Contents
General Motor Freight Trucking Business Plan
Timely Trucking is a new dry van trucking business based in Portland, Oregon founded by entrepreneur Jim Kerrigan. It will serve businesses in the Pacific Northwest (expanding to include Washington, Oregon, Idaho, Montana, and Wyoming) with freight hauling and logistics management services. The business will develop a reputation for on-time and accurate service, along with sophisticated web and software functionality for seamless scheduling with clients. The business will be managed by CEO Jim Kerrigan and a Chief Operating Officer.
Timely Trucking can be launched for about $700,000, primarily invested by Jim Kerrigan and some partners. It will start with three 18-wheeler trucks and expand to eight by the third year, with auto loans financing the expansion. With gross margins of around 60%, the business will generate significant profit by the end of the third year as it scales up.
In the long term, the business will aim to expand to other locations in the Northwest and add refrigerated and temperature-controlled trailers. The ultimate goal is to position the business for sale to a national freight-hauling service interested in expanding or adding operations in the Northwest.
Timely Trucking aims to provide truck-based distribution services to businesses in the Northwest United States. During the first three years, Timely Trucking plans to achieve the following objectives:
– Establish bases in Seattle, Spokane, Portland, Cheyenne, Boise, and Billings
– Purchase 8 18-wheeler trucks with dry van trailers
– Hire 10 full-time truck drivers
– Achieve strong annual revenue based on 1.2 million miles of hauling in the third year
The mission of Timely Trucking is to simplify the distribution of goods for Northwestern businesses by operating efficiently and reliably. This will be accomplished through effective management of logistics and on-time, accurate deliveries in partnership with distribution centers and warehousing businesses.
The key factors for success in the trucking industry include robust communication systems, setting realistic delivery schedules, hiring and retaining safe drivers, and understanding clients’ needs to develop long-term relationships.
Timely Trucking is a startup truck company based in Portland, Oregon. It will provide trucking and logistics management solutions for businesses in Oregon, Washington, Idaho, Montana, and Wyoming. The business will operate in partnership with distribution centers, warehouses, and wholesalers to transport freight from suppliers to manufacturers, distributors, and retailers.
Timely Trucking was founded by Jim Kerrigan, who previously owned a warehousing business. During the pre-launch phase, Timely Trucking operates as a sole proprietorship but will be reclassified as a limited liability company to accommodate partnerships. Outside investors will receive 20% ownership shares.
The start-up expenses for Timely Trucking include basic set-up costs, such as stationery, office rent, computer equipment, marketing materials, legal consultation fees, insurance premiums, and licenses/permits. The business will also allocate cash for operational expenses and maintain cash reserves.
Assets for Timely Trucking include office supplies, accounting software, three new 18-wheelers, forklifts, repair equipment, satellite-tracking equipment, and office furniture. By owning the trucks, Timely Trucking can ensure better control over its service and maintain its commitment to timely deliveries.
| Start-up | |
| Requirements | |
| Start-up Expenses | |
| Legal | $5,000 |
| Stationery | $3,000 |
| Insurance | $10,000 |
| Rent | $12,000 |
| Computer | $3,000 |
| Licenses and Permits | $5,000 |
| Website Development | $20,000 |
| Brochures | $5,000 |
| Total Start-up Expenses | $63,000 |
| Start-up Assets | |
| Cash Required | $90,000 |
| Other Current Assets | $20,000 |
| Long-term Assets | $550,000 |
| Total Assets | $660,000 |
| Total Requirements | $723,000 |
Services
Timely Trucking offers the following services for businesses in the Northwest:
- Pick-up and delivery of goods with a minimum per-delivery weight of 20,000 lbs from and to locations in its geographic range by 18-wheeler trucks hauling dry van trailers
- Both “less than a truck load” and “truck load” services
- Online tracking information detailing the location of all GPS-tagged trucks and the status of deliveries, including expected arrival times for pick-up or delivery
- Phone support for all customer questions, delivery changes, and scheduling
- Preferred client services including online accounts, regular schedules of shipping, or linking of client order information directly to Timely Trucking’s scheduling software to allow for seamless logistics
To maintain its competitiveness in its core services, Timely Trucking does NOT offer:
- Storage or warehousing of goods awaiting delivery (goods can remain in storage in trucks for short periods, but at relatively high cost to customers)
- Packaging and crating
- Flat bed hauling
In the future, Timely Trucking will add:
- Temperature-controlled shipping to expand the range of customers Timely can appeal to
Trucks are operated by qualified and well-trained drivers with spotless records. Drivers are safety trained and re-tested for knowledge of laws as they change. A dedicated suite of software and communication systems allows for the logistical management mentioned above.
Market Analysis Summary
The American commercial trucking industry serves as a key link between raw material suppliers, manufacturers, wholesalers, distributors, and retailers in most industries. According to the American Trucking Association, the industry includes dry van, flatbed, refrigerated and bulk/tank trucking over short-haul (up to 100 miles), medium-haul (100 to 250 miles), and long-haul (250 miles and up).
Timely Trucking will compete in the market for medium and long haul dry van trucking in the American Northwest. This market serves businesses ranging from the packaged goods/grocery industry to the clothing industry to high-tech equipment, as well as commercial relocations.
Customers requiring frequent dry van shipping generally have the appropriate-sized loading dock for the standard 9′ high, 8′ 6″ wide, 53′ length dry van cargo area.
Market Segmentation
The market analysis table covers likely market segments within the five states Timely Trucking will serve.
Raw Material Suppliers ship large quantities of materials to large manufacturers in the northwestern states. These materials generally do not require refrigeration or temperature control. Manufacturers maintain on-site storage for these supplies and generally have some leeway as to when deliveries can be received, except when projections are mistaken and supplies drop low. Packaging supplies also must be shipped to manufacturers and are included in this group.
Manufacturers often outsource the distribution of their goods to businesses that specialize in serving one type of retailer or business. Their packaged goods are often shipped to only one wholesaler/distributor, creating regular business in shipping between the two locations.
Wholesalers/Distributors that serve large retailers assemble truckloads of goods from the many manufacturers they serve. While they often have their own trucks or distribution means, some of these firms do not either because they are smaller or because they attempt to limit their investment in assets. Others may require additional trucking support when they are operating at capacity but not prepared to expand their shipping capacity.
Market Analysis
| Market Analysis | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Potential Customers | Growth | CAGR | |||||
| Raw Materials Suppliers | 1% | 1,500 | 1,515 | 1,530 | 1,545 | 1,560 | 0.99% |
| Manufacturers | 1% | 2,500 | 2,525 | 2,550 | 2,576 | 2,602 | 1.00% |
| Wholesalers/Distributors | 1% | 1,000 | 1,010 | 1,020 | 1,030 | 1,040 | 0.99% |
| Total | 1.00% | 5,000 | 5,050 | 5,100 | 5,151 | 5,202 | 1.00% |
Target Market Segment Strategy
Timely Trucking will focus on manufacturers in Washington and Oregon states initially, and then expand to the entire five-state region after the first year. By serving manufacturers, Timely Trucking can offer affordable shipping solutions for new and growing manufacturers instead of them having to purchase their own trucks.
Raw material suppliers may require specific types of trucking, which Timely Trucking will not offer initially. Wholesalers often have their own trucks. By focusing on manufacturers first, Timely Trucking can be introduced to suppliers and distributors without engaging in full marketing campaigns to these segments.
Service Business Analysis
According to Hoovers:
– The U.S. trucking industry includes about 110,000 for-hire carriers and 350,000 independent owner-operators.
– Total industry revenue is nearly $200 billion.
– Major players in the industry include YRC Worldwide, Swift Transportation, JB Hunt, and Con-way.
– The industry is fragmented, with the 50 largest companies accounting for less than 30% of the market.
The industry includes carriers using commercial motor vehicles and excludes couriers and private carriers.
Hoover’s states that demand in the industry is driven by consumer spending and manufacturing output. Efficient operations are crucial for profitability. Large companies have advantages in account relationships, fuel purchasing, fleet size, and driver access. Small operations can compete effectively by providing quick turnaround, serving a local market, or transporting oversized goods. Average annual revenue per employee is $135,000.
The industry is divided into truckload (TL) shipments, which dedicate trailers to a single shipper’s cargo, and less-than-truckload (LTL) shipments, which transport consolidated cargo from multiple shippers to multiple delivery points.
Competition and Buying Patterns
In addition to competing with other trucking companies, including national carriers, Timely Trucking will compete with rail and air cargo transportation. However, trucking has an advantage due to the distances it intends to travel and the limited rail lines in the northwestern states.
Shippers choose trucking companies based on their on-time record, price, and ability to provide logistics expertise and additional services.
Web Plan Summary
The Timely Trucking website will provide basic information for internet searches and serve as an account management portal for clients. The website will explain the services and background of the company in detail, with specific calls to action for users to contact a salesperson or provide their information for further communication. Clients will have access to up-to-date information about their deliveries, and preferred service subscribers will enjoy additional features.
Website Marketing Strategy
Timely Trucking will promote its website through search engine optimization, a Google Adwords campaign, profiles and listings on business and trucking company databases, and by including the website URL in brochures and advertisements.
Development Requirements
The website will consist of the following components:
– Homepage
– About Us
– Contact
– Services
– Delivery Tracking (Form, Map, Statistics)
– Account Management (Login, Account Profile, Scheduling, Alerts)
– Back End (Database Entry, Billing Interface)
The website will be developed over the course of three months with an estimated cost of $20,000.
Strategy and Implementation Summary
Timely Trucking’s strategy will focus on establishing a strong software/web component, maintaining an on-time reputation, and targeting manufacturers in Oregon and Washington as the primary marketing segment.
Competitive Edge
Timely Trucking will differentiate itself through its commitment to on-time deliveries. The company’s software systems, communication methods, operational choices, and marketing materials will all align with this goal. By providing a more reliable on-time delivery service than competitors, Timely Trucking aims to attract and retain customers.
Marketing Strategy
Timely Trucking aims to create awareness in Oregon and Washington during its first year, followed by Idaho, Wyoming, and Montana in subsequent years. The company will position itself as a carrier with the best on-time record and advanced logistics management systems. Smaller businesses may prefer working with Timely Trucking as they may receive more personalized attention than with larger carriers.
Sales Strategy
Jim Kerrigan will manage sales for Timely Trucking, establishing relationships with clients through understanding their shipping needs. The company will prospect small and new businesses in the manufacturing industry initially.
Estimated costs for sales include fuel (25% based on a 10 mpg estimate for loaded trucks) and labor (25% based on a $16/hour rate). Preferred client accounts will have smaller cost of sales, accounting only for set-up and maintenance labor. The company projects a 90% retention rate for preferred client accounts.
Sales Forecast
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Unit Sales | |||
| Miles of Shipping | 600,139 | 870,201 | 1,261,792 |
| Preferred Client Accounts | 88 | 264 | 528 |
| Total Unit Sales | 600,227 | 870,465 | 1,262,320 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Miles of Shipping | $1.30 | $1.35 | $1.41 |
| Preferred Client Accounts | $1,000.00 | $1,050.00 | $1,100.00 |
| Sales | |||
| Miles of Shipping | $780,180 | $1,176,512 | $1,774,180 |
| Preferred Client Accounts | $88,000 | $277,200 | $580,800 |
| Total Sales | $868,180 | $1,453,712 | $2,354,980 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Miles of Shipping | $0.65 | $0.68 | $0.70 |
| Preferred Client Accounts | $100.00 | $105.00 | $110.00 |
| Direct Cost of Sales | |||
| Miles of Shipping | $390,090 | $588,256 | $887,090 |
| Preferred Client Accounts | $8,800 | $27,720 | $58,080 |
| Subtotal Direct Cost of Sales | $398,890 | $615,976 | $945,170 |
Milestones
The milestones table covers the early marketing activities described in the marketing strategy summary. The first two milestones (website and brochure) are budgeted under start-up expenses and the remainder are budgeted under the first year marketing budget for operations.
Milestones
Management Summary
Jim Kerrigan, CEO, will manage the strategic direction, sales, and marketing of Timely Trucking. He gained experience in all these areas through his previous warehousing business, which he successfully sold after fifteen years.
The Chief Operating Officer position will be filled by a partner who will receive up to 10% of shares in the business upon meeting certain milestones. Additional shares will be given if the COO contributes to the business financially. The COO will oversee operations, finances, human resources, and procurement.
The business will also require an administrator/dispatch center operator and a sales/marketing support associate. These individuals will be managed by the COO and the CEO, respectively. Initially, three part-time truck drivers will be hired.
Personnel Plan
Truck driver salary listed here covers only non-client job-related wages. This includes training, repair work, returns from deliveries, and other required empty truck driving. It is expected that this will be less than 20% of driver wages. Truck driver positions will grow from three part-time at launch to four full-time by the end of year 1, eight full-time by the end of year 2, and 10 full-time by the end of year 3. There will be more full-time truck drivers than trucks as the business aims to utilize truck capacity for at least 60 hours per week and limit driver overtime.
The sales/marketing associate will be hired in the fourth month after the CEO personally handles all sales and marketing operations for the first three months.
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