Use this sample business plan to get your trucking business on the road. Use this example to compile your own.
Mike’s Trucking Service is a Dallas, TX based trucking company that aims to be one of the largest trucking companies in the USA. Mike’s is initially focusing on the food industry with plans to diversify with new industries served.
Mike’s has chosen the trucking industry as the growth prospects are encouraging and stable, with trucking dominating the freight industry in this country.
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Mike’s will offer both for-hire trucking as well as private carriers. Most of their business will be derived from the private carriers. For the private carrier segment, both truck load (TL) and less than truck load (LTL) will be offered. Mike’s services will be especially attractive to the food industry, as participants in that industry typically use referrals, reputation, and customer service as purchasing variables.
Mike’s will serve four different market segments. The first, as mentioned earlier is the food industry. This segment is growing at an annual rate of 3% with 3000 potential customers identified. The second segment is the computer industry with a 5 % growth rate and 1500 possible customers. The retail industry is the third with a 2% growth rate and 1500 customers. The last segment is a catch all “other” segment growing at 2% and 500 customers.
Mike’s Trucking is lead by Mike Smith, a 15 year industry veteran. After college Mike went to work for C&F trucking as a driver for two years. Mike felt that it was instrumental to have experience within an industry at all levels. It was quickly obvious that Mike has skills beyond driving trucks and moved into management for three years.
After five years at C&F it was time for a change and Mike went to Yellow to manage their Southwest region operations. It was ten years of experience at Yellow that provided Mike with the skill sets, experience, and confidence to decide to open his own trucking company business.
Mike’s will employ three distinct marketing efforts to raise awareness about the company and generate new customers. The first strategy is the use of promotions. This will focus on press releases and advertising using various different media. The second effort will be the use of incentives. The incentives will be offered to existing customers. The last effort will be printed brochures. These will be distributed to new and existing customers.
Mike’s Trucking Service is a customer-centric organisation looking to become one of the premier trucking companies in the USA. Profitability is forecasted to occur at month three. Mike’s has conservatively projected sales of $100,000 for year one and $400,000 for year three.
The mission of Mike’s Trucking is to be the leading trucking company servicing the United States.
Mike’s Trucking Service is a Texas LLC, with principal offices located in Dallas, Texas. Mike Smith, president and CEO, is the majority owner. He has been in the trucking business for 15 years.
2.1 Company History
Mike’s Trucking has been in business for one year. We have maintained financial stability during the first year of operation due to the extensive industry experience of our management team.
The trucking industry provides transportation services for persons or companies looking to haul heavy things. Mike’s Trucking enables someone to lease a truck, of any size, for any project that needs hauling.
We will provide this service to the whole of the Dallas area, and hope to expand from this base area within the first five years of operation. This service is provided on two bases: for-hire and private carriers.
Of these two segments, Mike’s Trucking will concentrate on the for-hire carriers, and, more specifically, the truckload (TL) and less-than-truckload (LTL) segments. The services offered, and the markets being targeted, are discussed throughout the following section.
4Market Analysis Summary
Mike’s Trucking has an opportunity to entrench its competitive position in the regional transportation market by selectively focusing its target market on the food industry. The company has already had experience in servicing such clients and it believes that there is a growing demand for reliable transportation solutions in this customer segment.
4.1 Market Segmentation
There are several potential customer segments that we will provide our transportation services to. Major customer segments include the food industry, PC and semiconductor manufacturers, and retailers. The chart and table below outline the current market size and growth estimates for these customer segments in Texas.
Large established companies in the afore-mentioned segments (especially in the food industry) have their own truck fleets, while smaller players outsource the transportation function. The latter vary in the scale of their operations, but have a steady demand for reliable transportation solutions. We will actively solicit such customers.
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4.2 Target Market Segment Strategy
Mike’s Trucking will focus its marketing budget on a selected industry niche. A narrow-served market focus will help strengthen the company’s reputation of a reliable transportation services provider and will generate favourable referrals.
The major customer segment the company is focusing on is the food industry. Companies in this segment have varying needs, and Mike’s Trucking has already gained valuable experience serving such customers. The company management believes that by increasing its truck fleet it can capture additional clients and provide better service to existing clients.
4.3 Service Business Analysis
Market Description Industry: Trucking, except local Establishments that are primarily engaged in furnishing “over-the-road” trucking services or trucking and storage services for freight generally weighing more than 100 pounds. Such operations are principally outside a single municipality, group of contiguous municipalities, or municipality and its suburban areas.
4.3.1 Competition and Buying Patterns
Although there are major players in each of the commercial carrier market segments, the market remains highly fragmented. According to the Dallas Yellow Pages, there are numerous companies providing different kinds of the trucking services. Major competitors for Mike’s Trucking are those companies who have comparable truck fleets and are also targeting the food industry.
Market research shows that customers in the food industry are price sensitive, and they value on-time deliveries, special handling capabilities, and less-than-truckload orders. Customer referrals and carrier’s reputation are believed to strongly influence the buying decision.
4.3.2 Financial Risks and Contingencies
The company recognises that it is subject to both market and industry risks. The two primary risks to the company are:
Industry concentration risk. The company is mainly focused on food industry businesses in the United States. This position is favourable since the industry is fairly stable. Any slow down in the food production would have negative repercussions for Mike’s Trucking. To mitigate this risk, the company is looking at diversifying its trucking business to include other industries as well. Operational risk. Mike’s Trucking recognises the fact that there is an inherent risk in transporting cargo. Any damage to cargo may undermine the profitable of the company. To reduce this risk, the company maintains all necessary insurance.
4.3.3 Business Participants
With some $344 billion in 1998 revenues, the trucking (or motor carrier) business claimed 79% of the U.S. commercial freight transportation market. This total was divided among two sectors: private carriage and for hire.
Although private carriers comprise the largest component of the motor-carrier industry, financial information isn’t available for them. However, the industry is estimated to provide services valued at some $200 billion annually (or 58% of motor carrier revenues in 1998). The American Trucking Association (ATA) estimates that there are more than three million trucks operated by private fleets transporting 3.5 billion tons of freight annually.
The for-hire category generated $144 billion in 1998, or 42% of the industry total. Of that $144 billion, some $105 billion (73% of the sector’s business) came from truckload shipments, and $39 billion (27%) was from less-than-truckload and package/express delivery.
Truckload (TL). The national for-hire truckload segment had total revenues of $65 billion in 1998. The TL sector has historically been mostly privately owned, with the exception of the top ten publicly-owned companies (For this reason, we focused on the LTL sector in this survey). Schneider National Carriers was the largest TL operator, with revenues of $2.8 billion in 1998, followed by J.B. Hunt Transport Services ($1.8 billion), and the Landstar family of truckload-carriers ($1.3 billion). Of the 50,000 truck load carriers, perhaps 95% had annual revenues of less than $1 million. Less-than-truckload (LTL). The ATA estimates that the less-than-truckload market garnered $20 billion in 1998. Of this amount, the fast-growing regional segment accounted for slightly more than the national market.
The largest national LTL carrier was Roadway Express Inc., with $2.32 billion in LTL revenues in 1998; the company’s total revenue of $2.55 billion includes TL freight. Yellow Freight System (a unit of Yellow Corporation) was close behind, with $2.25 billion (out of $2.46 billion total). Consolidated Freightways Corporation was third, with $1.95 billion in LTL revenues. In the regional LTL market, Con-Way Transportation (a unit of CNF Transportation Inc.) was the largest player, with $1.5 billion in LTL revenue in 1998. Second place belonged to US Freightways, whose family of five carriers generated some 41.4 billion in LTL revenue. American Freightways Corporation was third, with $928 million in less-than-truckload revenues.