HOW TO

BUILD A PROFITABLE

SMALL FLEET

FROM SCRATCH
 When starting a truck Fleet there is NOT A LOT OF INFORMATION out there to go by. What
I'm going to attempt to do is show you how to start a small fleet from scratch without having to
rely on loadboards or brokers. Operating one truck is okay if you just want to stay with one
truck, what I'm talking about is starting from 1 truck and building up to 10 or even 100 trucks or
more. This guide will give you the stepping stones to get you started in your endeavor and it is
up to you which direction you want to go from this point. Each situation is completely different
from one another for instance, one person might like having used trucks and another will
prefer new trucks or one person will like OTR and another will like regional, etc. Use this guide
to help you make the final decision. GO GET IT!!!!

BUILDING A TRUCK FLEET USING A TRUCKING COMPANY

Perhaps the easiest way to assemble a truck Fleet is to gain employment with a trucking
company that offers truck Leasing and over time you build your truck Fleet One by One. The
positives to this technique is you don't need any money down or stringent credit requirements
to purchase your trucks, and you will have the resources of the trucking company at your
disposal at all times.

Other positive aspects of using this method is:

-you never have to worry about parking space for your trucks.

-you will always have a pool of drivers to choose from the drivers that the trucking company
hires.

-you can also a run under their Trucking Authority.

-you always have Freight to haul by utilizing the trucking companies network of customers
and shippers.

-you also have a deep discount on insurance for your trucks which will also help your bottom
line.

Some of the negatives of hauling under a trucking companies operating Authority:

-In a lot of cases you can't leave the trucking company and use their Authority outside of
hauling for them, so you will have to surrender the MC number back to the trucking company
and purchase your own operating Authority which can be a fairly big expense.

-You also have to remember that when you put your truck on with a trucking company you will
more than likely be their direct competition so you making money is not at the top of their list
but getting there freight moved is more important then your bottom line so always remember
to keep your options open when you put your truck on with a trucking company.

-It's a very wise move to have your Authority situated before you put your trucks on with a
trucking company and this will keep you safe in the long run. mileage rates will be fairly low
also, in the neighborhood of from as low as .88 up to 1.35 per mile, in a lot of cases if you try
to recruit drivers from their list of employees more than likely the trucking company will talk
bad about you to the driver thus preventing the driver from hiring on to your truck.
-You have to watch your carrier agreement with the company also because in a lot of cases if
their freight slows down, your work will slow down as well, which can put you in a financial
bind.
-Another negative aspect is more than likely you will have to maintain a certain year
equipment which can also end up crippling you in the long run from having to purchase new
equipment every three to 4 years. And with trucks costing upwards of $100k or better, this
could end up being a situation where your bottom line could end up getting smaller and
smaller as each cycle goes around from buying new trucks.

-By signing a non-compete clause, if you were to leave the trucking company, you would be at
a disadvantage because the non-compete clause basically states that you cannot use their
customers in some cases up to 2 years after you leave the trucking company so be careful
about this procedure it can be prosperous in some instances, but the advantage is always in
favor of the trucking company.

BUILDING A FLEET ON YOUR OWN (WITHOUT TRUCKING CO. SUPPORT)

There are many ways to build a truck fleet without using a trucking company for support.
Below, I will discuss many of the advantages of foregoing trucking co. support and relying on
and building your own resources.

Some of the advantages of starting your own truck Fleet includes:

-When you enter into an agreement with a shipper or manufacturer usually your per mile rates
are a lot higher (3.00-5.50/mile) then if you were just with a trucking company.

-Not being tied down to running for only one customer: when you own your own trucking
company you can haul Freight for anyone who will pay the rate you want to pay.

-The majority of your customers are shippers and manufacturers which means consistent
steady Freight.

-You will always have dedicated Lanes.

-You can predict the cost of operation up to a year in advance.

-There's no need to ever deal with a broker or load boards.

-You make substantially more money then if you just exclusively drove under a trucking
companies Authority.

-You have full control of your business just as long as you keep the shipper that you're
servicing happy and satisfied.

-You have full control over who drives your trucks.

-There is no requirements on the year vehicles that you have in your Fleet so basically you
can have trucks from 2000 or older if possible. (In California, you might be required to have an
exhaust filter for carb compliance on older trucks).
-There's really no need to go over the road you can have local or regional freight and still
make a healthy salary.

WHY HAVING A FLEET (5 or MORE) IS BETTER THAN HAVING 1 TRUCK

There's nothing wrong with having one truck if that's what you want to do. Having more than
one will truck put you at a superior advantage to a guy that just has one truck. For instance, if
you were to break down you have four more options to getting the freight delivered if you have
5 trucks then if you just had just one truck.

If you are looking for shipper freight more than likely if you have only one truck, they will
generally not want to deal with you. If you have 5 trucks or more that is the ideal setup that
they will be looking for. Now you take the same scenario with the five trucks and add a solid
business foundation, and you will have more shipper direct Freight then you can handle
because they will view you as a legitimate business and also with a corporation set up you will
appear a lot more capable of handling a large volume of business that will certainly come your
way.

A corporation also shows that you have "skin in the game" and that you are serious about
doing business and in this industry being serious about business is the one thing that will
separate you from the rest of the crowd.

Also remember that a lot of people who are one truck operations tend to not be able to stand
up to the rigorous schedule that a shipper or manufacturer demands. Make no mistake about
it, if you land a shipper Direct Freight setup you will be looked upon to deliver no matter what
kind of difficulty you might be facing at the time.

The MOVEMENT OF FREIGHT is the name of the game when it comes to obtaining shipper
direct freight contracts and if you fall short of moving shipments too many times, you will be
shown the door and in some cases blacklisted due to the fact that these companies network
very heavily with each other. So be aware before you embark on this endeavor.

WHY GETTING A CORPORATION SETUP IS A REQUIREMENT NOT AN OPTION TO

SETTING UP YOUR FLEET

Getting your Fleet setup for business requires a few steps. These steps are necessary
before you approach a shipper or a manufacturer, not doing these steps will render your
efforts unfruitful and highly frustrating and will only make you quit your Pursuit of owning a
small fleet.

BEFORE YOU PURCHASE ANOTHER TRUCK, YOU WANT TO GET YOURSELF

INCORPORATED

It really doesn't matter which one LLC, Corporation, S corporation, Etc. You really want to get
a corporation set up as this communicates to potential shippers or manufacturers that you are
serious about doing business and that they can rely on you.
BASIC STEPS TO SETTING UP YOUR TRUCKING BUSINESS

These are necessary steps to get a solid business foundation set up to do business with
shippers and manufacturers. It is not very easy to do but it is not difficult to do also, it just
takes a little bit of patience and a little bit of tenacity and before you know it, you will have
everything you need to get started in the very lucrative side of trucking that many drivers
never get to experience.

*You need a physical business address not a drop box or A PO box, but an actual address. I
have a list of services that will have virtual address setups if you are starting out. A virtual
address keep your expenses to a minimum until you get established and can go and get a
physical address later on. When customers check on your location that use Google Earth and
other sites that use satellite technology to determine a location of an address and virtual
addresses are set up to show buildings in industrial zones, so it is to your advantage to use
these services to get started.

*You will need a business phone number not a cell phone or your home landline, again I
have a list of providers that will give you a good solid business phone number to get you
started.

*Apply to Dun & Bradstreet and get a duns number. This should take take from 1 to 4 weeks
to receive your number.

*You will need to apply for your tax ID or EIN number.

*You will have to set up a business bank account, since you have a business name and a
EIN number you will have no problem establishing business credit with the bank account.
After you receive your duns number apply with net 30 vendors and start establishing credit
and within six months to a year you should have enough credit established to start purchasing
your trucks.

*Get payroll setup. You will need to get a payroll company to get the proper deductions
recorded for tax purposes.

*Purchase insurance for your employees and your vehicles.

*Apply for fuel cards and credit cards on behalf of your business.

*Apply for operating authority.

FACTORING COMPANY

Hiring a factoring company is not necessary but it will help with your bottom line because a
lot of shippers and manufacturers will not pay you for up to 90 days. If you're not familiar with
a factoring company basically what they do is take your bills once you have delivered your
load and they will pay you what the shipper owes you minus 3-10%. Instead of taking 60 days
to pay you, a factoring company will deposit your money within 2 days. It is wise to see why
dealing with a factoring company will help greatly with your cash flow in the beginning. I myself
still use the same factoring company from time to time for emergencies.
ESCROW SERVICE

An escrow service is also good to use for business transactions where the shipper or a
broker has shaky or bad credit.

The way an Escrow Company works is when you contact a broker for instance and you and
the broker agree on a rate to payout. After you check the broker's credit rating, you find that he
has less than perfect credit. The broker then informs you that he will pay you once you deliver
the load so you negotiate a solution by asking him to put the money in an escrow account. An
escrow account is basically a third party that will hold the money that is in question until
services are rendered on both ends of the transaction, so when a broker put the money in an
escrow account you both sign an agreement that says the funds will be surrendered to you
once you finish making the delivery. If the broker or shipper refuses or have heavy objections
to putting the money in an escrow account then this pretty much answers the question of
whether or not they will pay you and it ends the question of credibility on their part, thus
ending the business relationship altogether. This is why it is vitally important that you set up an
escrow account before you haul your first load because I promise you, there are more
dishonest brokers than I care to count so protect yourself.

HIRE AN ASSISTANT

You will need to hire an assistant or secretary. A lot of people try to skip this step but you have
to remember you're not going it alone anymore and you need someone to help with the heavy
lifting. Find someone with professional experience in trucking, negotiate a reasonable salary to
pay and utilize this person to the fullest.

HIRE SUPPORT STAFF

Trying to run a small fleet by yourself is nearly impossible. Many people have tried and failed
miserably which is why I am urging you to assemble a support staff.
A support staff can be something as simple as an office assistant and a dispatcher. You can
add more staff later as you start to grow but for now, stick with these two positions. Also an
accountant should be added for good measure. You will find that when things are dialed in
with your staff, your operation will start to run smoother.

FIND A MECHANIC

Before you purchase another truck you need to find a mechanic. He doesn't have to be the
best he just needs to know how to keep a Truck moving. Finding a good mechanic is not an
easy task but it is necessary in order for you to have a profitable venture.

OLDER TRUCK VS NEWER TRUCK

The age-old question of buying a new truck versus an old truck is a touchy subject and I tend
to leave it up to the person that is putting a small Fleet together. In my opinion I would rather
have a fleet that is Maybe 4 to 7 years old and have a good mechanic shop in place to service
my vehicles as this will keep costs down and keep drivers happy and moving at a steady
pace. Breakdowns are going to happen but as long as you got your maintenance team
together you should be okay.
WHEN DO YOU NEGOTIATE

Negotiating freight rates is a tricky endeavor, you have to get a feel for when to begin
negotiating freight rates because doing it at the wrong time can be the difference between you
getting business and actually pushing business away and ending the relationship prematurely.

I personally have two ways that I negotiate rates, the first way that I negotiate rates is on a
non dedicated route where I basically quote a rate from point A to point B and back and it is
generally from 3.90 to 5.00 per mile.

When it is a dedicated route meaning that the freight will be on a regular basis I generally try
to be fairly liberal on the rate per mile, the reason being is that my truck will be sitting much
less than if I was on a non dedicated route.

So the lesson for this is to judge the situation wisely and then quote a fair rate that will be
beneficial to both you and the shipper or manufacturer and you will have more than enough
business to handle far into the future.

HIRE A REPRESENTATIVE

Most people that Venture into starting a fleet never consider having a representative to handle
most of your if not all negotiations on your behalf. I suggest that you higher a representative
that will more than likely work off of commissions meaning that if he doesn't land any business
or get you a fair rate he does not get any compensation.

This person will work vigorously to get high paying freight and good paying lanes so that he
can get a handsome compensation for his work. A lot of times owners of small trucking
companies and big trucking companies alike try to go this route by themselves and find that
building personal relationships is a task that is best left for someone a lot more professional
and perceptive to the needs of shippers and manufacturers in general.

I suggest that you go about hiring a representative to do this work for you because you will
find that in the long run it will be highly beneficial to you and your company.

Please contact us for a free, no obligation consultation if you want to get started on the road to
building a successful small fleet.

THANK YOU

Michael J. Blackwell
www.model-diamond.org