There are many opportunities for entrepreneurs looking to start a trucking business in South Africa. This is largely because many of the items that we use in our day-to-day life are transported by road. Examples include food and basic supplies, vehicles and building materials which are all hauled by trucking businesses.
To succeed in this lucrative but competitive industry you need an in-depth understanding of the industry and your numbers. Below we list the steps to starting a thriving business in this sector.
What you need to start
As part of your business’s setup process, it is useful to have a business plan that sets out your objectives and how they will be achieved. For your trucking business, you can include details such as the size of the fleet, how many drivers you will need and whether they will be full-time hires or freelancers.
Your business plan should also outline your costs, such as vehicle costs, vehicle registration and certifications, petrol, parking costs, and traffic fines. Other considerations are premises, including garage facilities for vehicles, as well as advertising and marketing.
A business owner looking to secure funding for a new venture has several options available to them, including:
- Bank loans
- Alternative lenders
- Private/VC funding
- Friends and family
The South African government also offers support for businesses in the road freight industry, namely the IDC Automotive and Transport Equipment Strategic Business Unit (SBU) which offers support and funding to businesses involved in developing the automotive industry.
All these options will require a business plan that demonstrates how revenue will be generated and the expected profit margin.
How trucking businesses make money
While there are many different types of trucking businesses out there, the way they make money remains mostly the same. Simply put, trucking companies are contracted by manufacturers and retailers contract to transport goods, the customer is then invoiced once the goods are delivered.
Making a profit in this industry is however not easy. In the face of stiff competition and rising costs business owners need to keep an eye on finances, more specifically, to know their rate-per-kilometre. This metric is important as it determines what you charge customers to generate a profit. Additionally, a competitive rate-per-kilometre can put you ahead of your competition.
The right accounting software can help business owners to track this metric, while also supporting accurate bookkeeping and financial management.
Business compliance requirements
To start, it’s beneficial to register your business with the CIPC. Other compliance requirements are with tax legislation through SARS is important, this includes VAT, PAYE, UIF and SDL.
Equally important are specific compliance requirements for trucking businesses, according to Arrive Alive they include:
- Vehicles are roadworthy and in possession of a COF (Certificate of Fitness);
- The vehicle does not exceed the permissible axle masses (No overloading);
- The load is secured before dispatching the vehicle;
- Pre-trip vehicle inspections are carried out;
- That drivers are trained, in possession of a PrDP (Professional Drivers Permit) and his/her licence is free of endorsements;
- All drivers receive regular medical examinations;
- If Transporting dangerous goods (DG) or hazardous chemicals (Hazchem), the vehicle is registered as a DG operator and the operator card or disc is displayed;
- Required documents for transporting goods in South Africa or Cross-Border are available for inspection by authorities.
- AARTO Amendment Bill, 2015 [B 38B-2015] responsible for: levying of penalties: traffic fines, overloading & impounding of vehicles, imposing demerit points.
All things considered starting a trucking business in South Africa is suitable for those with the skills, resources and financial know-how to navigate this sector.