How to start a transportation business

You must determine your business's transportation niche, develop a business model, and apply for the proper licenses and permits in order to start a transportation business. For more details on these steps and others you can take to start a transportation business, reference this guide:

• Determine your business's transportation niche. There are many different kinds of transportation businesses, and that's why your first step is figuring out what type of transportation business you want to start.

  This step involves determining who your customers are and what type of transportation you are providing. There are three main types of transportation businesses:

  Personal transport

  This includes one-to-one transportation services that are designed for individuals or small groups. Examples are taxi services, rideshares, limousines, personal driver services, or even bicycle rentals.

  Local transport

  This type of transportation business services regional markets by transporting items like goods, materials, livestock, and more. The opportunities here can be commercial or private, depending on the materials that are being transported.

  Global transport

  This classification of a transportation service may encompass all elements of the previous type of transportation services on a global or international scale. International transportation providers may offer air or sea travel to passengers, maritime shipping services, or air-based cargo delivery services.

  The possibilities are somewhat endless when it comes to transportation, so it's important you have a solid idea of the type of service and the size of the business you want to have. Other options that haven't been mentioned include logistics companies, medical transport, tour bus services, and many others.

  Once you decide on your niche, you must dive into researching that specific industry. You need to find out essential information relating to the demand for that transportation service, the market rate for the service, startup costs, and many other forms of critical information.

  Your goal should be to find an appealing area of the transportation market that will have a steady client base and one that fits your financial resources at the moment.

  If you're unsure of what to choose, do some research in your local community to find out what transportation services are lacking or if there are any businesses that are close to monopolizing the market.

• Develop a business model. Once you have chosen your niche and done your proper research, it's time to develop a business model for your transportation business.

  This step has to do with the structure of your business. You have several different options, including:

  Sole proprietorship

  In this business model, you have to work as an individual or married couple, but you do not incorporate. Although this offers flexibility, the downside is that any business losses may be assumed on a personal level.

  General or limited liability partnership

  In a partnership, you have the opportunity to go into business with others. The differences between general and limited liability partnerships are the ways that each partner assumes the risks, debts, or actions of the business as a whole.

  Limited liability company (LLC)

  If you operate as an LLC, your personal and company information is entirely separate. While this changes your tax status, it does protect you from personal losses based on the company's performance.

  Once you have this determined, you'll also want to get a Federal Tax ID number. This helps you get a license to run your business. This is also referred to as an EIN or Employer Identification Number.

• Apply for the appropriate permits and licenses. You almost always have to have certain permits and licenses to legally operate a transportation business. The amount and specific licenses and permits you will need can vary from business to business.

  Transportation companies require more permits than other forms of business because they are often handing passengers and other forms of precious cargo. If you are specializing in freight transportation, you'll need to apply for a DOT number.

  A DOT number or Department of Transportation number is a freight industry requirement.

  Other types of licenses and permits that might need to be gained, depending on your industry, include:

  • Commercial drivers licenses (CDLs)

  • Commercial vehicle registration for any fleet vehicles

  • Fuel carrier licenses

  • Heavy load or cargo permits

  • Insurance coverage for drivers, pilots, passengers, or goods

Again, the amount and types of permits and licenses will vary depending on your particular niche of the transportation industry. Do the proper research into your area to find out exactly what you need to obtain.

Even if your business is small at first, try to consider ways that you could grow in the future and hire more employees. The more employees you have, the more services you can offer and the more work that gets done. This results in higher profits generally.

In addition to drivers, pilots, truckers, or other vehicle workers you will be employing, try to think about other positions as well. This includes office and administration staff, maintenance and technician employees, sales and marketing teams, human resources (HR), part-time or seasonal employees, and many others.

Hiring qualified and motivated professionals will help you to launch your transportation business smoothly and successfully.