Start Up Business Loans For Trucking – There has been a shortage of truck drivers for years, but it has never been more clear than at the end of 2021. CNN recently reported that 80,000 drivers are needed to help solve the supply problem. This has caused many drivers to consider the idea of starting their own transport company. In this article, I want to show you how you can start a shipping company that can generate more than $400,000 a year and make $100,000 in profits.
We’ve created an income and expense report that’s perfect for the owner-operator or shipper. I have created a video that walks you through what to enter in each section of the table to provide common business comparisons that you can include in your truck business plan, or SBA loan application. Check out the demo below:
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So, I’d like to address some of the most common questions my new product marketers have, share some important considerations we made when developing the formula, and show you that you can have an annual income of $400,000 and a profit. $100,000 for your new transportation business.
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Before I delve into how to start your own trucking business, you should watch my video on why I think a crash is a good time. to start a trucking business. In short, starting a trucking business during a recession can allow you to get a better price on a truck because trucking prices often drop significantly during recessions. tires, and if you can reduce the debt to buy a truck because of the prices. skin , you are setting yourself up for long-term success compared to other trucking companies that advertise at the top of the truck market and charge top dollar for their trucks. The trucking industry is cyclical, so having a little extra room and a cheap truck can go a long way when things get tough. Get it out of the way, let’s get into it.
It costs between $12,000 and $20,000 to start a pickup truck company if you rent a truck.
It costs between $40,000 and $250,000 to start a trucking business if you buy a truck.
Of course, this answer can vary greatly depending on the type of vehicle you buy, the age of the truck, the make and model, etc. In addition to the price of the truck, you will get other starting prices such as.
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Your best starting price is your truck. Deciding whether you want to buy or lease a truck is a big decision. According to TBS Factoring, a semi truck can cost between $30,000 and $200,000 depending on whether you buy it new or used.
According to CDL.com the cost of leasing a semi truck can range from $1,600 to $2,500 per month.
So your decision to own or lease usually comes down to how much money you have to buy a truck and whether you can qualify for a loan to buy a truck.
People often ask how to raise capital for a trucking business, which leads to two other questions.
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If you lease a truck, you may need to pay a few months in advance or put down a deposit to get the truck. So, all you can expect is:
If you are looking for a business loan to help finance your travel startup, I always recommend the SBA Microloan program. If you can lease a truck and you need $50,000 or less for the investment to cover your down payment, the SBA Microloan program is a good fit. Learn how to get approved for an SBA Microloan. I spent 10 years as the CEO of an SBA Microlender and we funded more transportation startups than any other type of business, so I know it can be done!
Another thing to consider is what your operating costs are for a semi. You will have a fixed cost that is the same each month whether you drive one mile or not. The usual prices for shipping companies are:
In our example we expect one truck to cost about $2,000 a month in fixed costs whether you drive it or not.
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In addition to your fixed costs, you also have variable costs based on how many kilometers or days you travel. Variable costs for a single trucking company include:
We charge variable rates per mile, but it can vary depending on where you’re driving, what type of truck, what type method, as well as the price. Based on our initial estimates, we expect a single-truck trucking company to have variable costs of up to $1.50 per mile before paying drivers.
Our shipping cost chart can help you prepare a financial plan to determine how much it will cost to run your trucking business and you can add a fixed price, percentage of revenue or price per truck as seen below:
Now that we have explained the start-up and operating costs associated with a shipping company, let’s talk about revenue, profit and cash flow.
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Suppose you can find a private road that goes 550 miles a day, 5 days a week, and pays $3 a mile. This will allow you to earn an annual income of $434,000.
Of course a continuous road can be difficult, you may not be able to run the road 5 days a week for a year because your truck may come into the shop for repairs or maintenance, maybe you are on vacation, you may be sick, the weather may not be good, etc., etc.
In our transportation planning model, you can easily change these ideas. Maybe you think you can average 4.5 days of driving per week throughout the year. This adjustment will reduce your annual income by more than $400,000.
You can see an example of income and loss of transportation below that shows what we consider for income and expenses for our transportation business.
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The cargo business is very lucrative. Now look at your income statement. It is common for businesses to not charge for shipping for 30 or 45 days after delivery. This means you should have at least 45 days worth of cash when you start so you can pay your bills like fuel, insurance, rent, and shelter while you wait for a payment from your customers. Our standard is that you will receive payment 30 days after customer invoice.
So, in our example, Year 1 profit is expected to be $103,000, but you only get $70,000 for free in Year 1. The challenge is it will be the most difficult in the first few months. In our example, the business will invest almost $ 16,000 in month 1 and will not receive cash from sales because it will wait for customers to pay for at least 30 days.
So what you should be aware of, when you start a pickup truck business, not only should you have enough money for the start-up costs, but you should also have at least two months of cash in the bank to help you get started. A few months while you wait to get paid.
We think this is a bit of a misunderstanding. Obviously the home owner isn’t going to take home $240,000 a year after all the expenses and that’s why we need to work through some financial statements to make sure we include the expenses as well. .
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Based on our example, we estimate that a sole proprietor can earn $103,000 a year. Of course, results can vary based on many factors including fuel prices, current needs, and your geographic location among other factors.
You may be wondering how much money you can make if you own a truck and you may be tempted to think that if one truck can make $103,000 in profit then the 10 trucks $1,030,000 in profits. ($103,000 x 10), but you’d be wrong!
As you add more trucks to your fleet, you will increase costs. If you have 10 trucks in your fleet, I expect you will need the following employees:
HR Director – You need someone to help recruit drivers and compete with other trucking companies by offering competitive wages and benefits.
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I estimate that these 3 opportunities could cost around $300,000 each.
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