Trucking business in the USA is a territory of big responsibility but also good profit if you do everything right. So, if you’re thinking of creating a trucking company in this country, the decision is definitely good in its nature. Starting a trucking business with a truck, a trucker, and a trailer is already a good start.
But first, you need a proper business plan that includes the most important part ‒ how much will it cost you. And that’s where things might get complicated ‒ you don’t want to miss a thing in your budgeting. It is probably the best decision you can make before you load the very first freight Hiring a trucking tax accountant at https://fleet.care/services/trucking-tax-accountant/.
In this article, we provide you with rough numbers for the average trucking business. Depending on your state, opportunities, and other factors, these numbers can vary, but we provide you with them anyway just so you can get the gist of it.
What about the cost?
Our point will be a situation where you create a new business from the scratch. You have a truck, and you will take a fully loaded freight ‒ obviously because the bigger the load the more money you get and the less money you spend. You also have a trucker ‒ Sam, for example. This imaginary Sam has his own needs and a family who he needs to visit from time to time ‒ mainly on weekends.
Let’s see how much you will have to spend in this case:
- If you got a good credit for your truck, you’ll have to pay for it $1000-1500 monthly. $2000-2500 if you bought something sophisticated or got a credit that won’t allow you to pay less monthly.
- The truck needs its maintenance no matter how professional a driver Sam is. You also won’t spend the year without repairs, so the annual bill will be nearing $25000, making it around $2100 monthly. Sam, of course, can do some of these repairs on his own, but we’ll talk about it later in this article.
- The next thing the truck always needs is the trailer, of course. The best scenario would be if you buy a new one ‒ yes, it’s quite expensive, but it’s still better than buying a used one and paying the margin in price with downtime and many, many repairs. A new trailer will cost you nearly $600 monthly, including its stable usage and a lot more time it can spend on the road. Time is money, as they say.
- You need to ensure your truck to make sure it complies with DOT requirements and, well, gets financially protected in the worst-case scenario. Insurance will cost you somewhere around $1100 monthly, sometimes down $1000 monthly for the first year.
- Trucker needs his/hers salary, right? If your business runs well and the driver is experienced, this will cost you around $6000 monthly. This is so far the biggest expense.
- Also, you need some fuel. With a tight schedule and long routes, you’ll need to spend nearly $5500 monthly on gas or diesel.
- To comply with DOT requirements, the truck has to be marked and registered. These and other miscellaneous expenses including parking will cost you around $1000 monthly.
- You as a business owner also need your salary for handling all the paperwork, budgeting, and communication with brokers. Let’s round up to $4000 monthly.
Some expenses are not so predictable ‒ factoring and dispatcher’s job will be the best example. Factoring will cost you roughly 3% of the rate of each load, and you’ll need to pay 5-10% of every load for dispatching depending on how experienced is the dispatcher.
If we’re about to count essential and predictable expenses only we get around $24000 monthly. This means you need to make at least $6000 weekly or at least $1500 daily. To do that, you have to find the best routes and the best rates to make this much in 5 days a week. You need your weekends, and the truck driver needs them, too.
But what if something goes wrong?
The hypothetic driver, Sam, will spend some time with his/hers family not only on weekends but also on planned days off. Also, the truck will sometimes need repair works ‒ they also take some time. But time is money, and staying without dispatching freight on workdays will mean lower gross revenue. Serious repair works will also cost a lot ‒ some companies spend up to $40000 yearly for the first few years purely on maintenance and repairs.
Of course, if Sam is good with trucks, he/her can do some repairs at home. But if the damage is too serious, like a major engine failure ‒ it’s the worst-case scenario ‒ the downtime will cost you a lot more than $40000, adding a month or two of downtime.
Seasons also matter. On a good season, you can easily top that $6000 monthly gross revenue you’ve planned. In a slower season, you’ll get fewer jobs and therefore fewer working days ‒ getting $4000 monthly, in this case, will be nearly impossible. This is why you need a lot more gross revenue during busy months ‒ you need to compensate for this shortage.
How will you do this? By playing a serious market player, bidding at best rates, and being very insistent. This comes with great stress ‒ be prepared for this. You’ll get a lot of problematic brokers, and a lot of issues handling the scheduling and pricing, but in the end, if you’re resilient and efficient, it will work out just fine.
Further down the road, you’ll be able to make your name big in the trucking business and hire another driver, a trucking tax account, and a skilled dispatcher. With more employees, especially with dispatchers, your business will run more smoothly, and you’ll have somewhat fewer headaches when you dispatch a new freight or count all your expenses and taxes.