One of the most profitable industries is haulage and logistics. However, because to its capital-intensive and risky character, most people avoid this line of work. Do you want to learn how to establish a trucking business from scratch? Do you require a feasibility study report or sample business plan for a trucking company? Then, I suggest continuing to read.
Now if you're interested in learning how to launch a trucking company, you've come to the correct spot, as I'll be giving you some advice on how to be successful in this industry. This is where your road to launching a transportation company starts.
1. Your Personality
Yes, your personality should be taken into account initially. You must first be positive that doing something is what you truly want to accomplish. Going into business for the money alone isn't always a good idea; having a passion for the industry you're in will help you overcome obstacles and push through to success.
Though haulage is a profitable industry, it also entails a great deal of risk and difficulty. As such, the operation of this enterprise requires a strong will and resolve. You have to be ready to handle a variety of issues that are bound to arise in this line of work, such as unscrupulous drivers, dubious mechanics, accidents, and other problems.
2. Choose a niche in the trucking industry
Considering the trucking industry is so vast, choosing a niche is essential to success. The haulage industry has a variety of niches, and the one you select will impact the kind of vehicles you'll need and your startup expenses.
The main time ask yourself the following question:
It is necessary to have the answers to these questions before launching your own trucking company. If you want to work in the transportation of petroleum products, for example, you will need a petroleum tanker and will need to register with an oil company or work as a subcontractor for an established company. On the other hand, if you want to work in the transportation of building materials, such as granite, sand, and cement from quarries to construction sites, you will need a tipper or a lorry.
3. Start-up Capital
The next requirement to start your career in the trucking industry is capital, and you'll need a lot of it. The most difficult and expensive aspect of beginning a trucking business is probably founding a trucking company. How much money you need to start off will mostly rely on how big of a fleet you plan to own. As a result, you must draft a business strategy, determine how much money you will need to launch the venture, and assess your finances to see whether you can afford it.
If you don't have enough money to start, you should think about your creditworthiness, your eligibility for borrowed funding, and whether you have collateral to secure the money you want to borrow before looking into other financing possibilities. To confirm that the company will remain successful even after paying such interest, you should also check the interest rates on the loan and compare them with your anticipated earnings from the enterprise.
4. Rules and regulations
The legal requirements for beginning a haulage firm are another crucial element that needs to be carefully considered. Along with having to follow a set of rules and regulations, you would also need to secure a variety of licenses and permits. Make sure you are in compliance with these regulations by doing a thorough investigation into what they are.
5. Insurance
There are many risks associated with the transportation industry. It would be necessary to securely transport the pricey goods you are carrying to their intended location; they do not belong to you. It is hard to forecast what might or might not occur over the lengthy routes you would need to travel to deliver these items.
The haulage company could incur significant debt as a result of accidents, theft cases, and dishonest drivers who might even take the products somewhere else. For this reason, getting insurance for your haulage company is crucial. To assess the business's feasibility, weigh the costs of getting insurance policies and the premiums you would have to pay against your anticipated revenue.
6. Your management strategy
The next important to look into when starting a trucking business is your management strategy to handle payload and clients. A good management team is essential to running a successful trucking company. If you are inexperienced, you may need to employ a manager who is experienced to oversee the day-to-day affairs of the business and run the business profitably.
Your management team must be experienced in the transport industry; especially with truck management. Another important aspect of running a trucking business is your accounting process. You can buy accounting software for your business to make things easier. As an alternative, you could place your vehicles under fleet management companies that would manage the vehicles for you and pay you an agreed sum monthly.
7. Employees
This is very important as well. First, you have to think about the drivers because they are the life wires of haulage businesses. Your driver can make or mar your business therefore, it is important to first consider how and where to get professional drivers who would be interested in working with you to promote the business.
Next, you must think of the marketing and administrative staff too. If you are planning to start a small-sized haulage business, you may be able to handle the administrative and marketing functions yourself but for larger-sized companies, you may have to employ staff to support with administrative and clerical duties as well as marketing and promotion of the business.
8. Your services to the client
Lastly, you must get a grip on who your clients would be, what their needs are, and how you would reach them. First, you need to choose a niche, then write down a list of companies or prospective clients in that niche and devise strategies that you would use to reach them.
What types of goods are you planning to transport? Will you haul solid, liquid, or gaseous substances? Are you going to haul durable goods or perishable goods? Each type of freight has their set of requirements, so it would be best that you decide on this before you even open a shop. The types of cargo you will be able to carry will determine the type of clients you will work with. And speaking of clients, you will need to present yourself well to get the hauling contracts you need.
Then, you should also think of ways to beat your competitors and brand your business so that it can stand out from others in the industry. No matter how big or small your business is; your outlook matters, so don’t neglect to work on image and brand. Present your services, the cost of providing the services, and other added advantages or benefits that you think can make them sign up with you. Once you get the contract, give them quality service so that they will be enticed to keep coming back.
9. Work out your Contractual agreement
Depending on the agreement you have with the haulage company, some of them would manage your Truck for you, employ the Driver and a motor boy, and help you do all the major and minor repairs.
All you need to do is to go to their office and collect your money at the end of the month. The Trailers can conveniently make as much as N500,000 to N800,000 in a month, but all the expenses listed above have reduced the monthly take-home of the Truck owner to between N350,000 to N400,000 in a month.
10. Maintenance
When maintenance issues arise (and they certainly would), you need the right maintenance services to put the vehicle back in order again. You would need a very good mechanic to handle repairs of your vehicle.
This is especially important because the level of maintenance and quality of servicing your car receives would go a long way to promote the life span of your vehicle. You should look around you for competent automobile repair companies or technicians who can handle repairs of your vehicles.
These must be people who would be willing and able to provide 24/7 services and who would be willing to travel over long distances in case your vehicle breaks down on a trip. For people who own a fleet of vehicles, it is more economical and advisable to employ an in-house mechanic or team of mechanics to handle the maintenance and repairs of your vehicles.
Starting a Trucking Company (Haulage) – Nigeria as a Case Study
Transport business in Nigeria is as old as the nation itself and there is no doubt that those in the business have been known to have contributed in no small way to the economic development of the country. Transport plays an important role in most business activities. Efficient transport is an essential component in the production and distribution process – commonly referred to as supply chain logistics.
Nigeria has the largest road network in West Africa and the second largest south of the Sahara, with roughly 108,000 km of surfaced roads. The present paralysis of the rail system in Nigeria has made road transport the only effective means of conveying heavy goods from one point to another within the country. The population is there and the environment is good. This explains why the road haulage business is one of the most lucrative businesses to start in Nigeria today.
Haulage (or road haulage more specifically) involves the transportation of manufactured consumer goods, raw materials, machinery, petroleum products, and natural resources from one point to another using heavy-duty vehicles such as trailers, tankers, tippers, and cranes.
3 Distinct Ways to Make Money in the Haulage Industry
Starting a haulage business is just like starting a wildfire. The returns are enormous, but it greatly depends on what your truck will be doing. Haulage is a broad area and all spheres of haulage have its specific intricacies, the good news is that it is not so difficult to learn.
a. Running the business as an independent contractor
This involves starting your own haulage company, operating your truck, hiring your drivers, and hunting for contracts from companies that may require your services. This is the most profitable option, the most capital-intensive, and the riskiest.
For example, if you have a fleet of, say 5 trucks to start with, each truck can fetch you N500,000 or more in profits per week, depending on the capacity of the truck, the number of trips covered per week, and the distance traveled per trip.
For a 40ft truck traveling from Lagos to Onitsha, you will charge about N650,000. After deducting the cost of fueling and other routine measures (which will be around N250,000) you will be left with a whopping N400,000 profit—and that’s just for one trip. If the same truck does 3 to 4 trips per week, that’s a weekly profit of between N800,000 and N1,200,000. Now you can imagine how much you would make monthly if you had 5 trucks of the same capacity.
You may decide to haul products for oil majors like Total, Oando, and Conoil or Telecoms companies like MTN, Airtel, Etisalat, Glo, etc. However, all these companies have stringent entry procedures and requirements, so your option of going in as an individual may mean merging with some other persons in the business.
Although the idea of starting your own haulage company is very alluring due to the huge profitability of that option, there are certain risks involved, just as is the case with any other profitable business. Here are some of the risks and downsides of the haulage business:
b. Running the business as a contractor or subcontractor
In this model of haulage business, you will be serving only one client, usually a multinational or big manufacturing company. The company will manage all your trucks as well as the process of hiring and paying drivers. At the end of each month, the company will pay you an agreed amount of money, which ranges between N350,000 and 650,000—depending on the number of trucks you have.
One interesting fact about this business is that if it is properly set up, all you need to do is sit back and wait for your monthly earnings which can be up to N800,000k (depending on the type, age, and tonnage of your truck).
My research took me to some firms and I discovered how some Nigerians have been consistently collecting money from big haulage contracting companies, I saw a long list of signatures with a corresponding amount. I also noted that even the Trucks in the Country now are not enough to satisfy the needs of this sector.
You will need to think twice before adopting this model because you will be subject to certain terms and conditions stipulated by the company you register with (of course, you will be required to register with the company).
c. Leasing your trucks to a haulage company
This model is similar to running the business as a contractor or sub-contractor (as described above), but the difference is that you will be subcontracting with a haulage company. Here, you will also enjoy the benefits that come with sub-contracting with a multinational or manufacturing company.
More Tips for Running a Trucking Business Successfully
Drivers frequently travel at night, on holidays, and on weekends to avoid traffic delays and to deliver cargo on time. Truck drivers must cope with a variety of working conditions including variable weather and traffic conditions, boredom, and fatigue. Many truck drivers, however, enjoy the independence and lack of supervision found in long-distance driving. They collect 10% of the money they make on every trip- which makes them earn as much as N100,000 in a month
A brand new Trailer costs between N15m to N20 million at Leventis and UAC, while you can get a fairly used Truck for N6 to N7 million. Some of the fairly used trucks are imported from Belgium, Germany, and the United Kingdom. You can also buy a Trailer head and refurbish the engine to standard; in total, it can cost you between N3 to N3.5 million. A Trailer Tanker costs between N3 to N3.6million.
The “face” of your company is highly dependent on the type of drivers you employ, so make sure you hire drivers who are fit for the job. Check their references and background, and make sure that they’re not taking any illegal drugs. Hiring a terrible driver or being involved in an accident is going to be a disaster; not only to the finances of your company but also to your brand image, so recruit wisely.
As a final note, this is all the advice I can provide for now on how to start a trucking business. The trucking industry is quite a tough terrain to break into but the reward is worth it. I wish to personally congratulate you on your ambition to join one of the fastest-growing businesses in Nigeria and the entire Continent. This dream of yours will definitely ensure a very comfortable living for you and your loved ones…… Guaranteed.
It has been a long-term dream of mine to launch a transportation company. Whether you work as an employee truck driver or as an entrepreneur, you must have thought of launching your own trucking company.
Before delving into the specifics of this article, I would want to clarify that the trucking sector is similar worldwide in terms of both fundamental and technical aspects. So while I will be utilizing Nigeria as a case study in this article, the lessons/information may be used or recreated anyplace else; whether in the United States, Canada, India, Australia, U.K, etc.
Currently, one of the largest industries in the world is trucking. In actuality, the trucking sector generates approximately $300 billion in income annually in the United States alone. Nigeria has an enormous market for haulage services and even logistics, both of which are billion-dollar industries. This is because long-distance freight transportation has grown in importance.
Regardless of the business you work in, you have to move large quantities of goods—both raw and finished—back and forth. Because of this, the haulage sector is extremely profitable.
Starting a Trucking Business – Sample Business Plan Template
Now if you're interested in learning how to launch a trucking company, you've come to the correct spot, as I'll be giving you some advice on how to be successful in this industry. This is where your road to launching a transportation company starts.
1. Your Personality
Yes, your personality should be taken into account initially. You must first be positive that doing something is what you truly want to accomplish. Going into business for the money alone isn't always a good idea; having a passion for the industry you're in will help you overcome obstacles and push through to success.
Though haulage is a profitable industry, it also entails a great deal of risk and difficulty. As such, the operation of this enterprise requires a strong will and resolve. You have to be ready to handle a variety of issues that are bound to arise in this line of work, such as unscrupulous drivers, dubious mechanics, accidents, and other problems.
2. Choose a niche in the trucking industry
Considering the trucking industry is so vast, choosing a niche is essential to success. The haulage industry has a variety of niches, and the one you select will impact the kind of vehicles you'll need and your startup expenses.
The main time ask yourself the following question:
- Will you be engaged in transporting bulk goods or would you be leasing trucks to businesses in the transport industry?
- Will you outsource your truck to a trucking company or would you rather put your truck on a hired purchase?
- Are you going to haul short or long distances?
- If you are to go into transportation; will you haul solid or liquid goods?
It is necessary to have the answers to these questions before launching your own trucking company. If you want to work in the transportation of petroleum products, for example, you will need a petroleum tanker and will need to register with an oil company or work as a subcontractor for an established company. On the other hand, if you want to work in the transportation of building materials, such as granite, sand, and cement from quarries to construction sites, you will need a tipper or a lorry.
3. Start-up Capital
The next requirement to start your career in the trucking industry is capital, and you'll need a lot of it. The most difficult and expensive aspect of beginning a trucking business is probably founding a trucking company. How much money you need to start off will mostly rely on how big of a fleet you plan to own. As a result, you must draft a business strategy, determine how much money you will need to launch the venture, and assess your finances to see whether you can afford it.
Are you intending to purchase new or used trucks? You have two options for getting your trucks: you can either lease them or buy them completely. Seeking out subcontractors is an additional choice. Even though the initial outlay is substantial, with proper management choices, it can be readily recovered.
If you don't have enough money to start, you should think about your creditworthiness, your eligibility for borrowed funding, and whether you have collateral to secure the money you want to borrow before looking into other financing possibilities. To confirm that the company will remain successful even after paying such interest, you should also check the interest rates on the loan and compare them with your anticipated earnings from the enterprise.
4. Rules and regulations
The legal requirements for beginning a haulage firm are another crucial element that needs to be carefully considered. Along with having to follow a set of rules and regulations, you would also need to secure a variety of licenses and permits. Make sure you are in compliance with these regulations by doing a thorough investigation into what they are.
5. Insurance
There are many risks associated with the transportation industry. It would be necessary to securely transport the pricey goods you are carrying to their intended location; they do not belong to you. It is hard to forecast what might or might not occur over the lengthy routes you would need to travel to deliver these items.
The haulage company could incur significant debt as a result of accidents, theft cases, and dishonest drivers who might even take the products somewhere else. For this reason, getting insurance for your haulage company is crucial. To assess the business's feasibility, weigh the costs of getting insurance policies and the premiums you would have to pay against your anticipated revenue.
6. Your management strategy
The next important to look into when starting a trucking business is your management strategy to handle payload and clients. A good management team is essential to running a successful trucking company. If you are inexperienced, you may need to employ a manager who is experienced to oversee the day-to-day affairs of the business and run the business profitably.
Your management team must be experienced in the transport industry; especially with truck management. Another important aspect of running a trucking business is your accounting process. You can buy accounting software for your business to make things easier. As an alternative, you could place your vehicles under fleet management companies that would manage the vehicles for you and pay you an agreed sum monthly.
7. Employees
This is very important as well. First, you have to think about the drivers because they are the life wires of haulage businesses. Your driver can make or mar your business therefore, it is important to first consider how and where to get professional drivers who would be interested in working with you to promote the business.
Next, you must think of the marketing and administrative staff too. If you are planning to start a small-sized haulage business, you may be able to handle the administrative and marketing functions yourself but for larger-sized companies, you may have to employ staff to support with administrative and clerical duties as well as marketing and promotion of the business.
8. Your services to the client
Lastly, you must get a grip on who your clients would be, what their needs are, and how you would reach them. First, you need to choose a niche, then write down a list of companies or prospective clients in that niche and devise strategies that you would use to reach them.
What types of goods are you planning to transport? Will you haul solid, liquid, or gaseous substances? Are you going to haul durable goods or perishable goods? Each type of freight has their set of requirements, so it would be best that you decide on this before you even open a shop. The types of cargo you will be able to carry will determine the type of clients you will work with. And speaking of clients, you will need to present yourself well to get the hauling contracts you need.
Then, you should also think of ways to beat your competitors and brand your business so that it can stand out from others in the industry. No matter how big or small your business is; your outlook matters, so don’t neglect to work on image and brand. Present your services, the cost of providing the services, and other added advantages or benefits that you think can make them sign up with you. Once you get the contract, give them quality service so that they will be enticed to keep coming back.
9. Work out your Contractual agreement
Depending on the agreement you have with the haulage company, some of them would manage your Truck for you, employ the Driver and a motor boy, and help you do all the major and minor repairs.
All you need to do is to go to their office and collect your money at the end of the month. The Trailers can conveniently make as much as N500,000 to N800,000 in a month, but all the expenses listed above have reduced the monthly take-home of the Truck owner to between N350,000 to N400,000 in a month.
10. Maintenance
When maintenance issues arise (and they certainly would), you need the right maintenance services to put the vehicle back in order again. You would need a very good mechanic to handle repairs of your vehicle.
This is especially important because the level of maintenance and quality of servicing your car receives would go a long way to promote the life span of your vehicle. You should look around you for competent automobile repair companies or technicians who can handle repairs of your vehicles.
These must be people who would be willing and able to provide 24/7 services and who would be willing to travel over long distances in case your vehicle breaks down on a trip. For people who own a fleet of vehicles, it is more economical and advisable to employ an in-house mechanic or team of mechanics to handle the maintenance and repairs of your vehicles.
Starting a Trucking Company (Haulage) – Nigeria as a Case Study
Transport business in Nigeria is as old as the nation itself and there is no doubt that those in the business have been known to have contributed in no small way to the economic development of the country. Transport plays an important role in most business activities. Efficient transport is an essential component in the production and distribution process – commonly referred to as supply chain logistics.
Nigeria has the largest road network in West Africa and the second largest south of the Sahara, with roughly 108,000 km of surfaced roads. The present paralysis of the rail system in Nigeria has made road transport the only effective means of conveying heavy goods from one point to another within the country. The population is there and the environment is good. This explains why the road haulage business is one of the most lucrative businesses to start in Nigeria today.
Haulage (or road haulage more specifically) involves the transportation of manufactured consumer goods, raw materials, machinery, petroleum products, and natural resources from one point to another using heavy-duty vehicles such as trailers, tankers, tippers, and cranes.
3 Distinct Ways to Make Money in the Haulage Industry
Starting a haulage business is just like starting a wildfire. The returns are enormous, but it greatly depends on what your truck will be doing. Haulage is a broad area and all spheres of haulage have its specific intricacies, the good news is that it is not so difficult to learn.
a. Running the business as an independent contractor
This involves starting your own haulage company, operating your truck, hiring your drivers, and hunting for contracts from companies that may require your services. This is the most profitable option, the most capital-intensive, and the riskiest.
For example, if you have a fleet of, say 5 trucks to start with, each truck can fetch you N500,000 or more in profits per week, depending on the capacity of the truck, the number of trips covered per week, and the distance traveled per trip.
For a 40ft truck traveling from Lagos to Onitsha, you will charge about N650,000. After deducting the cost of fueling and other routine measures (which will be around N250,000) you will be left with a whopping N400,000 profit—and that’s just for one trip. If the same truck does 3 to 4 trips per week, that’s a weekly profit of between N800,000 and N1,200,000. Now you can imagine how much you would make monthly if you had 5 trucks of the same capacity.
You may decide to haul products for oil majors like Total, Oando, and Conoil or Telecoms companies like MTN, Airtel, Etisalat, Glo, etc. However, all these companies have stringent entry procedures and requirements, so your option of going in as an individual may mean merging with some other persons in the business.
Although the idea of starting your own haulage company is very alluring due to the huge profitability of that option, there are certain risks involved, just as is the case with any other profitable business. Here are some of the risks and downsides of the haulage business:
b. Running the business as a contractor or subcontractor
In this model of haulage business, you will be serving only one client, usually a multinational or big manufacturing company. The company will manage all your trucks as well as the process of hiring and paying drivers. At the end of each month, the company will pay you an agreed amount of money, which ranges between N350,000 and 650,000—depending on the number of trucks you have.
One interesting fact about this business is that if it is properly set up, all you need to do is sit back and wait for your monthly earnings which can be up to N800,000k (depending on the type, age, and tonnage of your truck).
My research took me to some firms and I discovered how some Nigerians have been consistently collecting money from big haulage contracting companies, I saw a long list of signatures with a corresponding amount. I also noted that even the Trucks in the Country now are not enough to satisfy the needs of this sector.
You will need to think twice before adopting this model because you will be subject to certain terms and conditions stipulated by the company you register with (of course, you will be required to register with the company).
c. Leasing your trucks to a haulage company
This model is similar to running the business as a contractor or sub-contractor (as described above), but the difference is that you will be subcontracting with a haulage company. Here, you will also enjoy the benefits that come with sub-contracting with a multinational or manufacturing company.
More Tips for Running a Trucking Business Successfully
Truck driving as a money-spinner
Drivers frequently travel at night, on holidays, and on weekends to avoid traffic delays and to deliver cargo on time. Truck drivers must cope with a variety of working conditions including variable weather and traffic conditions, boredom, and fatigue. Many truck drivers, however, enjoy the independence and lack of supervision found in long-distance driving. They collect 10% of the money they make on every trip- which makes them earn as much as N100,000 in a month
How to Buy a Truck or Trailer
A brand new Trailer costs between N15m to N20 million at Leventis and UAC, while you can get a fairly used Truck for N6 to N7 million. Some of the fairly used trucks are imported from Belgium, Germany, and the United Kingdom. You can also buy a Trailer head and refurbish the engine to standard; in total, it can cost you between N3 to N3.5 million. A Trailer Tanker costs between N3 to N3.6million.
Note: prices might change due to the exchange rate.
Road Haulage is clearly a huge industry with many and varied opportunities for anybody interested in investing in it. Almost 90% of the Trailers on our road are second hand and they are still OK. If you don’t want to spend a lot of money, you can decide to rent the back which goes for N30,000 a month, you will need to pay for 4 months which is N120,000.
Tippers carry granites from the Quarry to different parts of the Country. Any investor in this type of business is advised to register with the Quarry, they make 2 trips every day and they charge between N60K to N86,000 per trip. A good tipper costs between N4 million to N5 million naira and you are entitled to about N400,000 in a month; if you can give your tipper to a manager to manage for you.
Aside from the issue of capital, the trucking business is management-intensive. Another challenge militating against the success of trucking businesses is bad roads. The issue of bad roads results in unnecessary repairs, maintenance, and accidents/hazards. The last but not the least challenge of starting a trucking business is getting good drivers.
Road Haulage is clearly a huge industry with many and varied opportunities for anybody interested in investing in it. Almost 90% of the Trailers on our road are second hand and they are still OK. If you don’t want to spend a lot of money, you can decide to rent the back which goes for N30,000 a month, you will need to pay for 4 months which is N120,000.
How to Buy a Tipper
Tippers carry granites from the Quarry to different parts of the Country. Any investor in this type of business is advised to register with the Quarry, they make 2 trips every day and they charge between N60K to N86,000 per trip. A good tipper costs between N4 million to N5 million naira and you are entitled to about N400,000 in a month; if you can give your tipper to a manager to manage for you.
Challenges of Starting a Trucking Business
Aside from the issue of capital, the trucking business is management-intensive. Another challenge militating against the success of trucking businesses is bad roads. The issue of bad roads results in unnecessary repairs, maintenance, and accidents/hazards. The last but not the least challenge of starting a trucking business is getting good drivers.
The “face” of your company is highly dependent on the type of drivers you employ, so make sure you hire drivers who are fit for the job. Check their references and background, and make sure that they’re not taking any illegal drugs. Hiring a terrible driver or being involved in an accident is going to be a disaster; not only to the finances of your company but also to your brand image, so recruit wisely.
As a final note, this is all the advice I can provide for now on how to start a trucking business. The trucking industry is quite a tough terrain to break into but the reward is worth it. I wish to personally congratulate you on your ambition to join one of the fastest-growing businesses in Nigeria and the entire Continent. This dream of yours will definitely ensure a very comfortable living for you and your loved ones…… Guaranteed.
Trucking industry is one of the biggest businesses in the world. And you explained everything in your post is very important.
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