How to Start a Trucking Company in 7 Steps

Want to get into one of the fastest-growing industries in the country? The trucking business isn’t known for its high profits, but that changes when you start hauling 80,000 pounds per truck. That’s right! We’ll learn how to start a trucking business with expert advice from a trucking company.

Mikael Sant, the founder of Sant Lines, is ahead of the game. He started Sant Lines in May of 2021 at the age of 19. The trucking company made over $159,000 in revenue in the first six months. That’s more than many owner-operators make in a year. He has grown to four trucks, expects to have 100 in seven years, and is working to be a dominant force in the industry.

We’ve outlined the process to start a trucking company in just 7 steps. Click any of the links below to jump ahead.

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• How to Start a Trucking Business Case Study: Sant Lines
  
  • Step 1. Know the Trucking Business
    
  • Step 2. Starting a Trucking Company Business Plan
    
  • Step 3. Secure Startup Funding
    
  • Step 4. Is a Trucking Business Hard to Start?
    
  • Step 5. Get Customers
    
  • Step 6. Manage Your Trucking Business Finances
    
  • Step 7. Trucking Companies Need Admins
    
• How to Start a Trucking Business Frequently Asked Questions
  
• So What’s The Best Trucking Business to Start?

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Quick Warning

Before you even consider operating a trucking company, you should:

1. Get a DMV printout: If you have a DUI, vehicular manslaughter, or other charges, you will not be able to get a job or insurance.
2. Have no convictions for drugs, felonies, violent crimes, or fraud: It will be difficult or impossible to qualify for a job, insurance, or getting an authority.
3. Check insurance price:. Mikael spends $45,000 per year for his insurance because he is a new CDL driver.
4. Understand Finances: Every load you accept will have costs that impact it. Real simply, if you can’t multiply and calculate percentages, you are likely to struggle immensely. You need to be able to calculate the costs based on mileage and the weight of load. To make good money, you’ll need each load to be at least three times the cost.

How to Start a Trucking Business Case Study: Sant Lines

Mikael is a serial entrepreneur. He owns:

• Sant Lines
• Sant Logistics & Freight LLC
• Rettig & Sant LLC
• SANT Co
• Squeaky Clean Pressure Washing & Paint LLC 
• VESTALO LLC

Check out our interview with him below:

[su_youtube url="https://youtu.be/-8TnsjDRXUE"]

You can write your own success story in trucking by following Mikael's advice with these seven steps.

Step 1. Know the Trucking Business

Most of us are familiar with trucking on some level, whether it's seeing big rigs on the road or utilizing local moving companies. Behind the products we receive from those giant trucks, plenty of government regulations ensure every trucking company delivers products safely.

If you haven’t worked in a trucking company, it’s important to get some industry experience and specific licenses. You might want to work with a moving company to learn about the industry.

How do truckers make money?

Very simply, truckers make money based on miles and weight as they transport products. A trucking company operates under one of four main NAICS codes:

• 48412 Long Distance Trucking
• 48411 Local Freight Trucking
• 48422 Local Specialized Freight Trucking
• 49222 Courier and Local Deliver Services

Trucking businesses charge different amounts based on what they are hauling and where they are hauling it. I combined the IBIS World statistics for the four sectors and found that the industry makes $557.2 billion in annual revenue and $33.2 billion in profit. Check out the rest of my findings below:

NAICS Code	48411	48412	48422	49222	Combined
Type of Trucking	Local Freight	Long Distance Freight	Local Specialized Freight	Couriers and Delivery	4 Major NAICS Codes
Revenue (billions)	$86.60	$262.90	$56.10	$151.60	$557.20
Expected CAGR (compound annual growth rate)	0.80%	1.20%	1.90%	3.60%	1.90%
Profit (billions)	$5.70	$13.70	$3.60	$10.20	$33.20
Profit Margin	6.60%	5.20%	6.40%	6.70%	5.96%
Number of Businesses	307,000	570,000	65,000	416,000	1,358,000
Expected Businesses CAGR	4.30%	4.20%	1.80%	7.90%	5.30%
Number of Employees	562,000	1,000,000	290,000	1,000,000	2,852,000
Expected Employment CAGR	5.20%	2.30%	2.10%	4.70%	3.70%
Wages (billions)	$23.30	$69.20	$15.40	$43.90	$151.80
Expected Wage CAGR	3.90%	2.10%	2.10%	4.50%	3.10%
Wages/Revenue	26.91%	26.32%	27.45%	28.96%	27.24%
Purchases/Revenue	31.40%	31.50%	30.60%	7.80%	24.95%
Marketing/Revenue	0.20%	0.20%	0.20%	0.30%	0.23%
Depreciation/Revenue	5%	6.70%	6.20%	1.60%	5.00%
Rent/Revenue	4.30%	4.40%	4.20%	3.70%	4.17%
Other Costs/Revenue	25.20%	25.30%	24.50%	56%	33.56%

How much can you make owning your own trucking company?

The average trucking company has over $410K in revenue. Specialized freight makes the most at over $860K, while the others earn far less. If you plan to start a trucking company, it’s reasonable to assume you will make no more than the following amounts during each of the first few years.

• Long Distance Freight: $461K
• Couriers: $364K
• Local Freight: $282K

Learn more on our podcast where we discuss trucking with Mikael. 

In the podcast, Mikael explains how he built his company from the ground up, including startup costs, and how he's adapted to new systems as his company has grown. Plus, he talks about some surprising obstacles he's had to overcome to keep the company running. 

Is owning a trucking business profitable?

Yes, owning a trucking company can be highly profitable. The average trucker makes around $54K per year in wages and another $6,000 in profits, assuming they meet industry averages.

Mikael currently makes over $135K per year. He only drives in case of emergencies and pays his drivers to do most of the driving. So it can be highly profitable to start a trucking company without driving consistently.

New trucking businesses

More and more truckers choose to go out on their own once they have gotten some experience. In fact, owner-operators have the highest rate of solo entrepreneurs in the United States. 

That’s because they can make a great living. Assuming the 4.2% rent is helping pay off their homes, that means the average business owner is paying off around $17,000 of their mortgage as a business expense.

Follow Commercial Truck Regulations

When you start a trucking company, it is important to understand you are entering one of the most regulated industries in the United States. If you provide long haul services, you’ll need to register with multiple agencies including:

• Department of Transportation
• Department of Labor
• State Agencies (in every state you operate in)

Mikael told us:

[su_quote]For every state you have to be 18 to get a CDL, and 21 to get cross-state licenses.[/su_quote]

He also told us:

[su_quote]I focus mostly on running the business, but there are times when I have to drive too. It cost $4,500 to get my CDL.[/su_quote]

All of these costs add up, of course. Let's have a look at the hard numbers so there are no surprises when you start to pay your startup expenses.

How much does it cost to start a trucking business?

You’ll want at least $50K-$60K to start a trucking company. Mikael explained the startup costs for a trucking company, which include the following:

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• Truck: $32,000 (10 years or newer)
• Refurbished Trailer: $9,500 (currently worth $30K)
• Repairs: $6,000
• Fuel: $2,000 (first week)
• Insurance: $4,500 (down payment and first month)
• Permit: $950 per truck
• IFTA: $2,800 to get cross-country license plates
• Total: $57,750

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The good news is:

[su_quote]We made our money back in the first three months and have been profitable since.[/su_quote]

How to start a trucking company with no money

Yes, many major transportation businesses offer company drivers the ability to transition to owner-operators after working with them for a certain amount of time. They do this by setting up brokerages, leasing companies, and load boards.

The leasing company leases the owner-operator a truck in exchange for the truck company owner committing to a multi-year contract with them. At the end of the contract, you have your own trucking company and truck owned outright.

We’ll discuss the leases more in later sections, but first let's check out more resources to learn how to start a trucking company.

More resources for trucking businesses

There are industry organizations that you’ll want to follow to stay up to date on the trucking industry. These are some of the biggest in the U.S.

• American Trucking Association (ATA): The ATA is the largest group that collects industry data, lobbies for the industry, and provides info for trucking companies, moving companies, suppliers, and companies that need shipping.
• Transport Topics: This group publishes a variety of information about the industry including a Top 100 For-Hire list. FYI you need to make $244 million or more to be in the top 100.
• US Environmental Protection Agency (EPA): The EPA is tasked with regulating environmental concerns. Remember to pay attention to their rules involving trucking and agriculture because most trucking companies will be impacted.
• US Energy Information Administration (EIA): Be sure to pay attention to the transportation reports from the EIA if you haul oil and refined products.
• America's Independent Truckers' Association Inc. (AITA): Larry Daniel started AITA in 1997 to give independent truckers the same purchasing power as major conglomerates. It’s $10 per year for membership or $180 for fleets. If you find better discounts anywhere, they ask you to gather as much information as possible and send it to them so they can secure the same deal for all.

Step 2. Starting a Trucking Company Business Plan

As the saying goes, if you fail to plan, you plan to fail. You need a solid business plan. Trucking company business operations comply with numerous regulatory agencies. Your truck company business plan should address all aspects of the business that are essential to your success.

The business plan dictates the plan of action. Once you have some knowledge and experience in the trucking industry, writing your new trucking company’s business plan is the next logical step.

Your business plan is your venture’s founding document, and it will be the reference point for all business decisions moving forward. You want to put time and effort into composing the business plan because a well-written one will help improve the probability of business success.

Luckily, there are great resources for entrepreneurs who are writing their own business plans. Check out our business plan template and watch our interview with Mike Andes below.

[su_youtube url="https://youtu.be/Seac5PbUZXk"]

The Small Business Association (SBA) is part of the federal government and provides a step-by-step guide to writing your business plan.

Truckstop.com also has a guide to writing a business plan for trucking companies.

Keep reading to learn how to identify the target market for your own trucking company.

Identify the target market

Your target market will mostly be businesses when you open your new trucking company. Depending on the type of truck, you might want to build relationships with different kinds of businesses. Some businesses that consistently need truckers include:

1. Distributors
2. Car manufacturers
3. Agricultural businesses
4. Marijuana growing facilities
5. Moving companies
6. Car dealerships

You’ll want to build relationships with load boards and brokers like datboard and truckstop.com, but Mikael also wins a lot of business with word of mouth recommendations. You’ll probably also want to consider seasonal fluctuations. Mikael told us:

[su_quote]Everything is good during winter. $75K monthly and summers around $125K. Potato season is July to November, but our best run on a per-mile basis was Oregon to Phoenix. It totaled $6 a mile or around $9,000.[/su_quote]

It can be hard to describe your market accurately, but it’s a critical assessment to make. Market research firms gather data that are good for validating your original research. It’s worth considering hiring one if you aren’t confident in your research methods.

You can find a guide to market research for new businesses at Entrepreneur, and Joe Gardiner, CEO of VentureDevs, has a complete guide to market research at Forbes.

Define your business structure

Because of the investment, you’ll probably start a trucking business as a Limited Liability Company (LLC). A trucking LLC filing as an S-Corporation is the prevailing business structure when someone starts a trucking company. 

Limited Liability Companies can opt for the business entity to be treated as an S-Corp for tax purposes. You just have to file an 1120-S with the Internal Revenue Service.

A successful trucking company will find this business entity and tax structure beneficial because they will be able to:

1. Pay themselves a salary.
2. Receive various personal liability protections.
3. Separate business and personal assets.
4. Save money on taxable income over $200,000.

Running your business in this method provides a good balance of liability protection and business structure if you choose to grow beyond a solo entrepreneur. Almost every successful trucking business will use either this structure or a C-Corporation.

You might want to hire a law firm to form your corporation because it’s easier to head off any problems as the business is formed rather than to go back and change your founding documents or business protocols once issues arise.

Check out our business hub for more in-depth information on business licenses and entities. Alternatively, review the Small Business Administration startup guide for more information.

Choose your trucking business name

Your trucking name can reflect your geographic origins, or it can be more abstract, or even the name of the founder. Sant Lines uses Mikael’s last name.

Choosing your trucking name is an important consideration that can affect both the present and future of your business.

For example, naming your company the Trucking Business of North Carolina may attract customers in your home state that want to do business with local trucking companies, but it might hinder your expansion outside of your state.

For some help with choosing a name for your business, check out our guide and business name generator. Alternatively, Forbes has a guide, as does The Balance. 

Once you’ve determined your trucking name, run searches at your Secretary of State’s website and get a domain name from sites like GoDaddy or NameCheap.

Address start-up and operations costs

Your plan should outline the source(s) of your capital plus how and when investors will be paid back. Outline your operational costs carefully. For a trucking company, there are three main sources of operations costs:

1. Purchases

The primary costs associated with trucking are purchases including gas, maintenance, and repairs. These will be nearly ⅓ of your business expenses, so make sure to calculate them effectively. That means if you are doing long haul trucking, you should assume $153,667 of purchases per truck each year.

2. Wages

Your wages and any employee wages will be up to 29% of the revenue. That means you should assume you’ll be paying up to $133,690 if you are making the average amount for a long haul trucker. On average wages are around $55,000 per year across the industry.

3. Miscellaneous

The third largest expense relates to other costs like technology, miscellaneous business expenses, and taxes. These account for approximately 25% of revenue. I have created an automated 10 year calculator that estimates the revenue, expenses, and profits when considering the compound annual growth rate (CAGR) and how many trucks you want to add each year. Feel free to download it and try it out.

How much does a trucking owner make?

An owner-operator will normally pay themselves a salary plus profits paid out as either a dividend or return of capital. If you run as a sole operator, you need to make sure you set your pay correctly. There are a few ways you might fall under on the Bureau of Labor Statistics site:

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1. Heavy Truck Driver: $51,790
2. Operations Manager: $106,630
3. Top Executives: $109,880
4. Chief Executives: $198,610

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In addition, an average trucking company would offer around $20,000–30,000 in profits which can be treated as dividends. If you pay yourself less than the $106K salary, which I suspect most would for the first few years, do not give yourself more than a $30K dividend check unless you want to risk an audit.

(I’m not a tax attorney, but I know enough that you don’t want to deal with IRS audits. If you make enough to pay yourself $200K, it is the safest bet.)

Consult a corporate attorney to get legal advice.

Step 3. Secure Startup Funding

Once you’ve put together a plan, it’s time to start considering how to secure startup funding. As Mikael stated, you’ll need around $50K to $60K just to make it through the first couple of months. If you factor in the first year, you’ll need almost $300K, and to make it through the first five years you can expect to need over $2 million. These numbers do not include wages or depreciation (because depreciation is not a hard cost).

Most business owners start their trucking company with personal savings or by borrowing from friends and family, but you can also qualify for equipment financing and other loans that use the truck to back the loan. We suggest reaching out to National Business Capital first because they offer flexible financing options and work with you to find the best loan for your business from over 75 lenders.

Crowdfunding

If your business will serve a particular community or industry, you might be able to use crowdfunding to get the startup costs. Of course, you’ll normally have to offer them something like discounted pricing or a free local delivery depending on how much they contribute. 

Kickstarter is a popular site for business funding. If you’d like to learn more about the Kickstarter process, check out our interview with Pooch Selfie’s founder.

Major fleet owner-operator lease programs

While talking with one of my relatives about how to get into the trucking industry, he advised going through one of the major fleets to get financing. The way they work is they basically finance the truck in exchange for a contract of five years. After those five years, you own the truck. 

He warned that you need to be cautious with these, however. Some of the fleets are a bit shady. If you are making less than $400 per day, they aren’t doing right by you. In addition, after five years you should absolutely own the vehicle. Make sure to read the contract carefully.

I asked about the best ones. He specifically mentioned:

• Knight Transportation (From Arizona)
• Werner Enterprises (Based in Nebraska)
• Schneider (Based in Wisconsin)

Step 4. Is a Trucking Business Hard to Start?

A trucking business isn’t hard to start, but you will have some unique requirements that most business owners do not. 

First, you’ll need to get your commercial driver’s license (CDL). You’ll also need to perform the following tasks when you start a trucking company:

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• Get your CDL.
• Get a truck and trailer.
• Submit IFTA Form 290.
• Apply for insurance.
• Register with the federal Department of Transportation (DOT).
• Join the International Fuel Tax Alliance.
• Get an IRP plate.
• Let’s look at the considerations.

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Get Your Commercial Driver's License

To drive a semi-truck, you’ll need a commercial driver's license. Each state has different requirements, but most consist of the following: 

1. Be of good health based on hearing and response times, but there are other reasons you might not qualify.
2. Pass background and driver safety checks.
3. Get your state CDL manual from the Department of Motor Vehicles. Some states use alternate names.
4. Take a commercial permit knowledge test.
5. Go to a third-party commercial driving school. The manual should list licensed schools.
6. Take the driver test.

Mikael told us:

[su_quote]I don’t normally drive, but you’ll want to have the license in case one of your drivers calls out.[/su_quote]

He suggested JJ Keller for the school.

Next, you’ll want to apply for insurance because many of the following steps require it.

Buy A Truck

Mikael spent a good bit of time talking about the important aspects of a truck. He normally looks for vehicles with these features:

1. Age: Under 10 years old
2. Mileage: Under 750,000 miles
3. Brands: Kenworth, Volvo, Peterbilt, Freightliner, Western Star
4. Features: Sleeper included for long haul trips
5. Market Price: Should be market price or slightly below to get the best value

He told us:

[su_quote]I try to stay between [the] $50 to $70 thousand range for used trucks that have between 450K miles to 650K miles.[/su_quote]

He also suggested bringing someone with you that can check the engine and transmission. They will be able to provide reasonable estimates for the cost of repairs and help you negotiate the price.

Types of Trucks

Trucks in the United States are rated by the gross vehicle weight rating (GVWR). The GVWR is a rating that manufacturers use to specify the maximum weight that a vehicle can operate safely. This weight includes the truck, trailer, gas, occupants, and freight. There are eight basic levels including: 

• Passenger vehicles (light duty): Classes 1, 2a, and 2b have a GVWR of under 10,000 pounds. These also include popular trucks and SUVs like the Ford F150 and some box trucks.
• Medium duty vehicles: These go in Classes 3-6, which are below the 26,000 pound GVWR. Common vehicles in this class include Ford F350 to F650, Silverado 3500 to 6500, and Ram 3500 to 5500. A box truck company will fall in this category as well as some smaller semi-trucks with sleepers.
• Heavy duty trucks: Class 7 is 26,001 to 33,000 pounds, and Class 8 is over 33,000 pounds. These are the big boys, and they require a CDL.

The federal government requires heavy-duty trucks to have a commercial driver's license, but each state has its own policies. California requires any vehicle over 6,000 pounds and 3 axles to have a CDL.

Tow trucks and other vehicles may also require CDLs. To learn more about tow truck driving, check out our interview with K.O. Towing below:

[su_youtube url="https://youtu.be/pk4B1Q28SCs"]

Types of Trailers

There are a ton of different trailers you can use for trucking. It just depends on what you need to carry. Some of the most common are:

1. Dry Van Trailers: Standard trailers are 53 feet long and around 45,000 pounds maximum weight.
2. Standard Flatbed Trailers: These trailers are great for products that don’t need to be protected from the elements.
3. Refrigerated Trailers (Reefers): If you transport food, you’ll need temperature control with a max weight of 42,000–45,000 pounds. 
4. Drop-Deck, Step-Deck Trailers: These are similar to flatbeds but prevent height problems, and are up to 53 feet long.
5. Double Drop, Lowboy Trailers: Double Drops are higher at the front and the back and carry 40K–80K pounds.
6. Hotshot Trailers: This low-lying flatbed is 30–40 feet long, but only carries 16,500 pounds and is usable with Class 3 to 6 trucks.
7. Conestoga Trailers: If you need a flatbed with a sliding tarp cover, use a Conestoga trailer.
8. Curtainside Trailers: Need a dry-van with a solid front, top, and back, but tarp curtain sides to make it easier to load from the side? Curtain Trailers are the answer.
9. Extendable Drop-Deck Trailers: These drop decks are built for lengths longer than 53 feet.
10. Removable Gooseneck (RGN) Trailers: Use these to drive vehicles onto the trailer.
11. Extendable RGN Trailers: These RGN trailers extend based on the length of your load.

Watch the video below to learn more about these trailers:

[su_youtube url="https://youtu.be/fkNaIQOEd34"]

They don’t mention tankers in the video. You can transport hazardous waste or oil products, but those will require specialized licensing and knowledge. You are better off getting some miles on the road before you start hauling these products.

When first starting, you’ll probably only be able to choose one type of trailer. I’d probably go with a reefer or drop deck as they will offer you the most versatility. That sounds consistent with what Mikael told us:

[su_quote]I offer 4 main services:

• Refrigeration and frozen food (best in summer and fall)
• Flatbed for construction (springtime does best)
• Power only: Amazon is the biggest customer I have just 'cause of their volume
• Towing: I’ve delivered as far as Nevada[/su_quote]

Fill out Form 2290

You’ll need to pay your heavy use taxes to the IRS before you can start driving. You’ll use Form 2290 and either apply for an exemption or pay up to $504.17 (subject to increase). You won’t be able to get your authority or IRP License without proof.

Get your trucking insurance

You’ll need active insurance coverage including public liability insurance. The requirements vary based on state and federal laws, but you will need at least $750,000 of Bodily Injury (BI) and Property Damage (PD) liability insurance coverage. If you will be transporting hazardous materials, the requirement is $5 million.

The ATA has an agreement with Sentry as a preferred insurance provider. Most major insurers also have a commercial truck insurance product, or you can also find specialized truck insurance from companies like Owner Operator Direct.

Become a trucking authority

To run an interstate (operating across state lines) business in the U.S. transportation industry, you will need to get licensed as an operating authority with the Federal Motor Carrier Safety Administration (FMCSA). To apply, you’ll need to:

1. Get your Department of Transportation (DOT) number here.
2. Get the proper insurance.
3. Apply for the Operating Authorities you wish to qualify under. There are multiple types.
4. Pay $300 fee per Operating Authority.

When you perform these steps you will have a temporary operating authority for your self-owned trucking company. The DOT has to perform an audit before you have a permanent operating authority. These are not actually permanent, however, as they will take it away if you do not operate under the laws.

Join International Fuel Tax Association (IFTA)

You’ll want to join the International Fuel Tax Association. It was created under the International Fuel Tax Agreement to simplify the payment of fuel taxes in the continental United States, Alaska, and Canadian provinces.

Truckers are required to pay fuel tax based on the percentage of miles they drive in each state. To simplify the administrative costs, each jurisdiction handles its own member applications, tax returns, and audits. Read up on how it works on the IFTACH website.

You’ll need to apply at your local office and pay a fee which will provide you with two decals to prove your membership.

These taxes fund highway programs that you and other trucking companies rely on to transport products, livestock, and agricultural goods.

You can get more details on the IFTA website. 

You’ll need to file a tax return every year for your gas tax. Fortunately, you just file with your state and they’ll distribute it accordingly. You’ll need to track your miles and time in each state to pay the appropriate taxes whether you bought gas in that state or not. You can use a log book or an electronic log (elog). I talked to a relative that is a truck driver and he warned:

[su_quote]Be careful with elogs. When GPS goes down, and it frequently does, they may not log the miles. In addition, when they get hacked you have to get a new one. 16,000 drivers recently got warnings to get a new log or stop driving because of a hack of a provider. If you use them, also keep a manual log.[/su_quote]

Get an IRP plate

You’ll need an International Registration Plan (IRP) before you start a trucking company. An IRP is a plate that allows you to get plates that work in all states. You’ll want to go to the appropriate licensing office in your state to get these. You can find each state in the FMCSA list of providers.

Some states also require additional permits to operate within them. Mikael told us: 

[su_quote]Oregon requires a permit if you operate within the state but are from out of state.[/su_quote]

Allow a DOT Trucking company audit

When you start a trucking company, the DOT will conduct an audit during the first year to verify that:

1. You are keeping proper records.
2. You have a drug and alcohol testing program.
3. All insurance is up to date.
4. Periodic inspections are performed and documented.
5. No major infractions incur.

You can learn more at FMCSA. If you do not pass this audit, your business will not get permanent authority to operate.

Keep reading for tips on how a successful trucking company gets customers.

Step 5. Get Customers

With all the regulatory compliance that starting a trucking involves, it’s easy to lose sight of the end goal of any business: attracting and retaining new customers.

Getting customers for your new trucking business isn’t that hard these days. There is a huge shortage of drivers, and you just have to get your name out there.

Mikael had a ton to say about finding customers. He told us: 

[su_quote]My number one niche is reefer. Customers are everywhere.[/su_quote]

Create your brand

One of the best ways to attract new customers is by creating a memorable brand image through an effective branding campaign. 

Branding is the process through which a company’s mission, values, and image enters the public consciousness. 

Get a good logo

Successful branding begins with a good logo that represents the company effectively and in a simple, easily memorable manner.

Getting the logo right is an important step toward corporate success, and if you are not a natural artist or computer graphics expert, plenty of firms offer logo design for reasonable rates. It’s a worthy investment of resources toward a bright future for your new trucking business.

Advertise your brand on social media

Successful advertising happens in both traditional and social media. Mikael told us:

[su_quote]I advertise on Facebook, Instagram, and TikTok.[/su_quote]

He went on to explain that he does short videos to help people understand the industry better. He even hires new drivers through the videos. He had four interviews from a single TikTok video.

Determine your competitive advantage

Branding and advertising can all be for naught if your company’s competitive advantage is not clearly defined. A competitive advantage is a unique service, perk, or reward that differentiates your business from others. 

The trucking business is a very competitive industry with some large players that have thousands of trucks in their fleet and nearly half a million competitors. Some ways to differentiate your trucking company might be:

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• Subscription-based models: Charge customers monthly for a guaranteed number of miles or pounds. Mikael has several customers that have a consistent pickup day and time. He’s able to reduce the administrative time and cost for them because they just routinely send their order.
• Service-based models: Guarantee on-time pickup and delivery (better follow through).
• Pricing: Offer premium service or discount service. For instance, you might give someone a discount if they have a delivery that you can just add onto your current load.
• Be more open: Mikael told us that different industries pay better at different times of the year. Share how you calculate pricing so people can create their own estimate and request a pickup.

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Don’t neglect traditional marketing

Mikael reminded us that traditional marketing strategies like business cards and networking are really beneficial in the trucking industry. He told us that the trucking industry is in demand by most companies.

[su_quote]It’s always nice to know someone with a truck when you need to move.[/su_quote]

Always be prepared; you never know where you’ll find customers.

Links to resources about business marketing

There are a couple of excellent articles that focus specifically on getting customers. Forbes offers ten ways to get customers to your new small business, and Inc. offers the same, with a focus on also increasing your sales.

Step 6. Manage Your Trucking Business Finances

Mikael runs multiple businesses so he had a lot to say about how to manage a trucking business (or any business for that matter). Some of the advice he gave us included:

• Get a business bank account with a credit union.
• Make sure you have at least a personal credit score of 680. 
• Be sure to have at least $10K down payment if you’re financing the business.
• Always have money for incidentals. (His company had 2 flat tires in a week and 16 repairs in a month.)
• Use Quickbooks and hire a bookkeeper. 

He told us: 

[su_quote]My brother does the bookkeeping.[/su_quote]

He went on to explain how they try to grow. He explained:

[su_quote]I try to hit $10K per month per truck. I calculate earnings by the week, then try to hit  the median + 30%. Effectively, I’m trying to increase by 30% each week.[/su_quote]

Step 7. Trucking Companies Need Admins

Trucking companies have a lot of administrative work they have to do. If you’re a solo entrepreneur, you’ll be doing it yourself, or you can hire people to help you. A lot of truckers hire their wives to do the dispatch. This can be a good or bad thing. Make sure she understands what she’s doing.

The main administrative work is typically done by dispatchers. A dispatcher will normally make between $30,000 and $75,000 per year and have job responsibilities including:

• Providing estimates to customers
• Preparing dispatch documents
• Planning and adjusting routes
• Scheduling driver pickup and delivery times
• Communicating with customers about delivery or pickup times, freight limitations, and special requests
• Creating bills and invoices
• Maintaining call records, delivery and pickup times, driver routes, and route changes
• Updating drivers on transportation regulations and laws
• Reviewing drivers’ logs and comparing them to quoted arrival times.
• Logging shipping schedules 
• Monitoring truck repairs
• Scheduling maintenance
• Logging shipping schedules 
• Managing complaints

You can outsource your dispatch to a company like Cameron.

You’ll probably need some software to manage this so let’s look at some of the software Mikael suggests.

Technology

Mikael suggested the following software:

• Motive: This software is a combination of risk management, security, and customer relationship tools. When used with the video cam, it is also good for an educational tool.
• DAT board: Use this to find a load that you can use to improve your returns by running a fuller truck and getting loads for the return home.

How to Start a Trucking Business Frequently Asked Questions

We’ll answer some of the most frequently asked questions on how to start a trucking company in this section so you are better prepared for your own trucking business.

How to start a trucking business with one truck

You can either start your own trucking company as an owner-operator or pay someone else to drive the truck. You’ll want to: 

1. 1. Learn more about how to start a truck business.
   2. Write a business plan about how to start your own trucking company.
   3. Secure the funds for starting a trucking business.
   4. Go to a private truck driving school.
   5. Go through the entire regulatory process. We explain it more if you go to Step 4 in the blog.
   6. Find customers.
   7. Manage your company.
   8. Hire administrative help.
   9. Pay your taxes.

How to start a trucking business owner-operator

An owner-operator will be required to perform all parts of a successful business. You’ll need to:

1. Get all business license requirements.
2. Comply with government regulations.
3. Maintain business insurance.
4. Establish contracts.
5. Manage cash flow and fuel costs.
6. Haul loads.
7. File IFTA’s quarterly tax returns.
8. Maintain new or used trucks.

We created an owner-operator startup checklist for those who want more information on how to start a owner-operator trucking business. Download it below.

How to start a box truck business

Starting a box truck business is a little bit easier than other trucking companies. You’ll want to:

1. Check if you need a CDL in your state and surrounding states. Get it if you need it.
2. Start your LLC or Corporation.
3. Get your state and local business licenses.
4. Get a business bank account.
5. Get your commercial driving and business insurance.
6. Find customers.
7. Transport loads.
8. Manage the finances.

Be sure to glance back at the steps included in this article if you have questions about these tasks.

Most box trucking companies are not required to have the following:

• International Registration Plan plates
• International Fuel Tax Agreement decals
• DOT registration
• Unified Carrier Registration

How to start a trucking brokerage business

A truck broker or freight broker is a company that has relationships with suppliers and transportation companies. They manage a load board and help both parties meet their unique business needs. They may be large businesses that also participate in hauling loads, or they may be strictly middlemen.

To start this type of company, you will need to follow the 7 steps outlined above, including:

1. Understand how to start a trucking business.
2. Write a business plan.
3. Secure funding.
4. Go through the legal proceeding requirements.
5. Get customers.
6. Manage your trucking finances.
7. Handle administration. This section will be particularly important to a broker.

Read the whole blog for more information on how to start trucking business brokerages.

How to start a trucking business without driving

There are a few ways to start a trucking business without driving. Some of the trucking businesses that don’t require you to drive include:

• Freight factoring company: Provide loans on invoices for a percentage of the load.
• Freight brokerage: Develop relationships with shippers and truckers and play the middleman. You still need all the requirements of a trucking company, though.
• Process Agent: A process agent is a company that has a person and office in every state. They are necessary under the Unified Carrier Registration. You can find a full list on the FMCSA.
• Trucking Software Provider: If you think you can find ways to help truckers simplify reporting, financial projections, taxation methods, or other essential parts of their job, you might have a great opportunity because the industry is in constant flux.
• Hire drivers with CDLs: You can start a trucking business without a CDL, but you’ll have to pay truckers to haul the loads for you. Mikael operates in this manner but still has his CDL just in case something happens.

Who are good trucking influencers to follow on social media?

Checking out what other companies are doing can be really beneficial. Part Catalog has a great list of trucking influencers. We included two with the highest engagement and Mikael Sant’s links.

• Alex the Trucking Guy: YouTube / Instagram
• Big Rig Barbie: YouTube / Instagram
• Mikael Sant: TikTok / Podcast

So What’s The Best Trucking Business to Start?

Starting a trucking company requires complying with a lot of regulations, a lot of administrative functions, and a lot of patience and determination to build a company that makes more than $75K per month. It’s achievable, though.

Just make sure it works with your life. While long-haul trucking is more profitable, you might want to start locally if you have a family you want to see every night.

Given the amount of regulation, starting a truck company might not be the first business you start unless you’re already driving and want to go independent. You can definitely build a successful career in trucking, but it’s a long haul.

For those who successfully scale the formidable barriers to entry, the financial rewards can be great. But the majority of trucking owners love the freedom of the open road and are typically mom-and-pop shops.

Do you have experience running a trucking business? What do you love about it? What would you change? With what other businesses do you get to explore the world as you work?

Are you skilled at in-home and business repairs? If so, you might want to provide handyman services. Caleb started North Seattle Handyman in 2017 and is making $250k/year with only one employee. He started his handyman business with $5,000 and has never had a month where he didn't break even. He shared how he started his business, and we're going to share his tips with you. We'll walk you through how you can start your own handyman business step-by-step.

What is a handyman?

A handyman is a person who does odd jobs like small repairs, home maintenance, hanging TVs, and other tasks that homeowners and rental property companies require to ensure that their properties stay in good repair. That means most handymen will be working in the client's home or business. Working on someone else's property has special legal requirements that you need to pay attention to during the beginning stages of starting a handyman business. We'll cover them in general terms as each state will have different requirements.

What type of work can a handyman do legally?

Each state has different requirements, but in general, a handyman can typically do jobs under $1,000 without a handyman license. If you plan on taking larger jobs, small business owners should check what their state's requirements are on Next's Handyman License Requirements. Local contracting laws may also impact whether you need handyman licenses for smaller jobs. Go to your city or county's website to establish whether you have local licensing requirements. If you wish to do larger repairs, like home remodeling, or other services like plumbing, HVAC, or major electrical repairs, you may need a contractor's license. As previously mentioned, your city or county will give you the best information about which license is better for you. Caleb told us: [su_quote]I have a general contractors license so that I can manage larger projects than most handyman businesses, but I make more profit on my smaller projects.[/su_quote] Do handymen need to be licensed? I wish I could give you a better answer to this and on how to get a handyman license. Unfortunately, the spectrum of requirements is so dramatic that the best I can tell you is to use Money Lion's links to the proper governing authorities for each state.

Skills required to become a handyman

When starting a handyman business, you should have a variety of skills because your potential customers will want to be able to contact you for any of the tasks they don't have the time or desire to do. Some of the most common client expectations of handyman business owners include:

• Know how to find a stud
• Anchoring bookcases, TVs, and other objects on a stud
• Filling holes in drywall with spackle
• Fixing loose tiles
• Caulking tubs, sinks, and bathtubs
• Fixing leaking faucets
• Unclogging drains (with or without a snake)
• Seal cracks in pavement
• Change showerheads and toilet seats
• Clean gutters
• Change doorknobs, tighten hinges and replace door locks
• Change filters
• Building and replacing window screens
• Painting
• Basic electrical like changing light switches and electrical outlets

If you want to learn about how to do many of the projects a handyman works on, check out The Handyman Youtube Channel. He has a ton of videos on repairs and other work he has done. I found him entertaining too.

Tools required to become a handyman

According to Smart Service, every handyman should have:

• Claw Hammer
• Tape Measure
• Level
• Utility Knife
• Impact Driver
• Drill Driver - Included in the suggestion for Impact Driver
• Drill Bits - This includes drills bits and screwdriver attachments
• Circular Saw
• Recipro Saw
• Flashlight - I'd suggest both a handheld and headlamp
• Charging Kit - Included in other power tools
• Shop-Vac
• Screwdrivers
• Wire Stripper
• Pliers
• Gloves
• A vehicle that can transport everything. Look at work vans and trucks if you don't already have one.

Now that you have a great list of tools you need to provide handyman services, let's look at how much it costs to start a profitable handyman business.

How much does it cost to start a handyman business?

If you have the tools and vehicle to start providing handyman services, the startup costs can be fairly low. Caleb told us: [su_quote]I started my business with $5,000, which was primarily the general contractor's license, a surety bond, and general liability insurance.[/su_quote] If you have to purchase the tools and equipment needed, starting a new business as a handyman may cost as much as $60,000 if you buy a new truck. Depending on the payment terms of a car loan, most of the extra cost could be spread out over 5-7 years. Handyman startup pricing will obviously depend on your area of the country and local regulations. Many handymen will be able to start a business with no special requirements, but places with higher-cost handyman business license requirements may be more expensive places to start small businesses.

How much do handymen charge?

When I researched "How much do handymen charge?", this is what I found:

• Self-employed handyman hourly rate: $50-$125/hour
• Most jobs are between $65-$1200 with an average of $390
• Common jobs may have a flat fee
• Materials are typically in addition to the hourly rate

We asked how much Caleb charges per hour and he told us: [su_quote]I charge $100/hr plus material costs. I found that was the rate that attracted clients that appreciate the work and can afford the service.[/su_quote] You can watch the entire interview here:  [su_youtube url="https://www.youtube.com/watch?v=leUta_q_MPQ"]

How much does a handyman business make?

This is the part of every business that really matters: how much do handymen make a year? Caleb told us: [su_quote]I pay my handymen between $30-35/hr ($62,400-72,800/yr.)[/su_quote] According to the Bureau of Labor Statistics, Repair Workers tend to average around $40k/year.  Because business best practices suggest keeping employee compensation (including benefits) at less than 1/3 of revenue, a handyman business should plan to make at least $120k revenue per handyman. That's consistent with what Caleb told us: [su_quote]I'm making about $250k/year with me and one other handyman. We're about at the limit we can handle without hiring another local handyman.[/su_quote] To further give you an idea of how much money many handyman businesses make, we asked Caleb how many clients he takes a day. He told us "Each handyman can normally handle about 5 calls a day." Now that you know the basics of what you need to become a handyman, let's dig into the process of how to start your own handyman business.

Identify the target market for your handyman business

Every new business will need to establish who its ideal customers are. Caleb was the most informative small business owner we've talked to about who the potential customers are. He gave us a list of potential target markets you may want to pursue when starting a handyman business.

• Property management companies because they create business growth quickly due to the number of properties they manage.
• Real estate agents because the buyers will frequently ask for small repairs that were noted on the pre-sale home inspection.
• Homeowners in wealthy areas who are able to afford service calls that are $500+

He also told us: [su_quote]I talked to a business consultant who recommended including Northern Seattle in my business name. That had 2 benefits, made it easier for my small business to rank on the first page of Google and narrowed down the area I service to between North Seattle and Mukilteo.[/su_quote] For those who don't know the Greater Seattle Metropolitan area, it is approximately a 1.5-hour drive to drive from Olympia to Mukilteo, but only 22 minutes from North Seattle to Mukilteo, reducing the time sitting in traffic by 67% percent. That makes it where each vehicle can take an extra service call or two per day. I'd recommend doing the same if you live in a metropolitan area and constrain your target audience to a much smaller geographic location. Keep reading to learn about writing a business plan.

What to include in your handyman business plan

A business plan will help guide your decisions and strategy if you want to start a profitable handyman business. Exactly what you should include in it depends on whether it is just to guide your decisions, to help employees understand their roles in the business, and whether you are trying to get small business loans. At a minimum, I would recommend including:

• The business’ services
• The business’ goals. Do you just want to make as much money as you can make on your own, or do you want to hire employees?
• Who the ideal clients are. If there is more than one, you should break down each segment separately.
• What you need to achieve before you can begin business operations.
• Budget and funding-startup costs and how you will get the funding. If you need to take out loans, how will you accomplish that?
• Naming the business - This is how companies will know your business.
• Forming a business - All the legal requirements that you will have to meet to start a small business and maintain your handyman licensing.
• Hiring employees (if you plan to) - What roles you will need to fill and how you will fill them.
• Marketing Plan - Guides what marketing strategy you will use, including marketing materials, social media platforms, and a brand style guide
• Operations Plan - Guides how the business will and will not operate, including customer relations, processes, vendor management, and employee management. If you are seeking funding or need the business plan to guide employee decisions, you'll want a more in-depth plan. Here’s some free and low-cost education on business plans:
• UpFlip’s blog on How to Write a Business Plan
• SCORE’s free business plans and startup assistance resources
• The Complete Business Plan Course (Includes 50 Templates)

I'd also suggest checking out our interview with Mike Andes on how to write a business plan. [su_youtube url="https://www.youtube.com/watch?v=Seac5PbUZXk"]

Create a budget and obtain funding for your Handyman Business

Creating a budget requires financial discipline. You'll want to estimate the costs that you will incur before starting your business and during operation, and you’ll want to include a miscellaneous expense amount. Let's look at each of these.

Startup costs for your business

While I have already given you an idea of how much startup costs can run, I feel like we should break it down into more detail. Here are the line items you should probably consider:

• Cost of tools (if you don't already have them): _______
• Cost of work vehicle (if buying): _______
• Cost of DBA in your location: _______
• Small Business Insurance/Handyman Insurance (talk to your insurance company to see if they offer this): _______ How often is the renewal period?
• Local Licensing: _______ Is there a renewal period?
• State Licensing:_______ How often is the renewal period?
• Cost of Commercial drivers insurance: _______ How often is the renewal period? Are you using your personal vehicle? If so, what is the difference between personal insurance and commercial insurance?
• Cost of website and other software: _______ How often is the renewal period?
• At least 1 month of marketing expenses:_______. If Caleb uses paid marketing, it's $600/mo (read marketing section for more details.)

Operational Costs

Operational costs should be broken down monthly. Remember, you should assume best-case revenue is $120k/handyman. If you are just doing this for yourself, I would probably do a one-year analysis and return to it each year. If you are trying to get financing, I would use a 5-year budget.

• Any renewals mentioned above (add 3% each renewal period to protect against inflation):_______
• Vehicle costs:_______ assume $.58/mile
• Loan Payments (if applicable):_______
• Employees: _______ Assume $40k per employee or 30% of revenue attributable to that employee (or more if you are paying higher than average wages.)
• Sales tax: _______ Base it on your location and revenue estimates
• Income Tax: _______ Assume 20% of revenue
• Materials: _______ Assume 10% of revenue according to BPlans.
• Miscellaneous expenses: _______

I created a mock income statement using:

• Data Caleb gave us about his revenue and other expenses.
• Assumptions from the BPlan link above.
• Breaking it down for 1 and 2 trucks.

These were the results: If you can achieve these results (or better), your business bank account should be in good standing. During the first year, meeting the $125k mark may be a challenge. Fortunately, you only have to make around $30k to break even, which should be completely achievable.

Funding your business

In the previous section, the interest expense was based on 10% of the total operating expenses. If you seek funding, you'd want to use either total operating expenses or (Total operating expenses + Direct cost of sales = Funding needed). Common funding paths include:

• Personal funds/personal assets
• A loan from family or friends
• Funds from a business partner
• Government programs

The SBA offers free courses on financing options and funding programs. For info on using personal funds to start a business, check out this article from The Hartford. Alternative sources of funding include:

• Crowdfunding 
• Credit cards
• Home equity loan
• Business loan - check out our partners
• Rollover for business startups (ROBS)

Keep reading for tips on naming your business.

Select a Business Name for your Handyman Company

Next, you need to name your handyman company. Consider these questions while naming your company:

• Does it describe what you do?
• Is it easy to remember?
• Does it prevent weird acronyms?
• Is it available as a domain name? Check that the domain name and social media accounts are available with namechk.
• Include your location/area you serve, as Caleb suggested.

Try the business name generator from Shopify and make sure it is available with the Business Name Search from Better Legal.

Get a domain name

You can buy domain names from the platform you set up your online store on, but if you want to spend money on it elsewhere, you can find domain names for as low as $0.88 at NameCheap. Other providers include:

• Google Domains
• GoDaddy
• HostGator

You can't learn how to become a handyman without learning about the legal requirements. Keep reading to learn more about becoming a legal entity.

Become a Legal Handyman Business

Before you can legally work as a handyman, you’ll need to meet the legal obligations of your area. Depending on your location, you may require all of these, but the insurance and bonds are most commonly associated with major cities that have special contractors licensing requirements.

• Business License/Contractors License
• Business Insurance
• Bonds
• Business Formation
• Apply for an EIN
• Sales Tax Permits
• Tax Filing and Withholding
• Federal employment and labor law posters
• Unemployment Insurance

I'd like to remind you that earlier in the blog, Caleb told us that his startup costs were $5,000, most of which involved this process. Keep reading to learn more about each of these requirements.

Business License/Contractors License

The business license may be required on a state, city, or county level. The requirements will be different for each location. I provided information on the state level earlier in the blog.  Unfortunately, there's not a definitive source for local levels. Just to give you an idea though, for jobs over $1,000 in Nevada (and jobs less than $1,000 that are part of a larger project, or involve HVAC, plumbing, or electrical work), the state Contractors Board requires:

• Submittal of resume and references
• Disclosure of financial records
• Disclosure of criminal background (if any)
• A commercial bond of up to $500k
• Passing an exam on business law AND trade practices
• $300 application fee
• $600 license
• Up to $1,000 annual payments to the consumer recovery fund

That means most of the jobs a handyman will do would need a contractor's license in Nevada. In NV, you'd want to go for a general contractor license so you can handle any projects you want. It might be tempting to run the business without a license, but that risks criminal penalties of up to 4 years in prison for operating as a contractor without a license. Make sure to do online research on the following topics to make sure you follow the proper procedures:

• Do I need a contractor license in (Insert your state)?
• Do I need a contractor license in (insert your city)?
• Do I need a contractor license in (insert your county)?

Business Insurance

Business insurance can be purchased from most insurance companies. I'd reach out to your current car and home insurance first as you may be able to get the insurance through them. You'll want a commercial liability policy, which will typically be $1 million occurence/$2m lifetime coverage, but some areas or clients may require more. For instance, in my hometown of Las Vegas, MGM casino properties require $3m per occurrence. They also require $1m automobile coverage for contracts. If you have a client that needs work done very occasionally that has these requirements, you can often change it for the length of the time it takes to do the job and reduce it again upon completion.

Bonds

If you need a bond for a handyman business, you will need to get the details from the governing agency that approves the contractor licenses. In NV, they require a bond agency with long-term debts that are A grade or a cash bond of up to $500k. I strongly suggest going with the bond agency.

Business Formation

Now is the time to establish the legal structure. For best results, hire legal representation that has experience starting a business, like an attorney, accountant, or tax specialist. Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your handyman company needs. We have partnered with Better Legal to help you with the business formation process. Better Legal will set up an LLC or Corporation for you. Their services include:

• LLC or Corporation Filing
• Employee Identification Number
• Operating Agreement
• Banking Resolution Document
• Free Website with Inventory Management
• Free Business Checking Account
• Free Tax Analysis
• Business Specific Insurance Suggestions
• Suggested Payroll, Benefits, and HR Platforms

They’ll help you get your business started quickly so you can focus on how to start getting clients for your handyman business. Keep reading for information on different legal structures.

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because the company protects the owner’s assets. It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement. Each state has different requirements. Here’s a link to find your state’s requirements. People may register in specific states due to the cost of doing business. Delaware and Nevada are common states to file an LLC because of their business-friendly laws. Here’s a post on the top 10 states to get an LLC.

Sole proprietorship

A sole proprietorship is the easiest way to become a handyman, but the structure doesn’t protect the owner’s assets from legal issues. This structure should not be used because the handyman work includes work and materials that can cause injuries to employees, customers, or physical property. To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.

Partnerships and corporations

Partnerships and corporations are typically for massive organizations or legal firms. Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations.

Apply for an EIN

Every business operating in the United States needs an employer identification number. It’s like a social security number for your business. Apply for it on the IRS website. It’s used on tax forms when filing taxes and to tie employees’ pay to the proper employer.

Sales Tax Permit

Most states have a sales tax, and you need to adhere to their requirements. This blog isn't the place to discuss the permits for all 50 states, but Avalara has a guide on Sales Taxes. Check it out. While you are learning about sales taxes, consider using AvaTax with Shopify Plus to make your tax compliance super easy.

Tax filing and withholding

Federal and state tax filing requirements apply to new employers. You must keep records of employment taxes for at least four years, including special forms and accounting for state taxes. Don’t worry! We’ve got you covered! Check out the IRS guide for employers here.

Federal employment and labor law posters

All employers must display Workplace Posters, which you can download from the website. Other requirements include:

• Employment Eligibility Verification (Form I-9)
• State’s New Hire - This is required so that people who owe child support remain in compliance
• Worker’s Compensation Insurance- Insurance for when employees get hurt on the job. Check out this guide to state laws
• Disability insurance - California, Hawaii, New Jersey, New York, and Rhode Island, and Puerto Rico have requirements. Learn more about disability insurance
• Occupational Safety and Health Administration (OSHA) - Federal and state laws govern what are safe working conditions. Fines can be up to $136,532/violation or up to $13,653/day. Make sure you understand your area’s laws at OSHA.gov.

Unemployment Insurance

The U.S. Chamber of Commerce has a ton of information on unemployment and also offers links to each state agency that handles state unemployment. You’ll have to pay $420 per employee on a federal level plus any state UI. Let's look at some tips on hiring employees to run a more profitable handyman business (measured in total dollars).

Hiring Employees

Hiring employees is primarily focused on hiring people who are skilled at the type of services you provide. Caleb told us: [su_quote]If your employees aren’t making you money, then it’s not worth having them. In the Seattle area, you are going to pay each employee around 6k a month in wages and also have LNI and insurance for them.[/su_quote] When hiring a handyman, you’ll need to:

• Post Open Jobs
• Conduct Interviews
• Establish Compensation
• Manage Tax Filings and withholdings
• Comply with federal and local labor laws

Keep reading for more info on each step.

Job Posting 

Hiring people requires posting “now hiring” signs and posting on prominent job boards. Some places you can start posting job requirements are:

• Facebook
• Indeed
• Zip Recruiter
• LinkedIn
• Craigslist

Make sure to include the tools you expect them to have as well as the most common jobs they need to be able to do without guidance. If you have to train them, you'll be spending more time on each job as opposed to taking on more jobs.

Interviews

Having a prepared list of questions for interviews can make hiring the right people easier. Indeed offers a variety of resources to help you make better hiring decisions. Read their guide on how to hire your first employee. Some questions you should ask during the interview process include:

• What handyman work are you most comfortable with? Least comfortable with?
• If you have to use a tool you have not used before, what would you do to make sure you handle it safely?
• How do you respond to a customer when you don’t know the answer to your question?
• I intentionally left (something in the shop that needs to be repaired) needing repairs for this interview, can you walk me through how to repair it?
• What are your compensation expectations?
• Do you have any ongoing commitments that impact your availability? If so, what dates and times will it impact?
• Do you have any points or DUIs on your driver's license?

Check out Indeed's list of questions to ask for more interview questions.

Compensation

Employees are typically a company’s biggest expense. There are three common pay structures in business. Each fits different scenarios. Let’s take a closer look.

Salary

Flat weekly/monthly rate based on a person working a specific number of hours. This is typically reserved for owners, managers, and some admin roles. You might want to assign this to yourself for budgeting purposes.

Hourly

This pay structure just tracks the hours an employee works and pays them a set hourly rate. This pay structure is solely based on time, not performance.

Commission

Typically used in sales to give employees a percentage of revenue. It is a strictly performance-based compensation model.

Hybrid Models

Hybrid models combine two pay structures: for instance, hourly and commission to compensate for time and performance. The hourly rate will typically be lower than an hourly rate without commission, but the commission should make it where good performing employees make more than they would without commission. These structures also help reduce the variability of pay from week to week. Paying employees an hourly wage works for most positions for clothing lines, but depending on your business structure, a commission or hybrid payment model might make sense. The article, “How to Create a Pay Structure That Promotes Team and Company Growth” offers some insights into thinking about pay structure.

Outsourcing

If you don't need a full-time employee, you can consider outsourcing or hiring a freelancer on sites like Upwork.com. You may pay more per unit hour, but it saves you time in hiring, training, and other time-consuming activities. Accounting and payroll are often prime targets for outsourcing because they can be done remotely on a weekly or biweekly basis.

Marketing a Successful Handyman Business

Caleb gave us a lot of great advice when it comes to marketing the fact that you provide handyman work. He emphasized: [su_quote]If you start a handyman business right now, you will immediately get real estate agents or people managing condominiums. I do direct-to-customer, that way, I can charge $100 an hour. I’m not using a 3rd party customer.[/su_quote] In other words, avoid using companies like Homeadvisor, Thumbtack, and other services that take a large cut for marketing. [su_quote]You have to market your skills, define your skills. Anything from hanging TVs, installing faucets, to lifelong carpentry.[/su_quote] Share pictures of projects on social media and Google My Business. [su_quote]Having a website is what has made the difference in my business. Having somewhere people can see me virtually increases my customer base about 1000 fold. We use branding on the side of the van, the website, and by doing a good job for the customers. I use Squarespace for my website. We have an online portal where the customer puts a bunch of information in for us. Our system is created to accurately quote based on emails and pictures.[/su_quote] In other words, create an awesome site using Squarespace or other platforms and integrate it with other software to make life easy. If you are going to build your own website, check out our blog on how to create a website. [su_quote]We do a lot of things to stay relevant on Google. First, the website name. Our Yelp ads help keep it ranked. Second, we ask people to include the name North Seattle Handyman if they leave reviews on Google or other places.[/su_quote]

Useful Software for Handyman Businesses

[su_quote]When a client is gets directed to my website, they fill out the info that gets put into a Google Form, and then we have a 3rd party software called Zapier that connects other parts of the business. It sends me an email, and then it also sends it to my customer management system, and that keeps everything in one place. So I can invoice, I can talk to the customers, I can schedule through that system which is Field Pulse. Those systems run around $100 a month. We use HomeWyse, it’s like having an estimating book in your car.[/su_quote] If Field Pulse doesn't seem like the best CRM for you, there are a ton of Customer Relationship Management tools for handyman businesses. Jobber and Housecall Pro seem to be two that have high usage and good ratings.

Operating Your Own Handyman Business

Caleb gave so much advice on operating your own handyman business that I think it is best to let his words do the talking. Caleb on learning business skills: [su_quote]Online tutorials are great, but I found having a business coach beneficial. You do have to spend some money on them, but they will help you make decisions you avoid making. (He uses Rebecca Ellison.)[/su_quote] Caleb on the early stages of business: [su_quote]Freedom is the best part of being a business owner. You can make being a handyman into whatever you want it to be, I made it into a professional service. When you first start out, you can definitely do this with a pickup truck and a set of tools. Eventually, I think it’s a good idea to buy a sweet van. When I first started, I was going to charge $60-70 an hour, but friends in the business said I needed to charge more, so I did. I charge around $100 an hour. $100 an hour is perfect for middle to upper-middle-class clientele. When you first start, you are going to overbook yourself. You have to pay attention and revise your decision-making.[/su_quote] I hope you have found this information about starting a handyman service company as informative as I have. If you found this walkthrough useful, subscribe to our mailing list to keep up to date on how to start different types of businesses. I want to leave you with the best three pieces of advice that Caleb can give you: [su_quote]Get started, treat your customers like people, and systemize, systemize, systemize.[/su_quote]