Is a Trucking Company a Good Investment?
These are two big questions that you really need to know the answer to before you put your money down and buy a truck so that you can launch your trucking business.
You will also need to know how to get funding for a trucking business, plus a whole host of key questions that will be on your mind if you have made a decision to make your money from being on the road.
Before we answer the question of how much you can earn as an owner of a trucking company, it is important to appreciate that the answer to that particular question is very dependent on a number of key factors, such as what business sectors you choose to serve and how you set up the business in the first place.
Let’s take a look at whether owning a trucking company could turn out to be a good investment and what you are letting yourself in for when you decide to launch this type of business.
The road to profits
You can find plenty of success stories in the trucking business and you can also find plenty of stories where things haven’t gone to plan. All business ventures are fraught with inherent danger and trucking is no exception.
Running a trucking business can be extremely profitable and earn you a decent living. However, you need to go into it with your eyes wide open as it can be a cutthroat business where profit margins can be reduced by competitive pressures.
As with many would-be business owners, you may well be a skilled and accomplished truck driver who has what it takes to deliver on your promises and get to your destination on time, but it is a different scenario when you are running the venture as a business and trying to make a profit from what you are good at.
What you need is a grounding in what is involved when it comes to running a trucking business. This will help you to avoid the sort of mistakes that others before you have made when starting out.
Be aware of the costs
You will need to prepare a fully costed business plan so that you have a clear idea of how much you need to make each week to cover the cost of financing your truck, paying for fuel and other overheads, plus paying yourself and others a wage.
There are also some extra costs attached to starting a trucking company that you need to be fully aware of.
You will need to put yourself through some specific educational programs if you don’t already have the experience and recognized driving qualifications.
Putting all of your costs down onto a spreadsheet so that you know what it will cost to get started and how much it will cost to run your trucking business from day one is something you absolutely have to do.
If you are trying to get finance to start your trucking business and buy a truck, you will need these projections to prove that you can service the loan you will be getting.
How much money can you expect to make?
At this point, if you are weighing up the idea of whether to start a trucking business it would help to have an idea of what sort of income you might be able to generate.
It depends if how many hours you intend to put in to your business. For example, an industry-standard turnover figure for a full time owner-operator of a trucking business would be to make somewhere in the region of between $100K and $140K. But, if you treat it like a side hustle, expect to earn less.
Your earnings and the level of profit you make will be heavily influenced by costs that you don’t always have as much control over as you would want. In particular, the cost of fuel is spiking as a result of geopolitical pressures and that will lead to higher fuel costs, which could eat into your profits.
A typical cost for running a truck estimated by the industry publication FreightWaves puts the annual amount required to run a truck at about $210K per year. This is based on traveling 120,000 miles per annum, or about 400 miles per week for six out of seven days each week.
What this equates to is a typical average gross of somewhere between $2K and $5K as an owner-operator. If you get your margins right, this should allow you to earn anywhere between $500 and $2,000 every week.
In it for the long haul?
There are a number of other key considerations that can impact your profitability. One of those is whether you should target doing short-haul local drops or offer to haul goods over long distances.
There is the potential for bigger profits if you choose to drive long distances and even travel overseas with cargo, although you do need to get your costings right or your profit margins can be eroded with higher running costs.
Another important factor is whether to specialize in transporting certain types of items that are either abnormal loads, high volume, or hazardous loads. You will often need specific licenses and qualifications to transport certain items, but the plus side is that you should be able to charge a premium for a more specialized service.
You will probably be aware of ice road truckers. These drivers are often the highest paid in their field because of the risks they take. Hazmat haulers are not far behind them because of the dangers they face when transporting dangerous loads.
The bottom line
The answer to the questions of whether trucking is a good business to get into and whether you can make money from the venture are both in the affirmative.
Yes, you can make money from trucking, if you get it right.
The average net profit margin of a trucking company averages between 2.5% and 6%. That means it can be a profitable business and an industry that you can make a decent living from, provided you get into the trucking business with your eyes wide open.
Knowing what lies ahead will help you make the right decisions and take the route to potential riches.