In his book Bounce Back: Survive and Thrive in a Business Crisis, author and long-time business broker Richard Mowrey advises: “Never operate your business without a written business plan.” If you have a trucking business, even as an owner/operator, you need a business plan just like any other small business.
If you’re like many trucker entrepreneurs, you may never have created a business plan or even know what goes into one. But they are vital as a roadmap to the one thing most important to any business: profit.
And if you need to approach lenders, investors, or partners to finance your trucking business, the first thing many of them will want to see is your business plan. Let’s look at how to create a trucking business plan.
Steps to take before writing a business plan for your trucking company.
Believe it or not, you should be an official business before you start writing a business plan. Start here:
- Register your business: There are several ways to register your company, including a sole proprietorship with a DBA, an LLC, a C Corp, or an S corp. You can register in your state or another one. If you’re unsure which to choose, look to the Small Business Administration’s (SBA) online guides. Many local chapters also offer free advice.
- With your business name, get an employer identification number (EIN) from the IRS. Apply online here.
- Get a federal Department of Transportation (DOT) number. You’ll need to provide where you will operate, the number of trucks you will run, and what materials you will be hauling.
- Apply for a motor vehicle carrier (MC) number here.
- File a BOC-3 with the Federal Motor Carrier Safety Administration to give you presence in the states where you will operate.
- Get truck insurance. Talk to an agent about recommendations and requirements in your state and the states where you will be operating.
- Get your apportioned plates and set up an International Registration Plan. This will help you domestically, too, if your lane includes California.
- Set up an International Fuel Tax Agreement (IFTA) to normalize fuel taxes in every state and Canadian province.
- Get a Unified Carrier Registration by visiting UCR.gov.
This seems like a lot of steps, and it is. But it’s important to know what each step means. The UCR is how you pay fees to supplement motor carrier registration, education, and safety, according to UCR.gov. Be aware that there are annual and/or regular fees associated with each step.
Information you need to create your trucking business plan.
Once you’ve registered, it’s time to research. Educate yourself on industry basics and general business know-how like cash flow, profit and loss (P&L), return on investment (ROI), and other standard terms. If you haven’t already, also do the following:
- Figure out what assets you have and what they are worth. Your truck may be an asset if it’s paid off. Otherwise, it might be a liability. Understand the difference between those terms.
- What will it cost to operate your business? Tally up your projected average fuel cost, miles per gallon, and miles driven. Operation and maintenance costs help you figure out where to set your rates to be profitable.
- Learn how to manage costs and project revenue (the money you make) and expenses to determine your profit margin.
- Know the going rates in different freight lanes.
- Set up your operating procedures for different freight types and where they’ll be picked up and dropped off. These are the “logistics of the logistics business.”
- Understand spot market vs. contract market rates.
- Decide if you will add fuel surcharges to your rates and the pros and cons.
All these steps are especially necessary if you will be seeking financing. Lenders will want to know how you plan to make money and your backup plan if things get bumpy.
What to include in a trucking business plan.
More than just a roadmap of how to run your business, business plans show financial institutions, lenders, investors, and potential partners that you’re an excellent person to do business with. You are essentially selling them on you, your business, and why investing in you and your plan is a good idea.
According to the SBA, there are standard things to include in any plan. Here are two of the most important:
1. Industry knowledge. Detail any expertise you have in the trucking industry and any area you plan to specialize in. Your investors will want to know that you are more than a driver. You are a professional who understands what it will take to operate a business and be profitable. Make sure you outline how you will stand out from your competition. Avoid buzzwords like friendlier, faster, on-time, reliable, etc. Everyone uses those.
Simon Sinek probably says it best: “People buy from you because of why you do what you do, not because of what you do.” You likely got into trucking for a reason. Maybe there’s a passion beyond just making money. That “why” and the reason you want to run a trucking business needs to come through in everything you do and say. That will set you apart and hopefully get investors and other financial backers excited.
2. General business knowledge. Your business plan should show that you know things go wrong in business and that you have a plan for them. It should demonstrate that you understand how to keep your business running, track expenses, profit, loss, cash flow, and know taxes and corporate structure.
Before they invest in your company, financial backers will be investing in you and who you are. Most of all, your business plan should include you.
How to write a trucking business plan.
If you’re going to include yourself in your business plan, you also need to set your strategy apart from others. Tailor it to showcase who you and your company are, what you’re doing, and how it’s different. Keep the above section in mind, but also know that it’s somewhat of a formula. Investors expect to see specific elements in a particular format and order.
The business plan you create is for investors and financial backers, but it is also for you. Set it up in a way you understand and can refer to often. Here are the parts and what each one means.
Executive Summary: This is a brief description of you and your company, but also about you. Showcase who you are and what sets you apart. This is your chance to make a great first impression, and you won’t get a second one. Consider hiring a professional writer or editor to give your plan a final polish once you’ve got the basics down.
Company Description: This is the “About Us” section. Here, you can go into more detail about who you are and your business experience and learnings. Finally, reiterate what sets you apart from your competition. Example details:
- Will you specialize in a certain freight area?
- Will you specialize in a particular region, cargo type, logistics arm, or even a unique partnership opportunity to have connections?
- Who will be working with you? Will you have other managers?
- Who will your employees be? What characteristics do they have that will make them valuable parts of your team?
Use this section to describe your ideal client and how you plan to connect to them. This is the meat and potatoes of what your business does or will do.
Operational Plan: If the company description is the “who” behind your business, the operational plan is the “how” and the “what.” What are the critical roles in your company? How will you handle routing and dispatch? Will you also be operating a route and running the business? Will there be other drivers?
Secondly, describe how you will use technology to keep your business profitable. For example:
- You can use Truckstop’s online load boards. Use it to find reliable brokers and money-making loads fast, and plan optimal routes for maximum profitability.
- Factoring helps you get paid quickly rather than waiting for the load broker to pay. You can even apply for advances and get broker credit checks right away.
- Show that you plan to use other small business software for accounting, mileage tracking, and more. Automating your accounting process will save you both time and money.
Trucking has become a high-tech industry. It’s essential to show how you will take advantage of advanced routing and other tactics to make your business as profitable as possible. Using technology will help set you apart from your competition.
Services: Here, include the details of the services you provide to your customers. There are two vital things in this section:
1. Include the customer perspective. What problem do they have that you are solving? Maybe you’re making gas truck runs to specific areas in Idaho because they don’t have a fuel pipeline system or local refineries. Explain how that is profitable. This shows why your services are in demand.
2. Include pricing, materials you haul, and other details. If you include detailed pricing, also explain why you set your pricing that way. Breaking down your logic shows you understand the market and profitability.
Market Analysis: The trucking market is crowded. What need do you meet, and how well do you understand it? This is what you explain here. Talk about your target market, how large or small it is, who your competition is, and what your customers need that you will provide. Demonstrating a thorough understanding of your competition illustrates your ability to “beat” them.
You’ll also need to know how much of the market you can expect to gain and how you plan to get there. Include profit and loss projections and how you came to those conclusions. Finally, show that you understand government regulations and how they affect your business.
Sales and Marketing: In a crowded market, the number one issue companies have is being discovered. Explain here how you will reach new customers and build a loyal base by keeping them once they’ve used your trucking service.
At the same time, you have to explain how you will handle sales — going out and finding new prospects. You can use brokers or other services, or you hire sales personnel to call potential customers for you. Whatever your method, you need to have a strategy and outline it here.
Financial Projections: How far out do you need to project your finances? The general rule is five years. You can always adjust your plan as the industry changes, but you need to show your investors that you have a plan. This also gives you a roadmap to follow. Evaluate future opportunities based on your business plan.
For example, let’s say want to purchase a new truck to serve a new territory, but it’s a type of truck and cargo you didn’t have in your business plan. Do you have enough of that specific experience to meet those needs realistically? Is this an opportunity or a distraction? How will it affect your finances, both short and long term?
Funding Request: Not all business plans include this section. But if you need a loan, investors, or partners, they will want to see how much money you need. Calculate that by subtracting the money you currently have from how much you need. List your assets and what you’re contributing to jumpstart the business. Investors like to see that you have a stake before they invest their money in your venture.
A trucking business plan is just like any other small business plan. You need to know your industry, show that you understand it, and provide a solid plan for running a profitable business.
But a trucking business plan is not only for investors. It’s a roadmap from where you are now to where you want to be in five years and beyond. If you need help writing your business plan, the SBA and other small business groups offer some great free resources to get you started.
When you’re ready, we’re here to be your trucking business partner. Founded in 1995, Truckstop.com built the internet’s first digital load board to help carriers find loads to move. Today, Truckstop.com is one of the largest and most trusted brands in the freight transportation industry, connecting tens of thousands of carriers and brokers with technology solutions to manage the entire freight lifecycle.
Truckstop.com solutions include freight matching, marketplace rates, partner screening, and monitoring tools, transactional cargo insurance, freight-tracking and visibility, transportation management systems (TMS), integrations with most major industry software partners, and complete payment solutions.
We are always evolving to include tools to improve and manage every step of the freight moving lifecycle.