There are at least two reasons why most entrepreneurs start a business: one, they know how to go about it, or two, they are known to be highly profitable. In the case of a dump truck business, the answer can be both.
With today’s driver shortage and increasing freight demand, largely owing to the rising construction, manufacturing, and e-commerce industries, there’s never been a better time to start looking for brand new or used dump trucks for sale and start a trucking business.
But, how much does it cost to start a trucking business? While there’s no ballpark figure, there are factors that influence the cost of starting a trucking company, and to name a few:
- State of operation
- Type of cargo
- Type of services
- Type of trucks
- Size of fleet
- Size of manpower
- Scope of insurance coverage
For the startup cost, you should prepare to shell out somewhere between $10,000-$20,000 for a small trucking company and that doesn’t include your equipment yet. Let’s break that down further to see where your money will go.
The Cost of Starting a Dump Truck Business
There are costs involved in registering your trucking company. These include but are not limited to the costs to apply for federal DOT and MC number, complete Unified Carrier Registration (UCR), and get an International Registration Plan (IRP) plate.
To give you an idea, an IRP plate costs about $2,000. This is based on the total distance you operate in every participating jurisdiction. A Heavy Vehicle Use Tax and permit, on the other hand, charge at least $100 per vehicle. You may also be required to pay for state-specific taxes which can cost you at least $500 per truck.
Annual permits, taxes, insurance coverages, and employee wages—these are some of the fixed costs to start a trucking business. Add that to the cost to purchase and regularly maintain your vehicle. How much you would pay for your truck will be largely based on its condition. Whether you’re buying a brand new one or second-hand, there will be a significant difference in your total expenses.
In addition to that, there are also variable costs that change depending on your production volume; they rise as your production increases and drop as production slows. These include fuel costs, repairs, and fines. Most of your operational budget will go to fuel, that’s aside from paying yourself and your staff.
Aside from the above, major expenses, you should also set aside a budget for marketing to acquire and maintain customers. In today’s digital age, that should involve establishing a presence online—building a website, setting up social media pages, paying for ads, etc. Don’t forget as well to include management expenses like office supplies, rental, energy bills, etc.
While optional, you should consider investing in technology to minimize some of the variable costs of operating a dump truck business, e.g. improving driver safety to reduce potential liabilities and reducing fuel consumption by minimizing idling and imposing a speed limit. Accounting and dispatching software is also essential to automate a significant part of your operations.
In this business, the projected annual gross income is $200,000, with the driver’s salary estimated to be more than $40,000 every year. It helps to figure out how much it will cost you to operate your truck to know how much you will charge your clients for your service.
As you can see, starting a dump truck business is no easy feat. It illustrates the importance of researching key factors that could affect your profitability. Being a multi-million-business, it’s a given that you will shell out a significant amount of money before you expect a good return on investment (ROI). You are even likely to struggle with generating income, too—you’ll have to come up with ways to operate while making a profit and keeping your costs at a minimum.
There will be economic factors that will affect your bottom line, but that will at least set the benchmark figure you can work with. Evaluate your options and see whether a dump truck business is one that you should jump into. Will investing your life’s worth of savings into owning a dump truck company be worth it? Your call.
Did we miss anything? If you have any more tips and advice to add, leave a comment below.