December 15, 2020
What To Expect Your First Year as a New Trucking Company
Thinking about starting a trucking company? There’s a lot to uncover, like what regulations you have to worry about, which ones you don’t, and how to best track the money going in and out of your business.
That’s why we started our own company and documented the whole process from start to finish. We’ve gone through the numbers, the miles over the year, the cost-per-mile, expenses, revenue and finally profit. As part of our podcast Haulin Assets, we’ve answered questions like:
- Is it worth it to start a trucking company?
- How do I start a trucking business with one truck?
- How do trucking companies grow?
- Can a truck driver make 6 figures?
Every situation is different, so what happens when you start your own business may be different, but that doesn’t mean you won’t be successful.
There were a lot of things that happened that actually hurt Haulin Assets a little bit, as Chris was a new driver, which meant his trucking insurance was much more expensive. It also meant the number of brokers who might work with a new carrier were more limited. Most trucking companies probably wouldn’t have to leave their truck parked multiple times for a few weeks like Chris did because of his service in the Army National Guard.
No matter what type of business you decide to pursue, there will be up and downs, and chances are, you won’t always make a profit each month. In fact, most companies don’t make a profit the first year of being in business.
You have to learn the skills to become a good business owner to stay successful, even when your company might not be making money. To do this, you have to set the right goals. During the first year of starting a trucking company, you should:
- Build savings
- Develop relationships
- Develop a system
At Motor Carrier HQ, we’ve helped people start their own trucking companies for over a decade. We’ve seen the same mistakes being made over and over again, which is why we’re showing that it is possible to become your own boss with the right mindset.
Is It Worth It To Start a Trucking Company?
Starting a trucking company isn’t for everyone. No matter how prepared you are, it’s going to be stressful. If you don’t think you can handle the stress, a life as an independent owner operator might not be for you. And there’s nothing wrong with that.
From Chris’s first year, he came up with three reasons why you might want to consider starting your own trucking company:
1. You Want the Freedom
Unlike working for a company, you can choose which routes to take, when possible. While your company might not make as much money, you can choose what loads to take, what routes you want to take, and more. While you may still have a schedule based on when you need to drop off your haul, you are in charge of your own schedule.
It’s possible for everyone to run a successful business, but not everyone should do it. There’s a price point, mental cost, and you have to decide if that price is for you.
2. You Want the Pride of Ownership
In our big year-in-review episode of Haulin Assets, Chris and Craig relate owning a trucking company to owning a house. When property is yours, it gives you the opportunity to do what you want. It’s yours. Just like you can choose what color you want to paint the walls in your home, you can control what loads your trucking company takes, where you haul, and your schedule.
While running a trucking company does take discipline and is stressful, it can be freeing from being a company driver, too.
3. The Understanding You’re Setting Yourself Up for Financial Success
Trucking is not a “get rich quick” scheme. For most people, it’s probably not going to provide an immediate lifestyle benefit. While you may not see success from month one, the goal of any business is to build its value.
By starting a trucking company, you’re often creating something out of nothing, and even if you choose to sell your company later, if you have done things right, you will make more than you put into it.
Is a Trucking Business Profitable?
When done right, you will be more successful than you can be as a company driver. As a company driver, you are limited to a certain income. As a company owner, the sky is the limit. As long as you grow your trucking company right, not expanding too quickly, and focusing on taking loads that give you a profit and reduce your dead-head miles, chances are you will find success.
Pay attention to your all-in rate and your cost per mile to adjust your business expenses and figure out where you need to cut down on costs or what rates you need to find loads to break even or make a profit. You can get all the profit and losses that Haulin Assets has been through in each of our financial episodes.
Profit the First Year of Business
Here are the numbers for the first year of business. Chris was fortunate to not lose money in his first year, but there was a drop in April, due to circumstances outside of his control, the coronavirus . And that’s normal to have good months and bad months.
Profit From May 2019 to March 2020
In revenue, Haulin Assets made $202,405.33 its first year, but that’s not the most important number. What’s more important is profit. The whole year’s profit added to: $32,204.76. And that’s after paying Chris himself as a driver.
A lot of brand new companies aren’t able to make that profit the first year, so if when starting your trucking company, you don’t see this, that’s okay. It’s important to figure out what changes you need to make, such as decreasing the number of deadhead miles or taking loads at the right rate. Usually after the first year, shippers and brokers will be more willing to give you their higher paying loads because you have proven you’re capable of delivering a consistent service.
Miles Hauled Per Month
Over the first year, Chris traveled around 109,636 miles for Haulin Assets. And this was probably a little low for most trucking companies, as many truckers wouldn’t have to take a few weeks off driving their truck like Chris did. Most trucking companies would be able to drive around 125,000 to 150,000 miles in their first year.
Miles Traveled From May 2019 to March 2020
If you compare the two graphs, you’ll see that when done right, more loaded miles often means a lower cost-per-mile, which in turn leads to higher revenue.
Lessons for Owner Operators
When running a trucking company of your own, chances are, you won’t be immediately making more than what you were making as a company driver. In fact, Chris paid himself 42 cents per mile, and that was probably lucky for him, as a new driver.
As a new trucking company, you shouldn’t pay yourself more than what you were making as a company driver. Then, whatever money you make in profit, don’t take it for yourself. Instead, invest back into your business and save, save, and save more for any eventual setbacks.
Can You Make Back Your Start-Up Costs?
The total cost of starting Haulin Assets was: $29,893.50. This isn’t representative of all trucking companies. Someone who might already have a truck or certain equipment might be spending closer to $10,000 to start your trucking company.
If you want to calculate your own startup costs, you can use our free start-up cost calculator. Use the numbers we found or plug in your own to see how much you need on-hand to start your own business.
How To Start Your Own Trucking Company
If this sounds like something you want to pursue, you don’t have to do it alone. We’ve got a number of resources you can use to set your trucking company up for success. As a first step, listen to Haulin Assets, especially our year-in-review episode, where we go through everything we’ve covered here and more.
You can also use these resources to set you up for success:
- New partnership questionnaire to determine if you should start your trucking company alone or if you have a good potential business partner
- Cost-per-mile calculator to see how much your trucking company is spending per mile
- Buying a truck spreadsheet to compare potential trucks
- Savings spreadsheet to determine where your earnings should go
- List of brokers who are willing to work with new trucking companies
You don’t have to start a trucking company alone. If you’ve been on the fence about starting your own business, get in touch with the coaches at Motor Carrier HQ. We can walk you through everything we’ve covered here and more to get your trucking authority and set you up for success to become your own boss. The calls are always free and it’s never too early to start planning, so give us a call today.