When you are starting your own trucking business, there are many decisions both big and small that need to be made before you can haul your first load. This is the first in a six-part series covering the key financial considerations for starting your own trucking business.
Financial Consideration 1: Acquiring Equipment
Acquiring trucking equipment has to be one of the first things you do when starting your own trucking business because without it you can’t haul any loads. Depending on your financial situation and business plan you have a few options to acquire what you need. From paying for the equipment all in cash up front to leasing or financing the equipment, each option has its own set of pluses and minuses to consider.
With all cash up front, you can certainly save yourself some money in the long run since all your other options for financing include some amount of interest payment. However, you need to consider what if any cost you will incur by not having access to those funds since they will be tied up in the equipment. Will you still have access to the funds you need to pay for fuel, maintenance and all the other financial considerations requiring in starting and running a trucking business?
Leasing and financing are somewhat similar in the fact that you need to partner with a financial company to help you acquire the equipment. With both options, you will need to sign a contract for a specified period in which you will make payments, at a specified amount. A few key differences between the two is going to be the amount of the payment, and what happens at the end of the contract since with leasing you will need to return the equipment to the leasing company or negotiate terms to purchase it, and with financing, the equipment will be yours.
The most significant benefit to partnering with a finance company to either lease or finance your equipment is that you are not handing over a considerable sum of money at one time to acquire the equipment, possibly leaving you with limited funds to cover other expenses. There are also some tax benefits that can be realized based on the type of financing you choose.
Regardless of how you acquire your equipment to start your trucking business, the biggest factor needs to be how does that option fit with your overall financial plan. An excellent place to begin to determine which option is best for you is a company that offers several options including leasing and financing so they can listen to your needs and walk you through what might work best for you.