 10 Tips for Female Entrepreneurs From Women Who Founded Companies
- Cities With the Most Female Entrepreneurs
- 7 Best Fix and Flip Loan Options for Real Estate Investors
- 15 Pro Tips On How to Flip a House for Maximum Profit
- Seek on Forbes: Can You Flip a House With Credit Cards?
Photo credit: welcomia/Shutterstock.com