Getting into the box truck business can be lucrative, given that goods must move from place to place daily. These trucks often have an enclosed box-shaped cargo space, which means a bigger carriage for products and packages. Common services this business offers include moving people and cargo, hauling junk, and making deliveries.
The trucking industry is rapidly growing, with more than 70% of US freight (weight) being delivered by trucks. This means that having a powerful and well-maintained box truck, or several of them, can be the key to unlocking the life you have always wanted. Starting such a business may be challenging; therefore, we will offer you a detailed guide. Let’s get started.
1. Determine Whether This Is What You Want
It would be best to determine whether this is the right business for you by weighing all the pros and cons. A quick look at the pros will reveal that this is a low-cost business with steady demand, i.e., you can get started with a relatively lower investment and enjoy a large and ready market since people always want trucks. It is also profitable since box truck services are usually expensive. On the other hand, the downsides of running such a business are the high maintenance costs and regular changes in gas prices, which means a lower profit margin. Keeping the trucks running, especially when you have a fleet, can also be too expensive. Once you determine that the pros outweigh the cons, you can go ahead.
Also, consider the recent industry trends. For example, the demand for medium-duty trucks has rapidly increased in the recent past since more people are making short-distance delivery, which means that you can make more money by focusing on shorter distances. Other trends worth having in mind include the increasing demand for last-mile delivery offerings, the growing impact of e-commerce in this business, and the use of technology in the trucking business for shipment tracking or route optimization.
Lastly, consider the challenges this industry faces, such as extreme weather conditions, shortage of drivers, and rising fuel prices. Having such information at your fingertips will help you decide whether to give it a shot.
2. Expand On Your Idea
Once you have decided that the box truck business is right for you, here are a few things that you ought to do to hone your idea:
1. Identify a Market Opportunity
It would be best to find a market gap that you can exploit. Therefore, research the box truck companies in your locality and find out more about their offerings, customer reviews, pricing, and some of the areas they are struggling to fulfill, and you’ll find your market gap.
2. Decide on Your Products/ Services
The next step is to decide on the product or services that your business will be offering. A few ideas include offering moving services, running deliveries for local stores, hauling junk from residential properties or garages, partnering with a transport company, delivering catered food, or offering mobile advertising services.
Once you know the services you will offer, find out more about your competitors’ pricing to determine how to price your products or services. However, remember that your initial pricing is not fixed and will change based on the market.
4. Find Your Target Market
The services you intend to offer will determine your target market. If you start a junk-hauling box truck business, your target market will be garages and other small companies.
5. Determine Where Your Business Will Be Located
Your business location matters. You may run it from home or a common yard to save on costs before setting up an office when it grows. All in all, ensure that you settle in an accessible location.
3. Come Up With A Good Business Name
The third step is brainstorming a great business name that gives your business a good identity and reflects your offerings. It shouldn’t be long since shorter names are normally easier to memorize. Here are a few helpful tips if you can’t seem to find the best name for your business:
- Ensure that the name relates to your products or services
- Your business name should be catchy, short, and outstanding
- Ensure that the name is easy to say and spell
- Get suggestions from your family, friends, or colleagues, and pick the best
- Include keywords such as ‘truck’ in your business name for search engine optimization
- Avoid location-based names if you intend to expand your future operations
You can also use business name generator applications available online for free or at a small fee. Remember, your business name is one of the most important decisions you must make when setting up your entity, as it determines your brand. Changing your name may also be hard once you start getting a considerable number of clients, meaning that a bad choice may limit your expansion. Therefore, do not rush through this process; only move to the next step once satisfied.
4. Write A Detailed Business Plan
Every business must have a plan that outlines its goals and dictates its initial operations. In fact, the Small Business Administration, an organization that supports small American businesses through funding and planning, advises that aspiring business owners should create plans even 5 years in advance. Without a plan, a business can’t stand and stay profitable.
Remember, you can refine the business plan as your business expands. A good plan identifies your business goals, helps you stay organized, articulates your value proposition, and helps you identify future obstacles. It should offer the following:
- An appendix that consists of extra business or financial documents
- Executive summary, which offers an overview of the entire plan and can only be written once it is complete
- A business overview that covers the vision, mission, ownership, and corporate goals of the company
- Product and services section, where you describe your offerings
- Competitive analysis, which focuses on your main competitors and outlines your service advantages over them after assessing your strengths and weaknesses
- Operations plan, which includes your office locations, procurement, critical assets and equipment, and logistical details
- Financial plan for the next three years with detailed profit and loss estimates as well as break-even analysis
- The management team, including their roles and professional background
Your business plan should also asses your company’s unique selling propositions, normally known as USPs, and outline your marketing, sales abs promotional strategies. It’s also important that it analyzes the market by assessing different trends, including and not limited to demand and growth prospects. You can download a business plan template online and fill it out if you have never created one. Alternatively, get a business plan specialist to handle the entire process.
5. Register Your Business
This is where you legally establish your company. There are important decisions to be made at this point, but first, you must figure out the type of entity or business structure you need. Here are a few options:
1. Sole Proprietorship
Even though this is the most common structure for businesses, especially the small ones, it may not be the best option for your box truck business, given that you will be liable for all the debts, losses, and liabilities the business incurs. This also means that taxes on business income will be paid as part of your tax returns.
2. Limited Liability Company
This is the best option for your box truck business. A limited liability company protects your personal property since you aren’t liable for the business’s debts, losses, and liabilities.
You can also choose to form a corporation which makes the business a distinct legal entity hence absolving business owners from any liability regarding debts or losses. However, profits are only withdrawn through shareholder dividends, not directly as in other structures. One of the biggest disadvantages of corporations is double taxation, i.e., even though the business pays taxes, owners’ dividends are also taxed.
Here are the steps involved in opening a limited liability company or corporation:
- Pick a Registered Agent
Most states require people opening limited liability companies or corporations to have registered agents as the official point of contact for the secretary of state. They must be available at a given location to receive legal notices and sign for the business owner during certain business hours. They also sign and receive state mandates and wage garnishments on behalf of the business owner. You must ensure that your agent is always available since missing a delivery may trouble your business’s relationship with the state or initiate a lawsuit without your knowledge.
- Obtain an EIN
The EIN or the employer identification number acts as the social security number for your business. It is generally needed for tax filings and to open a business bank account.
6. Obtain The Necessary Permits And Licenses
The next step is obtaining all the required state, county, and local government licenses and permits, which is important before you begin any operations. The number of licenses your business needs will depend on your location and the type of services you wish to offer. Here are some of the requirements you need to operate:
- Commercial Drivers License– You cannot operate a commercial motor vehicle like your box truck without a commercial driving license. This is a federal requirement that must be complied with; therefore, talk to your state’s licensing agency and find out more. Ensure that you also obtain all the required endorsements.
- A BOC-3 Filing– The Federal Motor Carrier Safety Association requires every motor carrier, freight forwarder, or broker to get a process agent to file a blanket of coverage on their behalf. You will retain one copy at your business premises.
- Motor Carrier Operating Authority Number (MC number)- You must have an MC number for your box truck business. Note that your business operations will determine how many of these you need.
- USDOT Number– This Federal Motor Carrier Safety Administration’s requirement is used as an identification number during audits, inspections, and investigations.
- International Registration Plan Credentials– You will require these credentials if you intend to operate across several states. Also, remember to obtain the International Fuel Tax Agreement (IFTA) credential.
Don’t forget to check the Department of Motor Vehicles websites of your local and state governments to learn more about other license and permit requirements. Remember that your operations can easily come to a standstill if you don’t have even one of these, and your business could face severe penalties.
7. Get Capital And Get The Necessary Equipment
You know how much you need to get your business running at this juncture. Starting a box truck business with only one truck will require at least $10,000. Half of it (or slightly more) will be used as the down payment for your truck, while the other half will cover expenses such as maintenance, insurance, and other necessary payments at the beginning. Here are a few options to consider in case you are worried about finding your company’s initial capital:
- Bank loan– This is the most common avenue to obtain initial investment funds. However, you’ll need a good business plan and credit history.
- Grants– The government has several financial assistance programs for entrepreneurs that you can look up.
- SBA-guaranteed loans– You can talk with the Small Business Association to act as a guarantor and allow you to obtain the loan you need.
Other avenues include friends and families, crowdfunding, or venture capital. Once you have the money you need, remember to set up an accounting system to help you track your finances. You can use web-based accounting programs and applications such as QuickBooks or get an accountant to set up one for you. Alternatively, you can employ a tax attorney or bookkeeper to keep your accounts in check. We also advise that you focus more on invoice factoring for quicker payment processing and a reduction in the quantity of administrative paperwork during collections and billings.
Here is where you get the necessary equipment by buying or leasing. Even with the best team, permits, and licenses, you still need the right equipment for your business to succeed. Before getting any equipment for your box truck business, take some time and figure out which option between buying or leasing will benefit your company. You must also have your business’s offerings in mind.
An easier way to successfully get past the equipment acquisition process is to talk to experienced box truck drivers or owners offering similar services and ask for their equipment recommendations.
8. Insure Your Business
You must insure your business if you intend to stay in the market for long. Insuring your box truck business guarantees protection from heavy consequences from unexpected occurrences. Some of the options you should consider are:
1. General Liability
General liability insurance coverage protects your business from multiple events, which explains why it is considered the most comprehensive insurance plan any business owner can obtain. Even though it costs more, it will cover both damage to property and bodily harm.
2. Equipment Breakdown
Equipment breakdown insurance covers mechanical equipment failure, which can occur abruptly. The insurance company will pay for any replacements or repairs.
3. Business Property
Business property insurance is normally taken for business supplies and equipment.
4. Professional Liability Insurance
This is another common insurance cover that deals with claims of professional negligence.
5. Workers Compensation Insurance
What happens when an employee gets injured on the job and sues? The workers’ compensation insurance comes in. This is one of the most important insurance covers any company can have.
6. Business Interruption Insurance
Your business may have to close or suspend operations because of a covered event. If that happens, the business interruption insurance cover steps in, protecting you from loss of income and covering expenses that the business would have incurred if it were operational.
All these covers come in handy in different situations. However, we advise you first to get general liability insurance for your business since it covers multiple events. You should also contact several agents and research to get the best premiums. You may also want to consider insuring your cargo and passengers.
9. Develop An Excellent Marketing Strategy
This is where you tell the whole world about your business to attract clients. Whether you intend to work with your local community or maintain an inter-state business, this step is necessary. An excellent business marketing strategy will help improve your brand recognition. Here are some of the ways to get your business out there:
Social media is a ‘world’ of possibilities. Several businesses make millions yearly by marketing their products on social media. Therefore, establish social media accounts for your business on different platforms such as Facebook, Twitter, and Instagram to connect with customers and individuals. Ensure that you use the right social media tools to manage your accounts. You can also join your local community’s social media groups and market your services.
Remember to create engaging content and regularly communicate with your followers, clarifying your services and answering queries regarding your business.
Investing in a good website is the easiest way to make your business look professional. It gives your box truck business an online presence and can significantly increase sales. You have two options depending on your budget, i.e., either use platforms such as Webflow to create a cheaper website or get a hosting provider. Prioritize the second option if possible.
This is a good marketing option when starting a business. Employ a few people to distribute flyers in your neighborhood and during special events. Use the available online tools to create captivating flyers, or get a cheap freelance designer to help you.
You should know your way around search engine optimization if you intend to increase your online presence. Use different SEO tools to help your website rank higher on search engines and boost sales.
10. Build A Team And Launch
A small box trucking business may not need several employees. For a sole proprietorship, you need one or two helpers, especially if you will be driving the truck. However, if you are opening a big business with several trucks, you need a team. Here are some of the professionals your business will need:
You need drivers to operate the trucks. They will pack and unpack loads and ensure that deliveries are made successfully. Depending on the vehicles’ operation, these professionals will also determine maintenance or repair needs. Each driver may also require a co-driver or a helper for long-distance trucking and easier loading and offloading of goods.
Your marketing lead will focus on social media marketing, finding the best SEO strategies to ensure your website ranks higher, and leading other marketing initiatives.
The dispatcher receives calls and schedules services.
You can advertise these jobs on your business’s social media handles or post ads on popular job websites. Other positions, such as the general manager, may also call for premium options such as Glassdoor. Once you have a skilled team, then it’s time to launch. Ask your friends and relatives to share your business with their networks. You can also use your connections to promote your business.
It would be best if you also focused on your USPs, which are the unique selling propositions of your business. Remember, these characteristics set your business apart from the competition, allowing you to enjoy a sizeable market share. Ensure that your website and promotional materials also clearly highlight these propositions so that customers can know what they should get even long before interacting with your business.
Lastly, train your team regularly to ensure they can repeatedly meet customer wishes or needs. The only way to generate repeat business is to satisfy customers, which requires you to go far and beyond and ensure that your team is well-equipped.
We hope we have exhausted everything you need to know regarding opening a box truck business. The trucking industry is pretty lucrative and keeps growing daily, making it one of the best places to invest your hard-earned cash. We wish you all the best as you start and run your box truck company.