If you are thinking of how to start a transportation business, you are obviously not alone. Since the transportation industry touches virtually every aspect of our lives, more and more people are considering venturing into the industry to make a good business.
However, when people think of starting a transportation business, they only think about taxi companies or car rentals. But there are so many options in the industry than that. If you have ever rented a bike, car, or limousine, then you have interacted with a transportation business.
Creating a successful transportation business requires lots of planning and dedication. And of course, you need to know the right things to do so you won’t put your business in jeopardy. In this post, as we always do, we have helped you put together important things you need to get started with a transportation business.
Things You Need to Start a Transportation Business
Determine which part of transportation business you want to go into
This is the first place to start. You need to identify which niche of the industry you want to venture into. If you already have some vehicles at your disposal, you might use that to judge what niche to choose. Doing research about what people need in your area and what competition is like will also give you a good idea of where to go.
However, the basic options in transportation business include, but not limited to:
- Senior transportation
- Taxi company
- Bike rentals
- Car rentals
- Moving company or moving van rentals
- Trucking
- Limousine rentals
- Medical transportation
- School bus companies
Just make sure you do your research first before choosing any of these. That will help you determine which transportation type is most in-demand in your area.
Determine your preferred business model
This is the next thing to do after choosing which niche of the transportation business you want to start. You will need to choose your business model because it is what will determine the type of options and decisions you make in your business from start to finish. Some business models available are:
- Sole proprietorship: here, you will be running your business as an individual or married couple. Although this seems to be the most flexible and easy to start model, it has its own downsides. The major among them is that business losses can be assumed on a personal level.
- Partnership: in this type of business model, you can partner with others to start the business. Here each member of the partnership assumes the risks, debts, and actions of the business as a whole.
- Limited liability company (LLC): this seems to be the most secure form of business model because in case anything happens to your business, it won’t affect your personal finance. While this brings some changes to your tax status, it offers solid protection to your personal assets.
Write a business plan
Only very few businesses succeed without a solid business plan. You need to sit down and craft a business plan for your transportation business. Your business plan should include your company name, the type of business you are starting, your funding sources, your competition analysis, and many more. A business plan does not only help you decide what step is next in your processes but also helps you prepare for future challenges.
Here are some entities you need to consider having in your business plan:
- The goals of your business
- What type of business model you will be running
- Your preferred location
- Your marketing strategy
- Your delivery strategy
- Competition analysis
Even though your business plan is an outline of the things you need to do as you start out with your business, it is what can change over time too.
Get your business registered and get your EIN
It is time to get your business real with the law. You need to register your business and secure a license from your local or state authorities. Requirements for registering varies from location to location, so you may need to consult your local government to know what the requirements to get you registered are.
You will also need to apply for a federal tax ID number or employer identification number (EIN) before you open your business. Your EIN will also be useful for you to secure some other processes down the road. For instance, having an EIN will make it easier for you to open a business account and get credit cards, file quarterly or annual taxes, speed up business loan applications and protect your business from theft
Apply for licenses and permits
While running your transportation business and making some profits, you also need to make sure you are on the right side of the law. Since you will be working most times with passengers, people, and other types of cargo, transportation businesses often require lots of permits than other types of companies.
Below are some licenses and permits you may need as a transportation company:
- Commercial driver’s license
- Fuel carrier licenses
- Commercial vehicle registration for any fleet vehicle
- Insurance coverage for passengers, drivers, or goods
- Heavy load cargo permits
Get any funding you need
Transportation business is a capital-intensive venture. You need to secure enough capital up-front before you think of starting the business. From procuring equipment to renting a space to use, you obviously need to spend lots of money before you start making profits.
Therefore, you might need to secure some external source of funding. There is a wide variety of them you can go for. This includes SBA loans, small business grants, crowdfunding, loans from family and friends, etc.
Buy your vehicles and build your fleet
It’s time to buy your vehicles and open your business to the public. However, you need to take this step very seriously because having the right equipment to set out can mean a lot to your business. It can give your business a professional look from the very first day you open. Vehicle qualities and sizes matter, especially if you will be transporting goods and materials for people.
Decide whether you will be needing new cars or used ones to build your fleet. Consider the type of goods or people you will be transporting before choosing your car type and consider what type of wear and tear you might be facing in your type of business. You may also need fuel card for small business in order to save money.
Hire people to help you
The transportation business is not what you can do alone. You will need trusted hands to help you grow the business. So you need to make sure you have standard hiring procedures included in your business plan. This will not only help you hire following the state’s rules for employment but will also help you get the best people for the business.
Apart from reliable, polite, and trustworthy drivers, you will also need office and administrative staff and a maintenance team to help you manage other aspects of the business.
Final Note
Starting a transportation business may not be a very easy task, you will surely have lots of work to do to make sure you run your business safely and legally without any issues. However, you will see the stress is worth it at the end of the day. In this industry, it is entirely possible to start small and scale up your business. The major thing you need is to just start and stay determined and consistent along the road.
Whenever you are ready to start your new transportation business, take your time to go through this guide again. It will surely be of great help to you.
