Wondering how to start a moving company? We can’t blame you… There’s a lot of money to be made in the transportation business. The average family today moves more often than they did just a few decades ago. The moving and storage industry is one of the most secure and diverse companies in the country, with steady growth over the past five years, despite the recent changes to our economy from the pandemic. From independently-owned, “mom-and-pop” shops to agencies and multi-million dollar companies, moving companies that offer local, long-distance, and international moving and relocation services are in one of the most secure and profitable niches in the transportation industry.
Keep reading and we will be taking you through the steps of starting your moving business from forming a legal entity and getting the right licensing and permits, to buying supplies and starting marketing and sales efforts to get your first customers! Hopefully, this information will help you understand what steps have to be taken to start your company and ensure that you are set up for success when you start planning!
How to Start a Moving Company – Types of Moving Companies
There are a lot of different types of moving companies out there. There are local moving companies who haul household items for people who are just moving across town, there are long-distance movers who move people cross-state, and there are international companies who help people relocate to other countries. There are moving companies that specialize in shipping only in specialized areas of transport, like automotive transportation companies, freight transportation companies, etc.
If you are offering only local services, you will have city and state licenses and permits that you need to have in order to legally move items for people locally, and state and federal licenses and permits that you will need to move items across state lines. But what about planning your company? What about buying capital for your company? What about forming a legal entity for your business and picking an ideal business location? And then marketing your services to get your first customers?
While your business will undoubtedly may face challenges along the road that you have no control over like the Covid-19 pandemic, there are a few steps you can take ahead of time to make you of things beforehand to get everything off to a good start:
Step One – Create a Business Plan for Your Moving Company
Did you know that companies that create a business plan have a 19% higher success rate than companies that don’t? It’s true. There is a famous quote by Ben Franklin that says, “If You Fail to Plan, You Are Planning to Fail.” Millions have found out the hard way that this is true.
In short, building a successful moving company takes careful planning. A business plan is a roadmap that you create for your moving business in the form of a formal document. A business plan includes market research, financial projections, information on the internal structure of your business, and plans on how to market and sell your product.
Here is an outline of the parts of a business plan so you can get familiar with them ahead of time, and get your moving company off to the right start:
- Executive Summary: The executive summary should state the name of your moving company, your company’s purpose, information about your moving services, your marketing plans, your target audience analysis, and your financial projections. In short, the executive summary is a summary of all of the other portions of the business plan.
- Company Description: What your moving company does, the products or services your moving company offers, what consumer problem your moving company solves, who your ideal prospects are, what competitive advantages your moving company has over your competitors, and any strategic partnerships you may be forming should all be outlined in this section.
- Market Analysis: What are your competitors doing in the moving business to get leads? What are the strengths of your competitors? What are your competitors’ weaknesses? Are there market trends and themes occurring in the moving business? Why are your successful moving company competitors successful? Can your moving company do what the competitors are doing? (and do it better?) Do your competitors have any strategic advantages, such as a good location or other benefits?
- Organization and Management: This section should include information about your company’s Legal Structure (LLC, C-Corp, S-Corp, etc.) and an organizational chart to give a visible representation of the internal structure of your moving business.
- Product or Service Offered: This section should contain a description of the moving service or moving services you offer, the price of your moving services, what benefits your moving service offers your customer, and an explanation of the product life cycle of moving services, along with plans for the handling intellectual property, copyright, patent filings, etc., and lastly a discussion of all research and development done on your market and your company.
- Marketing and Sales: In this section, you’ll want to have information on how you will market your moving company toward your ideal moving prospects, a description of your sales process, an outline of your marketing and sales budget, your marketing and sales goals, and an outline of your pricing strategy for the moving services you will offer.
- Financing Request: If you are planning to borrow money or ask for funding from other sources, this section should outline the amount of funding you will need to start your moving company, how you intend to use the funding, the type of funding you plan on getting, and any future financial plans that you have for your moving company.
- Financial Projections: This section of your business plan should contain income statements for the past 3 to 5 years, your balance sheets for the past 3 to 5 years, cash flow statements for the past 3 to 5 years, and any collateral that you have available, along with any financial projections you can calculate for the next 3 years, and any budgeted capital expenditures.
It’s a good idea to put some thought into the pricing strategy for your moving company ahead of time. Will you offer moving discounts? Will you offer seasonal sales? Will you offer referral discounts? You can do a breakeven analysis to calculate your profitability once you have a pricing strategy in place.
Is not a bad idea to think out a contingency plan just in case you run into any roadblocks along the way. Think of any problems that you might run into with your business, your clients, or your location. Thinking all this out ahead of time will only help you prepare for the road ahead. </p>
Step Two – Name Your Moving Company and Buy a Website
If you haven’t already, come up with an acceptable name for your moving company. For the sake of businesses in the online world, it’s always a good idea to find a business name that has a relevant keyword or keywords in the title. Everything online is found by search engines using keywords. Not to say that you can’t have a branded title for your moving company like Two Men and a Truck does, but if you have a keyword in the title, for example, “Smith’s Moving Company,” you’re just going to get more points for visibility in the search engines because they will be able to tell what your site is about.
Buying a website is very cheap nowadays with all of the hosting companies out there competing. If you search online when you are ready to buy a website, you will come up with a ton of reviews on the best hosting companies. For the most part, what you’re looking for is a hosting company that has almost 100% uptime and reasonable prices, and it helps if you can find one with security features, premium plans, etc., just in case you end up not having enough time and need your hosting managed some at some point down the road.
Step Three – Get Licenses and Permits for Your Moving Company
If you plan to offer moving services across state lines, you will need to apply for a license from the US Department of Transportation (USDOT). The USDOT requires this because they need to have a way to identify your carriers while you’re on the road in case they need to collect information from you in an audit or compliance review, an inspection, a crash investigation, and other cases where they may need to collect information for any other types of data sets.
Depending on the type of vehicle you are starting a moving company with, you may require extra permits to use your moving truck. Larger trucks for auto transport, for instance, require overweight or oversized load permits, but this requirement varies by state, so check with your local state office to find out if your state requires one. Another thing that you might want to look into ahead of time if you have a larger vehicle is a commercial driver’s license.
Depending on what area you are from, you may need to have several licenses and permits to operate your moving company legally. Your local city and state may have licenses or permits that you need to get to operate a moving company. Local ordinances usually require you to have a permit if you are moving household goods, but check your state website just to be sure.
Step Four – Register Your Moving Company as a Legal Entity
According to this report by the National Association of Small Businesses, the majority of small businesses formed are LLCs, followed by S-corporations, then corporations, and then sole proprietorships and partnerships.
Choosing the right business structure for your moving company is one of the most crucial decisions you make, and you may end up appreciating the fact that you’ve got it out of the way early on once you get going. The structure of your moving business will come into play in many situations from taxes to liability, to fundraising, paperwork, registration, etc.
It pays to have your business entity decided on and set up from the beginning so that you can have consistency from the very beginning on all of your branding and paperwork. Each business structure has its own unique characteristics and pros and cons that come with it.
Here is a quick list of legal business entities for your moving company so you can get acquainted with the pros and cons of each one:
Types of Legal Business Entities for Your Moving Company
Sole Proprietorship Pros and Cons
A sole proprietorship is one of the easiest business entities to form for your moving company. In a sole proprietorship, you are responsible for all of your moving company’s profits and debts.
Sole Proprietorship Pros
- Easy to Set Up
- Very Affordable
- Business Tax Deductions
- Easy to Get Out of
Sole Proprietorship Cons
- Liable for All Debts and Obligations
- Personal Assets Can Be Seized
- Personal Assets Can Be Seized
- Business Ceases Operation When You Die
- to Sell Stocks
Partnership Pros and Cons
A partnership is an option if you and a business partner want to set up a moving company together. There are several different types of partnerships such as; limited partnership, limited liability partnership, general partnership, and limited liability limited partnership. There are variances between partnerships, but mainly with the personal liability of each partner.
- Easy to Maintain Personal Assets
- Cannot Be Used to Satisfy Partnership Debts
- Not Subject to Double Taxation
- Limited Liability Can Be Difficult and Expensive to Create
- Partnership Agreements Are Needed for Death or Exit of a Partnership
Corporation Pros and Cons
There are many types of corporations, including C corporations, S corporations, and nonprofit corporations. Each corporation type may have specific pros and cons that come with them, but in general, one of the main benefits of incorporating is the inability to be held personally liable for company debts.
- Personal Assets Not at Risk
- and Hard to Maintain
- Annual Reports Have to Be Filed
- Board of Directors Oversees the Company
- Must-have Bylaws That Government Company Operation
- Subject to Double Taxation
Limited Liability Company Pros and Cons
A limited liability company or LLC offers a lot of the same benefits that a corporation or partnership offers without some of the disadvantages. In LLCs, the owners’ personal liabilities are limited when it comes to company debts and obligations, and when taxes are reported, you will not be subject to double taxation because they’re done on your income taxes. Operating and maintaining LLC is also more expensive than running a sole proprietorship.
Limited Liability Company Pros
- Easy Startup and Upkeep
- Not Subject to Double Taxation
- Personal Liability Is Limited
- Management Flexibility
Limited Liability Company Cons
- More Costly to File and Maintain
- Hard to Transfer Ownership
Step Five – Register Your Moving Company for Taxes
For your moving company to be able to employ workers, you need to have an employer identification number. An employer identification number is a unique number that you get from the IRS when you sign up to have your business registered. You can easily apply online for an EIN, and even if you don’t have employees, you will still need to apply for an EIN to open a bank account for your business or file business taxes to get the credits and deductions that you deserve.
Your moving company will be expected to file both federal and state taxes. As you probably already know, state taxes will vary by state, and, just to get you acquainted, some of your federal taxes include employment tax, income tax, self-employment tax, and possibly excise tax. (when applicable).
Step Six – Get Your Moving Company Insured
To start a moving company, you’re going to need liability and cargo insurance at a bare minimum. Contact your insurance company to find out how much they charge for insurance and how much coverage is going to be for damages and liability. Be sure to sit down and go over your insurance documents with your insurance agent, and make sure that everything is acceptable before you get into the contract.
In addition, it might be a good idea ahead of time to ask your state agency or business attorney if you have one about any minimums for cargo insurance, auto insurance, and general liability if you’re going to be moving freight, automobiles, etc.
Step Seven – Find an Ideal Location for Your Moving Company
Finding an ideal location for a moving company is one of the steps you should take before buying equipment, trucks, and other moving supplies. Are you going to start your moving company from home? From a home office? From a warehouse? A storage unit? There are a lot of options out there available, but ideally, from the start, if you want to go with something affordable that is not going to be a financial burden in your start-up stages when you need to make more important moves with your money.
Step Eight – Purchase Moving Equipment for Your Moving Company
Purchasing moving equipment for your moving company is necessary because when you are moving people, household items, etc. because you have to take special care in handling them and transporting them. There is a ton of equipment that you can purchase for your moving company, but to keep it down to the bare minimum, you should have dollies, furniture, belts, ropes, moving pads, (or thick blankets), and/or other packaging and wrapping materials. If you are a thrifty shopper, you can get all the supplies and rent a dolly for under $300. Once you have everything together, it’s time to start marketing your company and getting some sales leads!
Step Nine – Get a Business Phone Number for Your Moving Company
Getting a business phone number for your moving company gives you a professional look and lets scholars know when they call your company that you own an actual business. There are ways around this, for instance, in cases where you may have an extra phone line that you can reuse, but for the most part, business phone numbers will cost you around $20 a month, so they’re not a big deal financially.
Step Ten – Marketing and Sales to Get Moving Leads!
Now that you got everything done, it’s time to start marketing and sales efforts to get moving leads. You can get local moving leads by advertising on Craigslist, your local newspaper, your website, Google ads, or buying moving leads— the possibilities are endless. There are a ton of ways to get customers out there. After you start getting customers, all you have to do is treat them right and the word will get around.
In addition, once you are up and running, consider getting an email and phone number in your initial lead capture, so that you can contact your moving customers after the move and see how they’re doing and ask them for a review for your business, maybe even for a referral. Even though reviews only account for about 7% of your local SEO score when it comes to ranking, they look great on you when people are looking for reviews to see how your moving business will handle their household goods.
We hope that this blog has got you up to speed on how to start a moving company. Hopefully, this information will help you be able to take the first steps to get your moving company off to a good start. Starting a moving company is just like starting anything else that you want to keep in life. It takes planning and special care to get it right.
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