When you start up a small freight business, you can focus on the needs of shipping companies and distributors without the vast amounts of expenses that larger companies have. Starting up your own small freight company involves satisfying all state-owned business conditions, acquiring a U.S. Department of Transportation Licensing Permit, and making the right connections to succeed.
Here, we look at some other things that you need to take into consideration when setting up a small freight business.
Have you got a business plan?
Develop a business plan that outlines your experience, your company’s objectives, and vision, and how you intend to make money. Define the gaps between the cost of doing business and your earnings. You need to consider what you will do if there is a cash flow issue in your business – many opt for freight bill factoring to keep them ticking over until invoices are paid. Look at your long term plan; what do you want to be doing in five to seven years? You also need to think about marketing strategies and client acquisition.
How are you going to structure your business?
Speak to a lawyer or an accountant about the best business framework to shield you and your personal assets from liability and litigation. The most popular options are limited liability companies and corporations. Establish the business by declaring the structure and the name of the business through your Secretary of State.
Have you registered and organized your taxes?
You need to make sure that you pay the appropriate fees and receive the entity documents of the company from the state. Use the details in these documents to secure a federal tax identification number from the IRS. Your business will need this number to access any banking, credit, or payroll services.
As a freight carrier, you must also register for the Unified Carrier Registration and pay a $76 annual fee. This federal requirement is mandatory for freight carriers and brokers.
How are you going to finance your business?
While a small scale company is not going to have the same overheads as the larger ones, a freight business is still going to be expensive to set up, so knowing how you are going to fund it is essential.
A brand new 18-wheeler with a trailer could cost more than $180,000. Although financing options are available at dealerships, if you intend to have more than one truck or trailer, you might want to think about a small business loan.
How will you network and market your business?
As a small freight company, a lot of your business will be dealing with shippers and carriers for surplus loads from their usual contracts. Speak to brokers who serve as middlemen for some of these contracts and get on their lists. Transfer freight on time and on budget with no damages to establish a positive reputation and earn repeat business. Set up a website and create an online presence.
Setting up a small freight business takes time, effort, and considerable capital, but once it is up and running, you will soon start to reap the rewards.