Trucking trends since 2020
Trucking and logistics generally have been hit hard by the pandemic and its associated shortages. Throughout 2021, shoppers in the United States had to deal with uncharacteristically bare shelves as the complex logistics of delivering necessary items suffered bottlenecks. The crunch has hit on the back end as well. Across the United States and Canada, thousands of jobs for dump truck drivers have gone unfilled, and even major projects are running behind because of a basic lack of stock and qualified workers.
The need for truckers in America
The labor crunch creates a need, and it’s one you can fill if you make the right moves to start a dump truck business. As the supply of a product or service drops or the demand for it increases, the price usually goes up. The chronic shortage of drivers for commercial trucking, especially for hazmat- and other certified waste handlers, has created a uniquely profitable window to start and grow almost any kind of trucking concern.
How is a dump truck business different?
Dump trucks are in a class of their own in the hauling market. While every kind of trucking has its place and can be very important, dump trucks haul large amounts of waste, often waste dirt and other bulk materials, for major construction and demolition projects. It’s difficult to grade a road, for instance, without moving huge amounts of earth, and that can only realistically be done in a 10+-ton dump truck.
Without the ability to haul dirt, few construction projects can get past the planning stages. That isn’t all dump trucks are useful for, however. Dump trucks can be found carrying raw ore from mining sites, concrete and steel from building demolitions and gravel or other bulky cargo for massive earthworks, such as a seawall. Concrete companies also tend to need dump trucks for delivery of necessary ingredients for their mixes. Dump trucks play an indispensable role in almost any kind of important building, mining or tear-down operation that gets done today.
One of the things that sets a dump truck business apart from other types of trucking is how versatile your business model can be. While tractor-trailers generally do the same sort of work day after day hauling cargo trailers along main distribution routes, dump trucks can crop up anywhere. If construction work slows down, a typical dump truck company can switch in a single day to private junk hauling. Or it can carry composted soil. Or it can (after a good wash) move into bulk agricultural work, such as fertilizer or grain transport.
How to start a dump truck business
Once you’ve decided to get into the business, there are some things you need to get squared away in order to maximize your odds of success. If you want to know how to start a dump truck business from scratch and see it through until it’s successful in several markets, it helps to start with the basics.
Get training and experience
Getting the training you need to do the job yourself is sometimes overlooked among entrepreneurs starting a dump truck business. While you certainly can get off the ground without ever having driven a truck yourself, it helps to understand the job you’re hiring for. This is especially true while the big bottleneck in the industry is a shortage of skilled drivers. Knowing how to operate a truck and then doing it for a while does more than make you a qualified stand-in when a driver calls out sick. It also teaches you what your drivers need to do their jobs effectively and helps make your brand attractive for drivers, which makes hiring easier, improves retention when labor is short and generally streamlines your operations.
Several schools offer training in heavy vehicle operations and in how to drive a dump truck. Assuming you’ve passed initial training, it’s time to get experience. This doesn’t have to be a long-term commitment. A few months working for an established dump truck business can give you enough excellent hands-on experience to adequately prepare to manage your own staff of drivers, who are doing a job you’ll be familiar with now. As a bonus, getting to know the owner of the dump truck company you start at may expose you to personal advice and tips on how to get by with a new business in the industry.
Develop a business plan
Successful businesses almost always have a plan in place before they launch, and they usually try to stick to the road map as closely as they can. Writing a dump truck business plan is exceptionally helpful, even before you get to the stage where somebody needs to look at it. Writing down your research and projections for revenue and expenses at an early stage helps to clarify what you need to thrive.
Study the local market
Dump truck businesses are almost always local because the cost of operating at long distances is too high to make economic sense. This works to your advantage while you’re studying the market since everything you need to research is probably close by.
Take your time and do your research well in this stage since it can make a world of difference later on and prevent you from opening your doors in an unpromising or overcrowded market. Take stock of what your local hauling rates are. This is a good guide to how much the local market needs another dump truck business like yours. Compare local costs to fees in similar markets across the state and around the country. You might find a better place to set up during this preliminary phase when it’s still not too expensive to move.
Calculate your costs
Every business has costs. Some of these are fixed, like gasoline and insurance, while others are fungible and can be worked around, such as uniforms and marketing budgets. Try to develop a clear picture of what both costs are likely to be for you as early in the planning stages as you can. Develop several cost projections. Factor optimistic assumptions into one of them to find the minimum floor for your expected costs, then do the math again using worst-case numbers to establish your ceiling.
When you run the numbers a third time, try to make neutral and objective predictions for things like gas prices and labor costs. That gives you a middle-case cost scenario that’s more likely to be true than either of the other two. Once you have a middle-ground prediction, add 10-15%, just to be safe, and then write your formal proposal.
Write a proposal
A proposal is a formal document describing in some detail exactly what you propose to do with your business and how it’s likely to go. Start with a statement of need, showing how your dump truck business answers a local need and should find customers quickly. Then, describe the market and the company you plan to start, linking your business structure to the demands of the market wherever you can. Finally, summarize what you need to start the business in a way that’s clear enough for a third party to understand your model.
Take your time with this step. Your proposal is close to the first thing banks and other lenders look at when they’re deciding to finance your business. It needs to be clear, concise and brief, preferably one page. If you struggle with this kind of writing, you can hire a professional to write the proposal for you. If it helps to get your dump truck business funded, it’s worth the expense.
Create a business structure
Almost any business you start is easier to operate if you create a formal business structure first. This is usually a limited liability company (LLC), but it can be a limited partnership or even a sole proprietorship, though these are less common. Picking the right structure for your dump truck business is an important factor in setting up your company, and it can save you the trouble of changing things later.
LLC
The LLC is by far the most popular choice for small businesses. When you create an LLC, the business can act as a person for many legal purposes. It can, for example, own property and take out loans. It can enter contracts and pay taxes. One way an LLC is different from a regular person is in liability. By definition, an LLC limits your exposure to debt and liability. When you do business through an LLC, none of your personal assets are at risk from the operations of the company. This protects you in case of a lawsuit or major liability claim.
Limited partnership
Limited partnerships are a lot like LLCs, except for their ownership structure. A limited liability company has two or more partners who have ownership stakes in the business. Often, one partner acts as a hands-on manager, while the other, limited partner contributes financing.
Sole proprietorship
This is not an unusual business structure for some professions, but it probably isn’t appropriate for your dump truck business. A sole proprietorship is basically an LLC that doesn’t have employees, with some exceptions, and it’s really more popular for craftsmen and freelance gig workers. If you plan to operate more than one truck at your company, this structure is probably not a good one for you.
Setting up your company is relatively straightforward, though the details of how to do it vary by state. As a rule, you can file the necessary paperwork with your state’s secretary of state or office of corporations and pay a fee. You may have to take out an announcement in a local paper and pass through a waiting period, but after that, you’re all set. Contact the IRS for an employer ID number, which is like a social security number for a business, and open a bank account under your company’s doing-business-as name.
Secure financing
Speaking of bank accounts, your new company needs money to get off the ground. There are basically three ways to fund a new company: debt, equity and private financing. Equity is when you raise money by selling ownership of your company to investors. This is a fairly complex operation for larger and older businesses, so you’re not likely to use it to get started.
Privately finance your dump truck business
Private financing may be an option for you when you’re starting a dump truck business. If you already have the capital to buy the equipment you need and pay your first employees out of pocket, you can save yourself the trouble and expense of borrowing. You might also get another party to fund your operation, which is one reason to consider a limited partnership.
Get a loan from a bank
If you don’t have a private channel for startup funding, you have to borrow the money, usually from a bank. A traditional business loan is a lot like the other loans you are familiar with. The bank reviews your application and financial documents, finds underwriting and approves your funding. You will be given a repayment plan to pay back the loan with revenue from the company’s operations.
SBA loans, VA loans and other nontraditional financing
The Small Business Administration and Veterans Affairs both offer special loan programs for qualifying borrowers. These are issued by private banks but with a government-backed guarantee of repayment, which cuts down risk and may get you a better interest rate.
Once you have money in the company’s bank account, you’re ready to buy equipment, hire employees and start marketing your dump truck business to the public.
