If starting a business is challenging, starting a new trucking business can be extraordinarily challenging.
Roemer Insurance was founded in 1934, specializes in truck insurance and has helped many companies succeed over the years.
One of Roemer’s most popular informational videos is about starting a trucking company. Having worked with a number of startups over the years, I believe their advice should be called the 5 Commandments of starting a trucking company— not merely tips
Here they are . . .
- Tip #1 Start with one or more core customers
- Tip #2 Have 90-120 days operating capital on hand before
- Tip #3 Improve your credit rating
- Tip #4 Start Small
- Tip #5 Pick 3 professional advisers
Core customers are profitable customers and profitable customers are always difficult to find. Trucking is an extremely difficult business because unless you can find equally profitable return freight, half of your miles will be empty (deadhead miles). Some lanes of traffic simply might have little return freight because there are inbound states and outbound states for freight, as well as seasonal variations and business and economic cycles.
Having sufficient operating (working) capital means you can pay your bills (fuel, insurance, and wages, even if it is to yourself), while waiting to get paid. There are occasions, for various reasons, that you may not get paid at all or customers learn you’re okay with slow payments, or perhaps you are slow in your billing. How many months can you afford to wait? What if your main customer suffers a reversal or changes their policy and there is no money for a while longer than anticipated?
Your credit score may be used to determine what kind of risk you could be to the insurance company. This is turn may affect your ultimate premiums.
Pilot, pilot, pilot. Anyone starting a business is usually shocked at how quickly the bills add up. Not having done it before, a new business owner will find that there are many blind-spots, traps and pitfalls in getting a new business up and running. Everything, it seems, takes twice as long and costs two to three times more than expected. Do test runs and work the kinks out of your processes, paperwork, and procedures.
“I always pass on good advice. It is the only thing to do with it. It is never of any use to oneself.”
― Oscar Wilde
Good advice is plentiful. So is bad advice. Good advisers are outnumbered by the bad advisers. Finding a helpful adviser you can trust is difficult.
In addition to having a good accountant, attorney, and insurance agent, find someone who is up on DOT regulatory requirements. Sometimes your insurance company has a Loss Control department that will provide help in this area at no additional charge to you. Another key player on your team is having a good, honest mechanic who is available when you need them.
Mike Lawrence from InsureMyRig.com gives his Top 5 Tips . . .
The 6th Commandant
I would like to add a sixth tip. It is always prudent to write a business plan for your new business. Working in a business and running a business are two different things. Becoming a business owner is a new role that requires a new mindset. One of the most common errors I see in many transportation businesses is the lack of proper documentation. Start off right with a business plan to put you in the proper mindset. Many local community colleges may offer a class on starting a business and can help in this area. Learn how to document everything— all of your plans, policies and procedures — and get in that mindset.
What does any of this have to do with safety?
If you are not profitable, safety falls to the side.
If you aren’t at least break-even, you can’t pay your bills and maintenance will fall to the side along with safety.
If you can’t pay yourself, your business will become a burden instead of the joy it was meant to be and safety will falter.
Much thanks to Mike Lawrence from InsureMyRig.com for his informative video.
Thank you for reading this.
Disclaimer: Reference to any specific product, process, or service by trade name, trademark, manufacturer, company name or otherwise does not constitute or imply its endorsement, recommendation, or favoring by the author.