Starting a drayage company can be a lucrative business venture, but it is important to understand the step-by-step process for doing so.
Here are the 10 steps you can take to get started on building your very own drayage business.
10 Steps to Launching a New Drayage Business
1. Choose Your Type of Drayage Business
The first step in launching a drayage business is to identify the type of drayage business you want to launch. You might choose from the following types among others:
- Full container drayage (FCL)
- Less than full container drayage (LCL)
- Overweight or oversize cargo drayage
- Refrigerated or perishable cargo drayage
2. Name Your Drayage Business
Give your drayage business an identity so people will think of it as a well-known and respected brand. You can take the name of your drayage business from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your drayage business is to make it sound appealing and trustworthy so that potential customers will be more likely to use your services.
3. Determine Your Drayage Business Model
There are several possible types of business models for a drayage business including:
- Intra-city drayage
- Inter-city drayage
- Regional drayage
- National drayage
No matter which model you choose, make sure that it aligns with your business goals and the services you offer.
4. Choose a Legal Form for Your Business
By incorporating your drayage business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your drayage business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common drayage business structures.
5. Write a Drayage Business Plan
All drayage business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
Read our article about how to write a drayage business plan.
6. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your drayage business.
For example, if you’re operating a trucking company, you will need to obtain a DOT number from the U.S. Department of Transportation. You will also need to get a business license from your state and local government.
You must also register your drayage business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.
7. Determine Your Budget & Apply for Funding as Needed
In developing your drayage business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your drayage business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your drayage business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about the costs associated with starting a drayage business to help you determine if funding is needed.
Read our article about how to fund your drayage business.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your drayage business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in a trucking management system (TMS), which can automate many of the tasks associated with running a drayage business. A TMS can help you with things like route planning and optimization, driver management, load tracking, and invoicing.
9. Market Your Drayage Business to Potential Clients
Before you start selling your services, you have to let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the drayage industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Drayage businesses should consider the following promotional strategies for which you should start getting prepared:
- Traditional Advertising: This includes print (newspapers, magazines), broadcast (television, radio), and online advertising (banners, directories, pay-per-click).
- Publicity & Public Relations: You can generate publicity for your drayage business by writing press releases and articles, giving interviews to the media, and participating in trade shows and events.
- Sales Promotion: This includes providing coupons, discounts and other incentive programs to get people to use your services.
- Direct Marketing: This involves sending marketing messages directly to potential customers through channels like direct mail, email, and telemarketing.
Read our article about how to market your drayage business for more tips.
10. Get New Clients & Grow Your Business
When you promote your services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your drayage business.
Read our article about how to effectively grow your drayage business to learn more.
Starting a Drayage Business FAQs
Why Start a Drayage Business?
There are many reasons why you might want to start a drayage business. First and foremost, it can be a great way to make money. Drayage businesses provide an essential service to their clients, and they can be very profitable.
Another reason to start a drayage business is that it gives you the opportunity to be your own boss.
Finally, starting a drayage business gives you the chance to make a difference in your community. Drayage businesses provide an important service, and by starting one, you can help make your community a better place.
What is Needed to Start a Successful Drayage Business?
There are a few things you need to start a successful drayage business. First, you need the right technology in place to maximize efficiency. You definitely need a computer with internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in a trucking management system (TMS), which can automate many of the tasks associated with running a drayage business. A TMS can help you with things like route planning and optimization, driver management, load tracking, and invoicing.
Second, you need to market your business to potential clients effectively. You need to let people know you exist and that you can provide them with the services they need.
Finally, you need to have the right people on your team. This includes finding and training drivers, dispatchers, and other staff members.
What are Some Tips for Starting a Drayage Business?
There are a few things you should keep in mind when starting a drayage business. First, it's important to have the right technology in place. This includes a computer with internet access and accounting software. You also need a trucking management system (TMS) to help you automate some of the tasks associated with running your business.
Second, you need to market your business to potential clients effectively. You need to let people know you exist and that you can provide them with the services they need.
Third, it's important to have the right people on your team. This includes finding and training drivers, dispatchers, and other staff members.
Finally, make sure you are compliant with all local, state, and federal regulations. This includes obtaining the necessary permits and licenses.
Where Can I Find a Simple Checklist for Starting a Drayage Business?
A simple checklist to use when starting a drayage business is as follows:
- Choose Your Type of Drayage Company: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your Drayage Business: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your Drayage Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a Drayage Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your Drayage Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services.
Summary
Starting a drayage business can be a great way to get into the transportation industry. There are a few things you need to do in order to get started, including choosing the type of drayage company, getting the necessary permits and licenses, and marketing your business effectively. With the right planning and execution, you can build a successful drayage company.