1.0 Executive Summary
The purpose of this business plan is to raise $350,000 for the development of a trucking and transportation company while showcasing the expected financials and operations over the next three years. Trucking Service, Inc. (“the Company”) is a Houston, Texas based corporation that will provide long and short haul transportation services to customers in its targeted market. The Company was founded by John Doe.
1.1 The Services
The Company will generate substantial revenues from the ongoing transportation of merchandise on behalf of retailers, wholesalers, and distributors. At the onset of operations, Trucking Service, Inc. intends to directly acquire five trucks with the capital sought in this document while concurrently leasing one truck. The Company anticipates that each vehicle will travel 12,000 miles per month. Furthermore, the business expects that it will receive fees of $2.00 per mile.
At this time, Management is sourcing the trucks that it will both purchase and lease in order to provide services to its customer base. The business will also develop third party relationships with freight brokerages within this market in order to ensure that the business is able to operate at 100% capacity at all times.
The third section of the business plan will further describe the services offered by the Trucking Service.
1.2 Financing
Mr. Doe is seeking to raise $350,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 5% fixed interest rate. The financing will be used for the following:
- Direct acquisition of five trucks.
- Location development.
- Furniture, fixtures, and equipment purchases
- General working capital
Mr. Doe will contribute $50,000 to the venture. In the future, the Company would be an excellent candidate for a working capital line of credit or business expansion loan given the large tangible asset base and highly predictable streams of revenue generated. However, this business plan assumes that no further capital will be used during the first five years of operation and that all growth will be financed with the retained earnings of the business.
1.3 Mission Statement
Trucking Service’s mission is to become the recognized leader in its targeted market for long and short haul trucking and transportation services.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the transportation industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financial results of the business during this period:
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target individuals and businesses within the target market while concurrently acquiring additional trucks/vehicles for transportation services.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Trucking Service, Inc. The Company is registered as a corporation in the State of Texas.
2.2 Required Funds
At this time, the Trucking Service requires $350,000 of debt funds. Below is a breakdown of how these funds will be used:
.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Trucking Service, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Trucking Service.
Based on historical numbers, the business could fetch a sales premium of up to 6 times earnings. It should be noted that Mr. Doe intends to operate this business for a significant period of time, and a potential exit strategy would not be executed for at least five to seven years.
3.0 Operations
As stated in the executive summary, the Company will operate with six trucks at the start of business operations. The business will be able to transportation merchandise throughout the entirety of the United States. In order to ensure that full capacity is reached quickly, the Company will partner with freight brokerages that will call upon Trucking Service, Inc. in order to have specific orders fulfilled. Mr. Doe anticipates that the business will reach profitability quickly given the enormous demand for freight transportation at this time (which will be further discussed in the next section of the business plan).
In regards to drivers, the Company will generally directly hire drivers to work for the business. Approximately 15% of the Company’s workforce will be independently contracted, which has been factored into the business’ cost of services.
Moving forward, the Company intends to acquire one new truck in Year 2 and Year 3 of operation. The business will use its retained earnings to acquire these vehicles.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the transportation industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Currently, the economic climate is uncertain. The pandemic stemming from Covid-19 has created a substantial amount of turmoil within the capital markets. It is expected that a prolonged economic recession will occur given that numerous businesses are being forced to remain closed for an indefinite period of time (while concurrently having their respective employees remain at home). However, central banks around the world have taken aggressive steps in order to ensure the free flow of capital into financial institutions. This is expected to greatly blunt the economic issues that will arise from this public health matter.
However, the pandemic has caused a massive spike in the demand for transportation services. As more people are working from home, the demand for delivery of merchandise has increased considerably. It is fully expected that this public health matter will permanently change the way that people work with more individuals indicating that they intend to work from home even once the pandemic subsides. This trend will allow for continued and ongoing demand for freight transportation and related services moving forward.
4.2 Industry Analysis
Fright transportation is one of the country’s highest gross industries. Given that the United States has a large landmass and highly developed interstate infrastructure, transportation via truck is the most economically viable way of transporting merchandise. Each year, nearly $1.3 trillion is spent on freight transportation and logistics. The industry, as a whole, employs nearly 7.8 million people.
Over the next twenty years, it is expected that there will be a number of changes that face the industry. Foremost, over the next ten years, many more large scale trucks and delivery vehicles will operate on electric motors rather than combustion engines. This is expected to greatly improve the gross margins of trucking companies given that there will be far less volatility in regards to fuel prices (which fluctuate on a number of factors including demand and political stability within oil producing nations).
4.3 Customer Profile
Trucking Service, given its planned operating infrastructure, will be able to provide services to any company that requires transportation of merchandise throughout the country. As discussed earlier, the business intends to work closely with freight brokerages, retailers, wholesalers, and product distributors. It should be noted that the Company will also be able to provide its services to individuals that are relocating on a local, regional, or long distance basis. The business anticipates that approximately 10% of its customers will be individuals that are in need of these services.
4.4 Competition
The ongoing competitive issues that the Company will face are moderate. Given the massive demand for trucking and transportation services in the United States, the Company is in strong position to offer its services on both a short haul and long haul basis. Additionally, the Company intends to retain a significant competitive advantage by maintaining a low cost operating and overhead infrastructure. This will allow Trucking Service, Inc. to remain profitable and cash flow positive at all times despite any volatility that occurs with the pricing of diesel fuels.
5.0 Marketing Plan
Trucking Service intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Trucking Service.
5.1 Marketing Objectives
- Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
- Establish relationships with freight brokerages within the targeted market.
- Implement a localized marketing campaign that targets individuals that are moving to a different residence.
5.2 Revenue Overview
5.3 Marketing Strategies
The Company will use a number of marketing strategies in order to ensure that its operational capacity remains at near 100% at all times. Foremost, Management has already begun to develop ongoing relationships with freight brokerages throughout Texas and in surrounding area markets. These brokerages have been made aware of the Company’s anticipated operational capacity. Mr. Doe fully anticipates that the business will receive substantial transportation orders from these entities once the vehicles have been acquired.
Mr. Doe will develop ongoing relationships with regional retailing chains, product wholesalers, and distributors.
Trucking Service, Inc. will also maintain an expansive online presence. Prior to launching revenue generating operations, the Company will have a web development firm create a state-of-the-art platform that showcases the services offered by the business. This website will be mobile friendly, and heavily search engine optimized. The SEO component of marketing operations will ensure that the website appears frequently when searches for regional trucking/transportation service providers are conducted.
The Company, to a more moderate extent, will maintain a presence on social media (with a focus on Facebook). The business’ social media pages will be geared towards individuals that need specialized freight transportation services.
The business will also maintain strong relationships with real estate agents and brokerages throughout the target market. As the Company will provide transportation services to individuals that are relocating, Mr. Doe sees a substantial opportunity to foster these relationships with real estate professionals.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
The Company has based its proforma financial statements on the following:
- Trucking Service will have an annual revenue growth rate of 16% per year.
- The Owner will acquire $350,000 of debt funds to develop the business.
- The loan will have a 10 year term with a 5% interest rate.
7.2 Sensitivity Analysis
The Company’s revenues are sensitive to many external factors. Should the cost of oil increase significantly, Management fully expects that its bottom line income will decrease. However, the Company has priced its services so that increases in the price of oil will not severely impact the Company’s ability to operate both profitably and cash flow positive. In the event of a dramatic increase in price, Management will seek to increase the price of its freight trucking services to reflect the higher transportation costs.
7.3 Source of Funds
7.4 Profit and Loss Statements
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
Appendix A – SWOT Analysis
Strengths
- Economically insulated business as certain businesses are going to continue to need ongoing transportation of merchandise throughout the United States.
- High gross margins from ongoing transportation services.
- Recurring streams of revenue on a monthly basis via established accounts.
- The ability to partner with freight brokerages in order to ensure 100% use of trucks at all times.
- An owner-operator (John Doe) that has extensive experience in the transportation and logistics management industry.
- Very strong demand for transportation services given that more people are remaining at home and are making significant online purchases.
Weaknesses
- Many regulatory and compliance issues.
- Profitability may fluctuate as a function of energy prices.
Opportunities
- Expansion of the business to maintain several staff and independently-contracted drivers.
- Attract additional equity capital from private equity firms and angel investors.
- Development of additional locations in economically viable markets throughout the United States.
Threats
- Many other businesses targeting the same client base.
- Changes in regulations could impact the way that the Company conducts business (limited risk at this time).