Unless you have wealthy relatives who are prepared to fund your trucking company with no strings attached, it’s in your best interests to write a professional trucking business plan to help you approach lenders, investors, or partners for money.
A thorough, precise, and well-structured trucking business plan can assist you in obtaining the funding you require to purchase vehicles, truck equipment, and other essentials. But, more importantly, it gives a vital road map for the practical and logistical procedures you’ll need to take when launching a trucking company. Stay tuned as this article will give you a broad understanding of what an owner-operator business plan is all about. Click here to read extensively about Business Model vs. Business Plans.
What to Include in a Trucking Business Plan?
Regardless of the product or service offered, a trucking business plan should include much of the same information as any other sort of business plan. 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,” according to the US Small Business Administration (SBA).
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.
Before you sit down to prepare your business plan, think out what information potential lenders, financiers, or investors will need to ensure your funding requirements are met.
In your business plan, you’ll need to incorporate some particular information that is specific to your company’s demands. According to the SBA, nearly all business plans should include the following:
- Executive Summary
- Company Description
- Market Analysis
- Sales and Marketing
- Funding Request
- Financial Projections
- Executive Summary
Steps to Take Before Writing a Business Plan for Your Trucking Company
When you start the process of obtaining finance, it’s a good idea to perform as much legwork as possible ahead of time so you’ll be ready to go when your funding arrives. According to Linda Finch, a compliance consultant with the OOIDA, the following actions should be taken:
- Create a sole proprietorship with a DBA, a Limited Liability Company (LLC), or a corporation for your firm.
- Obtain an Employee Identification Number (EIN) (EIN).
- Apply to a Motor Carrier (MC) number. The Federal Motor Carrier Safety Administration allows you to do this online (FMCSA).
- Submit a BOC-3 to the FMCSA. According to the RTSFinancial website, this form “gives motor carriers, brokers, and freight forwarders a legal presence in any state where they do business.”
- Get a truck insurance policy. Finch recommends main liability insurance of $750,000, cargo insurance of $100,000, and liability insurance of $1 million. Damages to individuals or property caused by your truck or trucks are covered under primary liability.
- Get a federal DOT number by registering your business with the US Department of Transportation. You’ll need to tell us where you’ll be operating, how many vehicles you’ll have and what kinds of trucks you’ll have, whether you’ll be hauling hazardous goods, the weight of your vehicle, the type of cargo you’ll be transporting, and whether you’ll be a freight forwarder.
- Obtain your assigned plates and establish an International Registration Plan or IRP. This is an agreement between the states, the District of Columbia, and Canadian provinces that accepts the registration of commercial motor vehicles registered in other jurisdictions, according to the IRP website. “Payment of apportioned licensing fees based on the total distance operated in all member countries,” according to the agreement.
- Create an International Gasoline Tax Agreement (IFTA) account, which, according to the California.gov website, is another agreement between the United States and Canada that simplifies fuel use taxes for interstate carriers.
Trucking Business Plan Sample
Here is standard way of writing a truck business Plan. Use a simple business plan template and adjust it to your needs to speed up the trucking business plan process. All business plans, regardless of industry, should include the same key sections. When drafting a business plan for a trucking firm, make sure to include the following areas.
a. Overview of the Business
The company description is the next section in your trucking business plan. This is where you tell us about your company’s history and how you got into trucking. You can go into further detail about the company’s objective, how your business will stand out from the competition, and who will make up your client base in this section.
Use this section to describe your competitive advantages. You might, for example, have experience with a specific sort of freight or market, as well as a large network of logistics companies, shippers, and freight brokers. Give specifics about your trucking career, from the beginning as a truck loader to managing a fleet of drivers
b. Executive Summary
This section should give a quick summary of your organization and its plans. Include information about your company’s mission, finances, performance, and expansion goals. The executive summary should be no longer than one or two pages in length. Because this is the first thing someone will read, you must make a good first impression.
Keep your language succinct, captivating, precise, and to the point. If you don’t grab the reader’s attention right away and make a compelling case for why you’re establishing a business and why it will thrive, your business plan may be tossed aside before the rest of it is read.
You’ll describe the services you aim to offer, how you’ll carry them out, and how they’ll fulfill market demand in this area. Explain how having a license to transport hazardous chemicals, for example, gives you a competitive edge and what types of consumers will need your services.
Give details about where you’ll be doing business and how it will affect your services. For example, a trucker in the Southeast would likely transport more construction supplies than one in the Northeast. Similarly, a trucker in the prairie states would most likely have more farming-related seasonal work.
d. Market Research
In many ways, the market analysis section of your trucking business plan is the most crucial because it’s where you can wow lenders and investors with your market knowledge. The purpose is to give data that demonstrates you understand industry trends, market demand, what works and doesn’t work in acquiring new business, and the strategies you’ll employ to get an advantage over competitors.
The following facts should be included in your market analysis:
- Business Overview and Forecast: Provide information on the size of the trucking industry in terms of both revenues and carriers. Include the number of competitors, the most powerful players, the largest shippers, and the industry’s annual income. Also, share information on how the industry is likely to develop and grow over the next five to ten years.
- Target Market: This is where you’ll focus your research on a certain niche market (e.g. tankers, refrigerated loads, flatbeds, etc.). Provide data on the market size in dollars, the number of competitors, the largest shippers and carriers, and the market outlook for the next five to ten years in this field. Describe how you intend to differentiate yourself from the competition in terms of services, competence, price, and dependability.
- Pricing and Margin: Describe how you plan to price your services, how they compare to rivals’ prices, and what sorts of margins you’ll need to be profitable.
- Competitive Analysis: Potential lenders and investors will want to know that you have a thorough understanding of the carriers and owner-operators with whom you’ll be competing. Provide extensive information on competitors, including who their key consumers are, what they do well, where their flaws are, and how you plan to exploit those flaws.
- Regulatory Environment: The federal government (and some state governments) regulates the number of hours you can drive in a day and week, the types of materials you can haul and where you can haul them, your vehicle’s fuel emissions, and the types of permits and licenses you need to operate in the trucking industry. Explain the rules you’ll have to follow and how you plan to follow them.
You can also discuss operational concerns here, especially as they relate to how pending legislation or regulations may affect your company.
e. Marketing and Sales
Reaching the right people at the right time and in the right manner will be critical to the success of your trucking company. Once you’ve formed a relationship with a prospect, you’ll have to persuade them to do business with you. You detail ways to discover potential clients and sell them your services in the sales and marketing portion of your business plan.
- Marketing Strategy: Explain how you’ll create and grow your client base in this part. Give specifics on how you’ll advertise your company, whether it’ll be through traditional advertising on industry websites, social media, buying phone, and email lists, attending trade exhibitions, or a combination of the above and other methods. Be explicit about the types of clients you’ll be targeting and where they’ll be found in your marketing. Also, include information about the marketing budget you want to set aside.
- Sales Strategy: This part will mostly address the type of sales organization you intend to establish. Provide data on how many sales agents you expect to have on staff, their compensation structure, and what kind of weekly or monthly sales goals you’ll apply if you plan to hire your own sales force. If you plan to hire a third-party salesperson, research the organizations you’re considering, as well as why they’re successful and how much you’ll spend. Also, describe how you went about finding and calling on prospects.
f. Request for Funding
This section explains the finance needs you’ll need to get your trucking business up and running, as well as how to maintain it running smoothly in the future. Be very clear about the amount of money that will be required over the following few years and how it will be spent. You may use the money to buy a truck and truck equipment, pay staff and bills, and expand your client base, for example. Also, clarify whether you’ll need a loan or equity, as well as how long you’ll need it for and what terms you’ll need it for.
g. Financial forecasts
This is where you’ll reveal your company’s financial information as well as its ability to accomplish its financial goals. Basic financial records like the balance sheet, profit-and-loss statement, cash flow statement, and sales forecast should all be included. You can also include a break-even analysis that explains how much you need to sell on a monthly or annual basis to pay your operating expenditures. Give an estimate of how the company will fare over the following five years.
As an entrepreneur, this is what you must do after creating a business plan.
You will have to deal with and be prepared for a lot more in this profession than just having your CDL and driving a truck. We hope that by reading this article, you will have a better understanding of what a trucking business plan is and what it includes, such as an effective overview, company description, services, market analysis, sales, and marketing plan, as well as funding requests and financial predictions.