The trucking sector is a growing and highly profitable industry that’s always open to new entrepreneurs. The recent rise of eCommerce has created plenty of consumer demand, along with new opportunities for growth and expansion.
Although this sector can be lucrative in the right setting, if you’re starting a new trucking business, you should know it has very stringent legislation, marketing, finance, and logistics requirements. Business owners who don’t carefully consider every aspect of the industry can quickly find themselves and their companies in hot water.
One of the best ways to ensure you cover every angle of operations before you hit the road is to draw up a business plan. Creating a detailed business plan provides you with a roadmap to follow, and will keep you on track and on target as you grow. If these reasons aren’t enough to convince you, consider the following areas a business plan will be integral in, when starting up your trucking business.
- Locating the Right Premises
When most people think of trucking companies, they think of the on-road factors involved. However, you’ll also need physical, static premises to operate your business from.
You can start by hiring an office and buy your own warehouse later down the line—but these options carry expenses. This is where your business plan comes in. Including plans for your physical premises in your plan will enable you to budget effectively to cover the costs of your rental or land purchase, building, furnishing, office equipment, and anything else your office will need to be functional.
You’ll also need secure premises to park and store your trucks when they’re not on the road, so be sure to factor in the parking space requirements and costs involved too.
- Assessing Vehicle and Equipment Needs
Any trucking business will require a fleet of vehicles to get started. Many smaller companies have successfully started ventures with a single truck, or a very small fleet, and you can take the same route, depending on your available budget.
Either way, the type and number of trucks you need will depend on the capital you have available, and your target market. You’ll need to decide whether to invest in new vehicles, or to buy used trucks instead, the latter which may require more mechanical maintenance. New trucks have fewer maintenance costs and tend to be more reliable on the roads, but require larger sums of cash up-front.
Use your business plan as a tool to help you assess and budget for the costs of purchasing your fleet, and keeping it road-ready. You should add factors such as purchase prices, fuel consumption, gross vehicle masses, and truck engine horsepower to your plan. Alongside the vehicles, your plan should budget for equipment such as tents, ropes, repair and garage tools, and any other items your drivers will need.
- Obtaining the Right Licenses and Insurance Policies
Once you’ve decided on the number, type, and build of trucks you will purchase, your business plan can help to determine which business licenses and insurance policies your fleet will require. It’s crucial you obtain the right licenses and insurance to protect you from legal liability and the potentially devastating costs that come with it.
Your drivers must be correctly licensed, with recent records of their driver certifications and health checks readily available. Factor in the costs of training, testing, and reviews, as well as driver and truck licensing. Your local council will be able to highlight the regulations you must follow to keep your business legally viable.
- Streamlining Hiring and Employee Management
Aside from your fleet, your staff will be the cornerstone of your trucking operation. Hiring plans, staff force payroll costs, and employee management protocols should all form part of your business plan. A sufficient plan will allow you to streamline the hiring process, find staff and drivers with skills best suited to your operation, and keep your staffing costs within your allocated salary budget.
Trained drivers who can handle all kinds of hazards are a must, but depending on the size of your outfit, you may need to hire accounting and finance personnel, marketing specialists, and office employees, among others. Marketing is important in the competitive logistics industry, so take care to allocate enough of your budget to secure a knowledgeable professional who can put your business on the map.
- Securing Capital
The amount of capital you’ll need to start your business will largely depend on the size of the company, what you want to achieve, and what resources you have available. Drawing up a comprehensive business plan is crucial to obtaining capital from investors. Without a clear and viable plan, very few banks, investors, and potential shareholders will be willing to pour funds into your venture.
If you cannot access investors or bank loans, you may choose to use your personal savings to start a small business and grow it over time. A business plan is still important in this scenario, as it will help you to manage your finances and debt obligations to ensure your investment generates a profit as soon as possible.
- Gauging the Market for Your Sector
The trucking industry is massive and grows consistently year on year. Hundreds of different industries require logistical services, from the fuel, mining and agriculture industries, to the medical, construction, retail, supermarket, and manufacturing sectors.
In your business plan template include a section where you indicate whether you’re focusing on a profitable niche, or if you plan to address the entire industry with your services. Then outline how you plan to target this market, and how you’ll achieve your goals.
- Assessing Your Business’s Long-Term Profitability
A business cannot continue to operate indefinitely if it’s not generating profit. Unfortunately, many trucking businesses fail over time due to a lack of profitability. You can avoid this costly process by using a business plan to predict your company’s long-term profitability statistics.
Take into account your expected expenses and estimate your income over the course of the first quarters and years of your operations. Determine how long it will take your business to generate profit, and whether its expected earnings will cover your business expenses.
Remember that there will be a certain amount of bias involved in your estimates, so you need to be conservative with your figures to remain as accurate as possible.
The Bottom Line
Your detailed trucking business plan will allow you to carefully plan and assess every aspect of your company’s operations. It can be used for several other important processes too, including raising capital, applying for bank loans, and acting as a start-up launching guide and logistics business proposal.
Additionally, your business plan will help you gauge start-up costs and short- and long-term profitability of your venture, and could assist you in finding a dedicated business partner who shares your professional vision. It will even serve as a comprehensive manual that you can use to help formulate solid business strategies to take your company to the next level.