Starting a car transport business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful car transport business.
Importantly, a critical step in starting a car transport business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
Start a Car Transport Business in 14 Steps:
To start a car transport business, you will need a few key things. First, you are going to need vehicles, like trucks and trailers, that can safely transport cars. You will also need to conduct market research, create a solid business plan, register your business, obtain necessary licenses and insurance, purchase equipment, hire drivers, and implement a strong marketing strategies. Following the below 14 steps will help you get off to a great start.
- Choose the Name for Your Car Transport Business
- Develop Your Car Transport Business Plan
- Choose the Legal Structure for Your Car Transport Business
- Secure Startup Funding for Your Car Transport Business (If Needed)
- Secure a Location for Your Business
- Register Your Car Transport Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Car Transport Business
- Buy or Lease the Right Car Transport Business Equipment
- Develop Your Car Transport Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Car Transport Business
- Open for Business
1. Choose the Name for Your Car Transport Business
The first step to starting a car transport business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your new company:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your car transport business.
2. Develop Your Car Transport Business Plan
One of the most important steps in starting your own car hauling business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your car transport business.
- Company Overview – this section tells the reader about the history of your auto transport business and what type of car transport business you operate. For example, are you a car rental agency, car shipping company, or a car transport broker?
- Industry Analysis – here you will document key information about the car transport industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your car transport business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your car transport business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Car Transport Business
Next you need to choose a legal structure for your auto transport business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
2) Partnerships
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a car hauling business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a car transport business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a car transport business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your car transport business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Car Transport Business (If Needed)
In developing your car transport business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a car hauling business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a car transport business that they believe has high potential for growth.
5. Secure a Location for Your Car Transport Business
To find a location for your auto hauling business, you’ll need to consider a few things. You’ll need to find a place that is accessible to your customers, in an area that is safe and has plenty of parking. You will also need to make sure the location is affordable and has the necessary infrastructure in place to support your business.
6. Register Your Car Transport Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your car transport business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, commercial driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your car transport business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
There are a few licenses and permits you will need in order to start a car transport business. You will need a business license and a permit to transport cars. You should also contact your state’s department of transportation to find out about any additional permits or regulations that may apply to your business.
10. Get Business Insurance for Your Car Transport Business
The type of insurance you need to be a car hauler will depend on the type of business you are running.
Business insurance policies you should consider for your car transport business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Car Transport Business Equipment
You will need the right equipment to start your car hauling company. You will need a van or truck to transport the cars, as well as ramps and a trailer to load and unload the cars. You may also want to invest in a tow bar, so that you can tow cars for transport.
12. Develop Your Car Transport Business Marketing Materials
Marketing materials will be required to attract and retain customers to your new business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your car transport business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional car transport business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your car transport business.
13. Purchase and Setup the Software Needed to Run Your Car Transport Business
There are a few key types of software you will need to run your car transport business. You’ll need accounting software to track your finances and a customer relationship management (CRM) system to keep track of your clients. You may also want to invest in a vehicle tracking system to keep tabs on your truck drivers and vehicles.
14. Open for Business
You are now ready to open your car transport business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Car Transport Business FAQs
Is it hard to start a car transport business?
No, it’s not hard if you have a truck, trailer, and good knowledge of the industry. The level of difficulty involved in starting a car transport business will vary depending on your location, the regulations in your area, and the competition in the transportation business. If you have the drive and ambition to start a successful car transport business, then it is definitely possible with careful planning and execution.
How can I start a car transport business with no experience?
The best way to start a car transport business with no experience is by doing some research to learn about the industry. You can also reach out to friends and family members who are in the car transport business to get advice and tips. Finally, you can attend workshops and seminars that are related to the car transport business.
What type of car transport business is most profitable?
The most profitable type of car transport business is a long-distance trucking company. This is because the fixed costs of running the business are spread out over more miles, allowing the company to make a larger profit on each shipment. Additionally, there is less competition in the long-distance trucking market, giving the company a competitive advantage.
How much does it cost to start a car transport business?
To start a car transport business, you will need to invest in a truck and trailers to haul the cars, as well as insurance and permits. The cost of starting a car transport business can vary depending on the size and scope of your business. It can cost anywhere from tens of thousands to hundreds of thousands of dollars to get started. The largest expenses are the truck and trailers.
What are the ongoing expenses for a car transport business?
The ongoing expenses for a car hauling business can include:
- Fuel costs
- Equipment rental costs
- Employee wages and benefits
- Office or storage space leases
- Vehicle maintenance and repair costs
- Insurance premiums, licensing fees and permits
- Marketing expenses including mailers, print ads, website hosting and design services
How does a car transport business make money?
There are a few ways that a car hauler can make money. One way is to charge by the mile. Another way is to charge by the weight of the car. A third way is to charge a flat rate for transporting cars. They may also charge a fee to store a car.
Is owning a car transport business profitable?
Yes, because the demand for car transport is growing as more people are foregoing public transportation and ride shares to purchase their own cars instead. Additionally, the trend of purchasing cars online is increasing, requiring more need for car transport services. The ongoing costs of running a car transport business are relatively low, and there are many ways to market a car transport business.
Why do car transport businesses fail?
There are a variety of reasons car transport businesses fail. The most common reason is that the business does not have enough capital to cover the costs of starting and running the business. Other reasons why other car haulers fail include inadequate planning, poor customer service, and stiff competition.
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