Did you know that in 2021 the trucking industry had a value of a whopping 212 billion US dollars? So there’s a lot of room for you in that industry. But how to own a trucking business without actually owning it? Here’s how to invest in a truck without driving:
- Layout a Trucking Business Plan
- Complete the Paperwork
- Select the Right Truck Specifications
- Get Your First Truck
- Get Insurance
- Hire Drivers with CDL
- Find Loads and Clients
- Oversee the Trucking Operations
With time, the trucking industry is only expected to go up, and it is a great way to make some passive income, so now’s your chance to take a shot.
In this article, I’ll walk you through some easy steps so that you learn how to invest in a truck without driving easily.
Read on to find out!
How Much Does a Truck Owner Make?
|Time Period||Average Income of a Truck Owner (Per Single Truck)|
|Per Hour||$10 — $45|
|Per Day||$80 — $350|
|Per Week||$500 — $2,000|
|Per Month||$2000 — $8,000|
|Per Year||$24,000 — $96,000|
This table shows the average income of a truck owner (per single truck) for hours, days, weeks, months, and years.
The average monthly profit of a truck owner is around $500 to $2000 per single truck owned. More trucks can multiply the revenue of a trucking business. The profit varies on drivers’ performance, mileage driven, and location of operation.
Here are some other factors that can make or break your trucking business income as a fleet owner without driving:
- Truck Maintenance
- Seasons (If Your Business is Seasonal)
- Drivers’ Skillset
- Type of Operations
So there’s huge potential for owners to upscale their business by getting more trucks to make more money.
Investing in a truck has immense potential, where you can always hire drivers or lease the trucks to make a passive income.
You may have to trade off a part of your salary with the drivers, but at that cost, you get to make money without having to deliver loads to far-off distances.
Do You Need a Commercial Driver’s License (CDL) to Start a Trucking Company?
You do not need a CDL to start a trucking company. You only need a CDL if you decide to drive the truck yourself. If you have hired drivers for your trucking business, you are good to go without a CDL.
Since you’ll only be owning the trucks and won’t be hitting the roads in your truck, there’s no need for a CDL. The drivers you will be hiring will need a CDL to start working at your company.
» Read my blog post about: How to Buy a FedEx Route to Make Money
How To Start an Owner Operator Trucking Business to Make Passive Income
Starting a trucking business is no easy task, but my step-by-step guide will help you get started. This may not have everything in it, and there must be things that you learn along the way, but it will suffice for you to get going.
#1 Come Up With a Business Plan
I’m starting my list with this point assuming that you’ve already decided on starting a trucking business to generate a passive flow of income and are ready to take the leap.
So, before you begin anything, you need to have a clear understanding of the market and determine the scope of your business. You need to come up with a business plan to organize your incoherent thoughts and to better manage the steps ahead.
So here, by a business plan, I mean you need to determine whether you need to carry and deliver loads within your state or go to far-off distances.
There are separate legalities for traveling across states for commercial drivers, but it allows you to expand and scale-up.
Being a newbie in the trucking business, I’d suggest you stay within the state and expand as you learn the tricks of the trade. It may limit your competition, but at the same time will let you play safe.
Lastly, figure out your strengths and weaknesses and see how they can be best implemented in your business.
By now, you already know that you need to hire a driver, so that’s sorted, now onto the office work. Managerial work is no piece of cake, so you could probably use an assistant.
Once you have a clear image in your head of achieving each task, it will help you run a successful business.
#2 File the Paperwork
Starting a business necessitates the completion of paperwork and the acquisition of permits.
Even if you won’t be driving a truck yourself, you will need to file the much-needed paperwork. These are the legalities of carrying freight from one place to another.
Here are some of the registrations and paperwork you’ll need to get ready.
|EIN or an Employer Identification Number||It is also known as the Federal Tax Identification Number that comes in use during taxation. It helps the International Revenue Service (IRS) identify your business. You can apply for it on the IRS website.|
|2. USDOT Number||It is a one-of-a-kind identifier that allows a business to transfer goods across state lines.|
|3. MC/DOT Number||Not every trucking company needs it but it comes in use for the transport of controlled goods. You can obtain both MC/DOT and USDOT numbers through the Federal Motor Vehicle Standards website.|
|4. DUNS Number or a Data Universal Numbering System||It is another piece of paperwork that maintains a record of many pieces of information about your firm, such as contact information, corporate family links, and other financial assets that indicate the company’s financial health. You can register for it by calling the toll-free number 1-(866) 705-5711.|
|5. FMCSA or Federal Motor Carrier Safety Administration||This government agency is in charge of ensuring the truck’s and its drivers’ compliance and safety. They’ll be in charge of protecting and enforcing your right to transport commodities both within and outside of a state. You can register for it at fmcsa.dot.gov.|
|6. Boc-3||For both FMCSA and Boc-3, you need to hire an agent (different for each state that you intend to operate in) to satisfy the agencies. By filing the Boc-3 you get the authority to transport goods.|
#3 Select The Right Truck
When learning how to establish a trucking company, one of your most important assets will be your commercial vehicle, so make sure you buy a proper one.
On average, you need to have a capital of $10,000 to $20,000 (excluding the cost of the truck) to start a small-scale trucking business with one or two trucks.
I have written a separate guide on How to Start a Box Truck Business in which I have written the prices of box trucks. Check it out!
The prices vary from state to state and the type of business you opt for like within the state or across different states. The cost is also variable on the freight and cargo a business owner plans to haul.
Factor in these points before purchasing a truck:
- Your selected mode of transportation
- Weather resistance
- Whether they have multiple franchises across the United States.
- Weight restriction
- New vs Secondhand
- Whether you’re working on a local or long-distance basis
Make sure you take a test drive before buying a truck. However, if you want to narrow down your options, Kenworth, Freightliner, and Peterbilt trucks are some of the best ones.
#4 Sort the Finances for Your Truck
Goes without saying that you need a truck to start a trucking business. There are three ways that you can finance your first truck.
- Rent a truck. It is an easy and cheap option to get started and various companies rent their trucks for long durations. They have different options for the kinds of loads you can carry, the duration, etc. Most of them do not offer insurance but are flexible in times of emergencies. It costs around $20 to $30/day to rent a truck.
- Lease a truck. Leasing is cheaper than renting and the companies even have insurance options for accidents, etc. You can lease a truck for $1,600 to $2,500/month. The companies do require a downpayment, so keep the cash in handy.
- Buy a truck. This is the most expensive option, but it makes you the owner and you get to keep the maximum profit of the earnings. A brand new truck costs around $80,000 to $150,000 and goes up to $200,000. You could even buy a second-hand truck for as low as $15,000 depending on its size, condition, and age.
You can apply for Small Business Administration (SBA) loans which have low-interest rates, high loan totals, and great repayment terms for trucking businesses.
Secondly, you can go for small-term business loans that lenders provide to borrowers, which are to be paid back in a given time.
Lastly, there are equipment financing loans where the borrower approaches the lender with an exact quote for equipment. Once approved, the lender lends the money which the borrower has to return in a given time frame.
To get your USDOT approval, you need to get insurance. It’s a bit expensive for the trucking business, but one is that critical.
General liability coverage of $750,000 and a $75,000 surety bond are the minimum requirements.
Keep the proof of insurance in the truck in case your driver needs to provide proof of coverage.
#6 Hire Drivers with CDL
Since you’ve decided to run a trucking business without driving, you need to hire drivers with a commercial driver’s license (CDL) because that’s a requirement.
You can hire more than one driver if you plan on leasing, buying, or renting more than one truck.
There are two methods for hiring a driver for your company. You can hire the driver as an employee (you pay them a steady wage and benefits) and have them fill out a W-2.
Or you can hire them as a contractor and have them fill out a 1099 or W-9, indicating that they are self-employed and that you are simply contracting them as a driver.
Since this is an exhaustive duty, make sure to give good incentives to your drivers to not let them go that easily. Tip them often for long hauls and provide the paid benefits to guarantee their satisfaction.
#7 Find Loads and Clients
Now that you’re all settled, it’s high time to find loads to deliver to clients. One of the best ways to do that is through freight brokers and trucking consultants.
You can even invest in advertisements and marketing your business to reach your potential clients.
In a separate blog post, I have some tips for getting more box truck contracts.
#8 Oversee the Operations
Even if you don’t drive one of the trucks, your contribution to the success of your trucking business will be critical.
As your operation grows, you’ll have more to manage, from regulatory compliance to sourcing loads to something as simple as ensuring you have the money to pay for petrol.
Always make sure your trucks are packed and ready for the road when managing your fleet. You want to be road-ready at all times, whether that means topping off the oil, checking tyre pressure, or anything else.
Another wonderful suggestion as you progress is to always have a backup driver on hand in case of unforeseen occurrences.
You need to know if your clients are satisfied so that you can take care of their shipments in the future to keep your business functioning.
Make an effort to connect with clients in every way possible. Maybe give them a call and see if they’re happy with the pickup and delivery process, and then ask how you can improve moving forward.
If you own a food truck, make sure your products’ quality is top-notch!
Doing the Math
Keeping track of your finances is the final aspect of owning a business. If you are not a natural mathematician, get a professional to assist you with your bookkeeping. It is critical that you pay your staff while simultaneously maintaining your fleet.
You must be able to distribute your money between wages for your employees, and business investments, and ensure that you are able to take home a paycheck as well.
Since the trucking sector relies on assets that degrade over time, such as vehicles, you’ll need to set aside funds to perform repairs or purchase new trucks.
Now that I have covered the basics of starting a trucking business, I’d like to share the pros and cons of starting your trucking company.
Advantages of Starting a Trucking Company
There are some major plus points of starting a trucking company and I’d like to share a few.
#1 It’s Recession-resistant
The United States heavily relies on the trucking company. As a trucking business owner, you’ll be responsible for moving loads from one location to another.
There’s always a need for trucking companies to transport goods and materials around the country, which makes it recession-proof.
#2 Desperate Need for Drivers
The trucking sector is expected to require 100,000 drivers in the future, while employers are scrambling to recruit drivers to fill the gap.
This will certainly give you a strategic advantage when figuring out how to establish a trucking firm because you’ll be helping to meet a need for more vehicles and drivers.
#3 Good Way to Make Passive Income
Since you’ll be working as an owner-operator and not doing the exhausting driving, you can make a good passive income by staying in the office and not going on the roads delivering loads to clients.
Drawbacks of Starting a Trucking Company
Each business comes with a set of pros and cons, here are those of a trucking company.
#1 Huge Financial Risk
Even if the trucking industry is highly profitable, as an owner-operator, your financial risk is steep. Your truck’s upkeep and fueling is your responsibility.
To begin, a substantial sum of money is required to make a down payment on a truck and to cover monthly equipment charges.
To secure your finances, read this article on avoiding losing all of your invested money.
#2 High-pressure Industry
An owner-operator’s pressure and stress levels can be higher than those of a salaried driver. You’ll need to do some research and network with trucking businesses to figure out which ones will pay the most and are reliable.
Due to contracts and a lack of funds, it’s difficult to move from one employment to another.
» Maybe this also could be of interest to you: $5,000 Per Month? – Starting a Bread Route to Make Money
It may appear difficult to learn how to invest in a truck without driving. The costs of equipment may be higher, and the quest for talent may be more competitive, but the fundamentals of beginning a trucking company remain the same.
You, too, can get your trucking business off the ground with the correct business plan, licensing, and funding in place.