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ОглавлениеAn Overview of the Transportation Industry
From taxis to limousines to bicycle rentals, moving vans, and long-haul transport of refrigerated goods, the transportation industry has a wide range of entry points. Whatever your particular interest is, there is likely a transportation business that can fulfill it.
But first, let’s look at small business as a whole.
The Current State of Small Business in America
According to the U.S. Census Bureau, small businesses (defined as those with 250 or fewer employees) employ 56.1 million of the nation’s private workforce. Firms with fewer than 100 employees make up the largest part of small-business employment.
stat fact
According to the U.S. Department of Transportation’s Bureau of Transportation Statistics, the value of freight carried by all modes of freight transportation (air, ship, pipeline, rail, and truck) was lower in 2015 than 2014.
That said, small business is far from immune to the ups and downs of business cycles. It has taken a while for the small-business sector to recover from the recession in the late 2000s. Just in 2015 did birthing of companies exceed the exit rate, a trend not seen since 2007 according to Business.com. “Small businesses are the forefront of our economy. . . . Every minute, a new business in the U.S. is started and according to some people, more than 50% of all workers will be self-employed by 2020.” (“The State of Small Business in 2015,” May 5, 2015, by Betsy Scuteri, www.business.com.)
State of Small Business
Wasp Barcode’s “State of Small Business Report” (www.waspbarcode.com) found the following statistics:
47 percent of small businesses were more confident in the economy in 2015 than a year before.
Product companies were anticipating higher revenue growth than non-product companies.
57 percent expected revenue growth in 2015.
56 percent expected to invest less than 3 percent in marketing.
38 percent were expecting to hire employees in 2015.
38 percent planned to spend money on IT in 2015.
35 percent view their company website as very or even extremely important.
54 percent spent over $5,000 in on IT-related equipment and software in 2014.
The Small Business Administration (SBA)
With statistics like the ones from the U.S. Census Bureau showing that small businesses, homebased or not are responsible for the employment of 56.1 million people, it’s no wonder the U.S. government has an administration devoted to small businesses. Anyone thinking about starting a business should have the SBA (www.sba.gov) bookmarked for quick access. There is a wealth of information on this site; you couldn’t do much better than to start your small business research here.
fun fact
Trucks carried 59.1 percent of the $48.3 billion of freight to and from Canada in September 2015, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.
The Small Business Administration started in 1953. It is an independent agency of the federal government helping Americans start and grow small businesses through field offices throughout the U.S. and its territories. The SBA was designed by Congress to also ensure that small businesses get a “fair proportion” of government contracts and sales of surplus property. You can quickly see that using the SBA to its fullest is only to any small business’s advantage.
Through the years, the SBA has met current challenges in the small-business arena such as focusing on minority- and women-owned businesses with special programs and education to help these businesses thrive. They publish a Small Business Resource magazine and annual national resource guides. These resources contain educational information on things like how to apply for a government contract and keep you up to date on current legislation and advocacy on behalf of small businesses, as well as some small-business basics like advice on creating a business plan and how to obtain financing.
The SBA was created for you. You will do yourself a favor by referring to their site and contacting them whenever something comes up in the startup phase or as you establish your transportation business.
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According to the SBA, each state has a portal dedicated to commercial transportation, to help you understand the regulations your state requires and the assistance your state provides.
Service Corps of Retired Executives (SCORE)
Imagine 13,000 volunteer mentors at the service of the small-business world. That’s what the nonprofit organization SCORE (www.score.org), formed in 1964, is all about. There are almost 400 SCORE chapters throughout the U.S. in urban, suburban, and rural communities. Over ten million Americans have used SCORE’s mentoring services. These mentors can help you at any stage of your business, from planning, to startup, to growth.
warning
Many small-business leaders point to health care costs along with EPA regulations and increased stringency in OSHA compliance as making it harder and harder to do business today. You shouldn’t let this deter you from starting your business, but you should be very aware of these costs as you get started.
Go to the score website at www.score.org and click on the link “SCORE Locations” to find a chapter near you. A check of the zip code 03801 (Portsmouth, New Hampshire) produced one chapter right in Portsmouth and five other chapters within a 50-mile range of Portsmouth.
After locating a chapter near you, you submit a request for a mentor, get together with your mentor to get help on specific goals (or help creating specific goals!), and follow up with your mentor throughout the life of your business. SCORE offers online resources that you can sign up for to have emailed to you, and they offer local and online workshops and webinars for further education as well as community events such as roundtable discussions and seminars. The website has everything you need to locate all of these services.
The Transportation Industry as a Whole
The transportation industry has so many niches that you will want to spend time figuring out what niche is the right one for you. You likely already have an idea of the type of transportation service that you are interested in, whether it’s owning a fleet of 18-wheelers that move manufactured goods or one Ford F-350 dually with a gooseneck stock trailer that you use to move people’s personal horses around, or a business where you sit in an office and manage a stable of drivers who provide medical transport for senior citizens. It’s all transportation.
warning
The transportation industry is heavily regulated in every state. Do not ignore these laws, which cover things like driver’s license requirements, rules, manuals, safety information, licenses and permits, taxes, and all other related issues.
The SBA offers the following five steps to help you decide if a homebased business is right for you:
1. Ensure that you and your home are properly equipped for the type of transportation business you intend to start. Do you have the parking space needed? Does your business fall within the limits of local zoning laws?
2. Finance your homebased business. The SBA does not give out loans, but they do have a guaranty program with banks and lenders that you should check out. Their microloan program guarantees loans averaging $13,000 with the high side at $35,000. Underfinancing small businesses is one of the key portals to failure.
3. Take the appropriate steps to license and register your homebased business. It is not worth it to try to skirt around the regulations. You do not want to risk your business.
4. Understand the regulations that govern your specific transportation niche. Again, you need to know what you are required to do, and you need to do it. It is not worth risking all your hard work trying to skirt around regulations that just seem too difficult. Find out all you need to know.
5. Thoroughly understand the insurance requirements of your niche of the transportation business. The SBA says if “you own and oversee the operation of commercial vehicles, your insurance requirements will cost more than many other businesses.” Discuss your specific needs with a local insurance specialist.
aha!
Who says your transportation business has to be shipping a container full of hundreds of objects? You could really specialize and provide transportation services for massive parts for the airline industry. This would require special vehicles and special knowledge—it may mean fewer shipping jobs, but each one will be much more lucrative than individual, smaller shipping jobs.
Some transportation-related businesses may require a retail-like storefront—bicycle or car rentals, for instance. Starting and running a retail store of any kind is an animal all its own and one that, according to the Small Business Administration, more than a quarter-million people in the U.S. earn a living doing. The SBA offers the following tips to get you off on the right foot:
Find the right location. Your location needs to be where your target market goes. The SBA recommends making sure to “combine visibility, accessibility, affordability, and commercial lease terms that you can live with.” In the case of car rentals, that might mean being near an airport and offering a pickup and drop-off service. For bicycle rentals, you need to be located near parking for vehicles and in an area where bicycling is safe, fun, or convenient.
Finance your retail venture. In other words, make sure you have the proper financial backing to fund your startup until the business starts to earn income. This is key for any small startup of any kind and one of the main reasons that small business startups do not make it. Chapter 6 walks you through financing. A retail storefront requires you to consider financing for a lease, purchase, improvements, specialized display furnishings, some sort of transaction equipment such as a cash register or point-of-purchase tablet with software, phones, electricity, heat or air conditioning—the whole gamut that any retail business needs to pay for.
stat fact
Small businesses created 108,000 jobs in March of 2015.
—ADP Payroll Services
Business Secrets You Should Know
Here are a few things, according to the Retail Doctor’s Blog (“41 Things No One Told You About Starting a Retail Business” at www.Retaildoc.com) that might surprise you. They were written specifically for retailing, but the following applies to any small business:
As soon as you figure out what your customers want, they will want something totally different.
People in your town will assume you are rich because you have your own business.
Sometimes a Tuesday might be your best day; other times it will be a Friday. In business, there is often no consistency.
The customer is always right.
You will rarely have a for-sure day off again.
Just because someone asks for a discount doesn’t mean they won’t do business with you if you don’t give them one.
Running a business is harder than you think it’ll be, but you won’t really have time to notice.
Determine your business structure. Do you want to head out alone or do you think a partnership of some kind might make it more likely for your business to succeed? If you decide on a partner, choose one who complements your own skill set. Partnerships can sour very easily, but if you do your upfront due diligence, it might end up being the best decision you make for the success of your business. Maybe you are the one doing the behind-the-scenes marketing and bookkeeping for your bicycle rental business while your partner interacts with customers and keeps the bicycles in good repair.
Take care of the regulatory requirements involved in starting and operating a business. The transportation business has some unique and strict regulations that you will want to be sure to know and adhere to.
save
Processing payment even if you don’t have a storefront anchored by a cash register is easier than ever before with the advent of devices like the Square swipe and chip readers. They attach to your phone or tablet, are secure, and offer competitive per transaction rates. They can even be used if you are in an area with no signal; swipe anyway, and they process when you are in range.
Transportation Business Options
The following represent many of the possible types of transportation businesses you could decide to start. It all depends on what your personal interest is and what skills you want to employ in your business.
Despite its initial controversy and claims of unfair competition and lack of licensing requirements from the established medallion-holding taxi companies, San Francisco-based Uber has staked its claim across the world—in fact, in 400 cities and 65 countries (“The Inside Story of Uber’s Radical Rebranding,” Jessi Hempel, www.wired.com, 2/2/16). Uber’s attraction as a small-business opportunity is that you are an independent contractor and on your own schedule. To sign up as a driver, start by going to their website at www.uber.com, and click on the “Become a Driver” button. A short questionnaire initiates the process.
There is no hailing of an Uber cab; Uber’s service is based on the Uber app. When someone needs a ride, they submit a trip request through the app. Uber drivers in the area get the request and must respond quickly to get the fare. The person requesting the ride can track the Uber driver on the app as it makes its way to pick them up.
As a driver you use your own vehicle, so startup costs are relatively low. Uber handles all the financial aspects of the ride. And not only can riders rate drivers using the app, but drivers can also rate users!
Payment to the driver is on a weekly basis. As independent contractors, drivers take on overhead costs (gas, maintenance, insurance, etc.) themselves. SherpaShare (www.sherpashare.com), a financial analytics site, says Uber drivers everywhere (except New York City where rates are highest), make in the range of $8.80 to $11 per hour gross before Uber’s percentage is taken.
Of course anything that is as successful as Uber immediately generates competitors. Lyft, which operates similarly to Uber, is one. Sidecar is another, but the Los Angeles Times reported that Sidecar did not make the cut and ceased rideshare operations at the end of 2015.
Renting bicycles is a thriving business in certain areas. The two key environments where renting bikes is a natural are in recreational tourism areas and cities.
In tourism areas, you might look to set up near a large hotel or resort where extended vacations stays create ready customers. In this type of business, you are going to need a storefront. Depending on your location you will need an open space where you can store all your rental bikes, or, if outdoor space allows, you can construct a simple canopy-style covering to keep your bikes under cover.
You will want to distinguish yourself as renting to the more serious cyclist with high-quality bicycles or leisurely riders with simple bicycles.
Another possibility for bicycle rentals is the bicycle-sharing approach like Hubway in Boston. Bicycle stands around the city allow riders to rent a bicycle in one place, ride to their location, and drop the bicycle at a stand near their destination. Hubway offers annual or monthly membership or daily passes. Perhaps your town is ready for a mini version of this business.
You could provide limo service to celebrities or to regular people and make them feel like celebrities; the choice is wide open. While these two services are very different in many ways, there are some fundamental similarities. We’ll focus here on the “regular people” limo service.
First, you need to have a sparkling reputation. Whenever anyone is entrusting you to drive them, a clean reputation is important. But in the case of the personal limo service, typically you will be driving a group of people who are not paying attention to where you are going or how you are driving but are enjoying the ride, which is what a limo is all about—luxury accommodations with perhaps a bar, a television, wifi, and music. The limo offers the opportunity to have a little party en route, party at the destination, and a safe ride home, especially if the customers have consumed alcohol. The driver needs to be supremely trustworthy, and the vehicle needs to be safe and well maintained.
You can operate the limo yourself with a modest limo service. That sounds like a lot of fun, and it may be exactly the way to start out. Your fleet of one limousine will be relatively easy to maintain. And you can provide all the service yourself, from scheduling to driving. If you want to expand, you’ll have to pony up the cash to do so. Just add vehicles and drivers, and keep expanding your marketing to keep business flowing.
That all makes it sound easy, and of course it isn’t exactly quite that simple. But having started slowly with one vehicle and yourself as driver, you get to understand your business and soup to nuts: vehicle care, licenses required, what customers expect—you’ll have personally experienced it all.
A business owner who has done all aspects of his or her business can really provide great insight and management leadership to employees. When an employee has an issue or complaint, you know what they are talking about. And, if you really are a good manager, you can use your hands-on experience to prevent employee complaints before they happen.
Your business plan should reflect how you plan to start your business and how you would expand when you are ready. When you create a pro forma budget, have it reflect the costs of expansion and how you might finance that, especially if you plan to expand by saving as you go along. Use the “Startup Expenses Worksheet” in Chapter 6 on page 69 to create a budget.
Although international trucking, including Canada and Mexico, is an enormous sector of the trucking industry, we will focus here on trucking within the United States. Adding those international markets can be a growth factor for your national business; if you think that is the direction you will want to head and expand into, start doing research now in order to be ready to dive in when the time seems right.
The basic format of the trucking business is to bid on and fulfill contracts. According to the SBA, there are two basic forms of operating, with the key difference being how you get drivers to fulfill those contracts (or accounts if you contract to do all of the trucking for a business). The two forms are:
1. Subcontract drivers. The drivers, in this case, are not employed by your company. They are independent contractors who likely own their own equipment. In this scenario, you are spending your time on two key coordination pieces—getting the contracts and accounts with the manufacturers who need goods transported and then finding drivers who can fulfill those contracts on schedule. The advantage is, of course, lower costs—independent contractors not only usually have their own vehicles that they maintain themselves but they insure them and themselves as well. Insurance is a huge cost factor in the transportation business, so clearly this is a savings. However, you will also be paying them a higher fee than if you were paying your own drivers, which cuts into profits. The real trade here might be in fewer headaches—as long as you feel confident of the drivers you hire.
2. Privately “owned” drivers. In this scenario, you own the trucks and the drivers work for you. You have total control and retain all profit—and you pay all of the expenses of employees and equipment, which means higher startup as well as higher operating costs. While your drivers will be at your service for the accounts and contracts you retain, the pressure is on to have no down time because you are paying for those drivers and those vehicles whether you are using them or not. If coordinating and scheduling is more of your strong suit, you may find that setting up your business using contracted drivers is the best way to go. Or maybe a combination of both—a manageable number of drivers and size of your owned fleet with a stable of contract drivers to call on when you get more contracts than you can handle.
Starting a small moving business is relatively easy—which also means you need to keep in mind that you will likely be competing with a couple of strong college students with a rented box truck. Your ace card will be that you will set up and conduct your business professionally, perhaps offering add-on services such as space for temporary, in-between-moves storage. That kind of added service can give your business more of an impression of stability, especially compared to the local college student setup.
Be sure to promote your integrity and status with emblems of professional associations to which you belong. Try to get your business in the news (in a good way) by volunteering in the community, sponsoring a charitable event or a kids’ sports team with your name on their uniforms. And be sure to have satisfied customers give testimonials that you splash on your website, tweet, or post on your Facebook page.
Startup costs include purchasing one or more trucks in a range of sizes that will accommodate the type of moving you plan to do. And, of course, you will need a place to park them.
You will need at least one employee—you can’t lift that sofa alone! And you will need to train that employee for packing, moving procedures, customer interactions, how to behave appropriately in a client’s home, etc., so that your professional reputation isn’t damaged.
Specializing in a specific kind of unusual transportation—extremely large items such as airplane parts, or modular houses, or refrigerated perishables, blood, or human organs for transplant—can provide a healthy income. You will likely have fewer clients but can charge higher fees for the expertise you have or gain from specializing. Depending on where you are located (for example, a medical transport business in downtown Boston where there are numerous large medical facilities opposed to a small town in southern Indiana) will dictate whether you can do this business yourself or you need employees.
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If you are starting a trucking business, be sure to understand IRS Form 2290, “Heavy Highway Vehicle Use,” which covers the tax regulations related to heavy use of U.S. roads.
Livestock Transportation
The horse industry is alive and well across the United States, and livestock hauling of cattle is a viable transport service in the Midwest and western parts of the country. Although you don’t need any specific licenses for transporting personal horses for customers unless you get into commercial-size vehicles that hold many animals, you will definitely need equine or bovine experience for potential clients to trust your ability to transport their animals, and you need to familiarize yourself with the livestock transport regulations for crossing state lines.
Although the livestock owner, not you, will be responsible for having their animal ready for transport to its final destination, you will want to know the livestock regulations of any state you will be entering. Most states have at least minimum requirements of certain infectious tests (including a health exam) and/or vaccinations for entering their state. Do not leave it up to horse or cattle owners to know these regulations; while they may be the one lining up and paying the veterinarian who will do these tests, you will want to be knowledgeable to advise them. It is to your benefit to make sure they have the proper paperwork for you to carry on the transport and show at the final destination or anywhere along the way that is necessary. All of this will help make your trip with their animal go smoothly.
To make sure the trip goes smoothly for the animal, you need to be knowledgeable about livestock. Or you need to hire someone to do the actual transport who is knowledgeable. It requires patience and knowledge if a horse or cow refuses to get in a trailer. Keep in mind that if you are transporting any distance and need to overnight, you will need to get the animal on and off the trailer several times. And not only do you need to know how to deal with things on the road—tricks to get the horse to drink while traveling and help avoid colic, how to treat or bandage a wound if necessary—you also need to know the basics behind driving carefully while towing a live animal. Getting a veterinary technician license or bringing a certified vet tech with you might be useful and give you an edge for getting customers and word-of-mouth praise.
Boats
Transporting boats is another specialty business that can be lucrative and interesting if you are in a maritime area. Keep in mind that this will be a seasonal business—and extremely busy during the pre- and post-boating season since everyone will want their boat in the water or taken out of the water in the same general timeframe.
You will need to decide what kind of boats you want to transport. A speedboat for the lake has a very different trailer requirement than a large sailboat with a mast and a keel. Most marinas have their own boat-moving operation to get boats off the moorings and slips owned by the marina and into their boatyard. But if the boat is going to be moved to someone’s backyard for the off season or otherwise being moved somewhere that sailing it there is not possible to do, it will need over-the-ground transport by someone like you. You can equip your rig to unstep the mast before transport, or, if the boat is at a marina, the boat owner could have the marina remove the mast; one way or another this is a necessity since you will not be able to transport a sailboat with a stepped mast in almost any town in the country, given utility wires.
Although motorboat transport would likely be a higher-volume business, it is also something many boat owners can do themselves. But if you keep your prices reasonable and become known for taking extra good care of the boats you transport, you may find people hiring you to take care of this for them anyway. Motorboat owners are more likely to have room in their yard to store them than those with large sailboats, especially ones with keels. However, covered storage is appealing, so if you can provide this you can have an added-value component to your business. Boat storage garages can have multiple stories, but you need a specific piece of equipment to lift them up and move them into position on the upper layers. You can also add the service of shrink-wrapping the boat before storage.
The startup funding for boat transport is modest but perhaps surprisingly higher than you might think, especially given the cost of pickup trucks. You will need an appropriately sized truck and perhaps two or three different-sized trailers. Also important is liability insurance to cover the boats you transport and the possibilities of things that can happen when you haul things. That storage option is a good expansion aspect to the boat hauling business.
Transport by air, whether plane or helicopter, involves significant startup costs for equipment, licensing (for yourself and/or employees), and insurance. But if you really want to specialize, this is one way to do it. Small plane transport can be of goods or people like hunters or skiers headed to remote territory, delivering goods or mail to islands, or even transporting freight internationally. According to the World Bank website (www.worldbank.org), “The demand for air freight is limited by cost, typically priced 4 to 5 times that of road transport and 12 to 16 times that of sea transport. . . . Commodities shipped by air thus have high values per unit or are very time-sensitive, such as documents, pharmaceuticals, fashion garments, production samples, electronic consumer goods, and perishable agricultural and seafood products.”
You would need to get your ducks in a row using a facility that has excellent cargo handling and inspection equipment (especially for agricultural products and other items highly regulated when they move around the country) and customs if you plan to do any international shipping since moving products by air is all about speed. You don’t want to offer flight shipment only to lose time on the ground on either end.
fun fact
The taxi service has traditionally been very highly regulated with transferrable permits, called “medallions,” in large markets valued in the hundreds of thousands of dollars. The changing cab market, instigated by ride-hailing services like Uber and Lyft, have devalued those permits and are starting to change the way taxi regulation is handled.
Air transport is definitely a possible transportation business, but you will need to give yourself lots of lead time to do research and set up the links you need to offer a smooth service.
Transport by boat (the original source of the word “shipping”) is a huge business. This is also a huge business to start. Marine shipping is often by tankers stacked with containers that get lifted off the trailer of an 18-wheeler and stacked on the boat, typically entails international import/export business, and requires knowledge of customs regulations in general and for specific merchandise. If you are an expert scheduler and coordinator, perhaps this is the business for you. But, like air transport, be prepared for a lot of research, planning, and need for significant startup resources.
warning
According to the SBA (www.sba.gov), “the nature of any transportation business means there will generally be a special requirement for a license or permit.” Check with your state department of health and human services to see if there is a permit to become an approved provider of even the most basic medical transport services.
Medical transport is an important business in the transportation arena. There are several ways to focus this business. Some require no more than a regular vehicle, driver’s license, and a solid driving record. You could focus on transporting seniors to medical appointments locally, or, if you live in an area that is a distance from a city, you could focus on driving people long distances to specialist appointments at world-class hospitals. If you have an EMT license, other medical credentials, or are willing to get them, you could start a business that contracts with hospitals to drive admitted patients to other medical facilities for specialized treatment; this would also require some specialty equipment like oxygen delivery and perhaps a vehicle that can transport a patient in a wheelchair.
Air transport is even a subset of medical transport. Even some of the smallest hospitals in more rural areas have a helipad for rapid transport of patients to larger facilities for specialized care.
America is aging at a fast pace. As older citizens relinquish their driver’s licenses, there is a business to be had for driving the senior set to places they can no longer take themselves. Focusing a transportation business on the senior set could keep you plenty busy. Beyond medical appointments, you could drive seniors to the grocery store or to outings at the mall. If you are in an area where seniors tend to be low-income (and all but the wealthiest seniors are likely on a “fixed income” of Social Security and whatever retirement income they managed to collect while working), you could even consider setting up as a nonprofit business and getting grant support to help seniors in your region be more mobile. Grant funders, corporate sponsors, and the federal government are often looking to utilize their funds for human service programs coming to the aid of the most vulnerable citizens.
