How to Start a Transportation Business

Are you wondering how to start a transportation business? 

If being a fleet owner is your goal, then you should understand the fundamentals to get you set on the proper track from the start.

This is often easier said than done, but don’t worry.

By the end of this article, you’ll have a solid knowledge base that you can use to start your own transportation business. 

How Profitable is Owning a Transportation Business?

It’s hard to pinpoint the exact income of a job that doesn’t have a fixed salary, especially if you’re the owner of the business.

However, if you’re thinking of starting a transportation company, you’ll be glad to know that, according to ZipRecruiter, you can make around $59,566 per year.

So, with good planning and dedication, this type of business can be profitable.

What You’ll Need to Start a Transportation Business [& Associated Costs]

Here’s what you’ll need to start up:

A Vehicle

Depending on the kind of transportation service you want to start, you’ll need a vehicle to transport people or cargo.

The price can change depending on the manufacturer, model, and condition of the car.

You may buy or lease a new or secondhand car.

A new automobile for a ride-sharing company, for instance, might cost between $20,000 and $30,000, whereas a commercial truck might cost between $30,000 and $150,000 or more.

Licenses and Permits

To legally operate your transportation business, you must obtain the required business licenses and permits.

Depending on your region and the kind of business you plan to start, the cost of business licenses and permits may change.

For instance, a ride-sharing license may just cost a few hundred dollars.

Insurance

To safeguard your company from dangers such as accidents, liabilities, and other problems, you must obtain insurance.

The price of insurance might vary based on the kind and volume of coverage you require, where you live, and other elements.

For instance, the annual cost of business motor insurance for a ride-sharing service might range from $1,200 to $2,400.

Marketing

You must invest in marketing your transportation company if you want to get consumers.

Depending on the kind of marketing campaign you intend to run, the cost of marketing can change.

For instance, the monthly cost of web advertising for a ride-sharing company might range from several hundred to several thousand dollars.

Further Costs

Other costs to take into account can include fuel, upkeep, repairs, tolls, parking fees, and other running charges.

Do I Need a License or Certificates to Start a Transportation Business?

As mentioned above, you’ll need some basic licenses for the transportation business.

For example, if you start a taxi business, you and your entire team of drivers should have taxi licenses. 

Additionally, if your business is transporting certain goods like certain foods, electronics, alcoholic beverages, and weapons, you’ll need some additional licenses.

A lawyer should be your best friend if you want to acquire all the necessary paperwork.

Why You Should Consider Starting a Transportation Business as a Side Hustle

The steps to start a transportation business could be a bit exhausting, but with consistency and dedication, there can be a lot of rewards in the process.

Here’s why it can still be worth your time:

• Extra passive income: Once you finish the extra preparations and play your cards right, you should have a reliable source of extra income (even if it’s not too much in the first year or two).
• Flexibility: Being your own employer always comes with time flexibility. You decide when it’s time to work and when it’s time to take a break. This removes the stress of having to commit to a certain employer.
• Low startup cost: Some transportation businesses can require a hefty amount of cash to start, but that doesn’t mean that all of them do. For example, you can start a taxi business with only one vehicle and get more as your business grows. 
• Opportunity for growth: With time, investment, and consistency, your extra income should increase and might even be sufficient enough to be your main source of income. 

How to Start a Transportation Business in Six Simple Steps

The first thing you need to do is decide what sort of transportation business you want to start.

However, there are common steps that you’ll need for a solid business plan for this type of business. Here’s an overview:

1. Decide Your Liability

Starting a business requires a capital investment, and having a sole proprietorship isn’t always possible.

Therefore, you should decide whether you’re financially capable of starting a business on your own or opting for a limited liability company.

Owning a trucking business requires an initial cost of $6,000–$15,000. This includes the registration and paperwork.

This initial cost might seem doable, but you’re not including marketing, maintenance, and fueling costs.

So, you should factor in these variables before assuming what’s doable and what’s not. 

2. Register Your Business

Once you choose a business name, you’ll have to register it with your state’s business bureau.

Registering your business will protect the business from identity theft. It also allows easy access to financial institutions. 

According to the SBA, commercial vehicle registration should cost you a little less than $300.

After you register your business name, you should use it to acquire your EIN (Employee Registration Number).

3. Acquire the Proper License(s)

You’ll need different types of licenses depending on the nature of your business.

For example, owning a trucking business requires a commercial driver’s license for you and everyone in your fleet.

Also, there are some additional licenses you’ll need if you’re transporting certain materials like firearms and alcoholic beverages.

The costs and steps may vary at this point, so it’s best to consult a lawyer to stay on the right track.

4. Start a Business Account

You need to have a business account that’s separate from your own personal account.

This is especially useful if you’ll need a business loan further on the line.

Business credit cards provide discounts for early payments, lower interest rates, and higher credit limits, which can help your business. 

5. Purchase Your First Vehicle

Many transportation businesses started with only one vehicle.

So, if one truck/taxi is all you can buy, then you can still start.

A truck can cost anywhere between $40,000 to $150,000 for high-end models.

If you’re starting a taxi business, most sedan vehicles will do.

To date, the average cost for a vehicle in the US is $48,000.

6. Start Hiring

Most people start using their first truck/taxi on their own.

However, at one point, you’ll need to hire your first employee.

You’ll know it’s the right time when you feel that you no longer have time or energy to take on orders/requests from your clients.

Things to Consider When Building a Transportation Business

Here’s what you should keep in mind before starting a transportation business:

Can You Run It by Yourself?

Most large businesses were started by more than one brilliant mind.

You should understand that the process can take some time and may be too much for one person to handle. 

Identify the Target Market

You must know your customers and their needs before deciding what you should be transporting.

For example, starting a taxi business in a city saturated with taxi services is a bad decision.

Be Ready for Collaterals

Even if you tick all the boxes, there will be some drawbacks in the process that you need to be financially ready for.

Goods can be lost, accidents can happen, and backup money will be needed.

Always ensure that you have some emergency cash for such occasions. 

Transportation Business Ideas

Here are some ideas you can base your transportation business on:

Airport Shuttle Service

Travelers can use an airport shuttle service to go to and from the airport.

This service can relieve guests’ concerns about parking and driving to the airport.

Also, it offers passengers who might not have their own transportation a practical and dependable solution.

Brokering of Freight

A freight broker links shippers and carriers to move products from one place to another.

This service aids shippers in identifying the most practical and affordable transportation options.

Additionally, it gives carriers a consistent flow of customers and aids in route and schedule optimization.

Medical Transportation

People who are unable to drive themselves to doctor’s appointments or treatments will find medical transportation most useful.

This service is advantageous since it makes it easier for people to get essential medical care without having to worry about transportation.

Bike Sharing Service

Anyone can borrow bicycles from a bike-sharing service for a brief period to use for transportation or recreation.

A bike-sharing service can offer a cost-effective and environmentally friendly means of transportation for short distances.

Also, it encourages physical exercise and eases urban transportation congestion.

Frequently Asked Questions

Similar Businesses to Consider Starting

Here are some similar business ideas that you can start:

• How to Start a Box Truck Business: If you have a box truck, why not start a business using it? All you’ll need is to insure it and pick a name for the business. Register that name, market for yourself, and start making money.
• How to Start a Trucking Business: Trucking business owners earn an average of $242,000 a year. You can start by owning one truck with a large trailer. 

Wrapping Up

The transportation industry can start with one car and end up with a fleet within a few years of good planning and dedication.

If you feel that you have what it takes, go ahead and start planning now.

If you have an idea that you didn’t see above, make sure to include it in the comment section below to help others. 

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