What is a business plan?

• A business plan is a written description of a business’s future that conveys the business’s goals, strategies, potential problems and solutions, and organizational structure.
• Business plans are used to attract employees, prospect for new business, deal with suppliers, and to show to potential investors.
• A good business plan should include an executive summary, market analysis, management plan, and financial plan.

A business plan is a written description of a business’s future. It describes what the business plans to do and how they plan to do it. Business plans have a variety of purposes.. They are used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used to attract key employees, prospect for new business, deal with suppliers, or to understand how to manage a business better.

A business plan conveys a business’s goals, the strategies they’ll use to meet them, and potential problems that may confront the business, along with solutions to those problems. Business plans list the organizational structure of the business including titles and responsibilities. Business plans also list the amount of capital required to finance the business venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. Although there are various sub-sections that some businesses use, a business plan has four main elements:

1. Executive Summary — This area includes the company’s mission and vision statements, the objective of the business plan, and a company description. The executive summary should also include a summation of the other sections of the business plan as well as a discussion of the nature of the business and its location. This section is also where a business identifies their niche in the market and what advantages they have over the competition.
2. Market Analysis — The market analysis should describe in detail the potential of the service or product the business is offering as well as how they intend to create and/or develop their customer base. A market analysis should identify the customers, their demographics, industry trends, and who the company sees as their competition. The price/cost structure and how the business arrived at that figure should also be identified in this section. Most importantly, the market analysis should define how the business will reach their customers, i.e., direct marketing, advertising, sales calls, etc.
3. Management Plan — A plan is as good as the people who implement it. Particularly in the early stages of a company, investors tend to put more stock in the management of the company than the product or service offered. This section should list the company’s management team and key employees. It should include an organizational flowchart that breaks down the duties of the principal members, as well as biographies and brief job descriptions. If there are multiple owners or managers, it is also important to note the financial stake that each management member has in the company.
4. Financial Plan — Financial data and calculations are the make-or-break component of any business plan. This section includes the company’s current financial status as well as future projections. Also included in this section are a balance sheet, profit-and-loss statement, cashflow projections, and a break-even analysis. Whether the company is a start-up or an existing business, three-year and five-year projections should be included in this section as well. These projections should be on cash flow as well as profit and loss.

Creating a business plan is a serious process. Considerable thought should go into each section, as a business plan, regardless of the company’s size, can make or break the company. Business plans do not have a specific length and can vary in size from one or two pages up to a 100-page or longer presentation. The business owner must decide what to include in the business plan to present the business in a positive way to customers, investors, and the industry.

Business continuity planning

• In the case of unforeseeable events, a business continuity plan defines the necessary procedures that will ensure timely and orderly resumption of the business cycle.
• A business continuity plan does not deal directly with the disaster itself, it deals with the aftermath.
• The goal of a business continuity plan is to preserve and protect the essential elements of any company and maintain an acceptable level of operations throughout a crisis and afterward, as the company recovers.

Business continuity planning involves devising a plan that guards against disruption of a business in case of unforeseen events. A business continuity plan defines the necessary procedures that will ensure timely and orderly resumption of a business cycle through the ability to execute plans with little or no interruption to service or operations.

A business owner needs to be prepared. What will happen if the business is hit by a fire, flood, or cybersecurity breach? What will the company do if the owner or other key personnel die, or leave the company unexpectedly? What will the company do if a technological disaster hits, such as having all the business’s data and records wiped out by a computer malfunction or malicious attack?

More importantly, in the transportation industry, what will the business do if the owner or one of the drivers has a major accident, causing a loss of a vehicle or vehicles, total loss or damage of a customer’s load, or loss of life?

Yes, all of these things should be covered by insurance, but a business continuity plan does not deal directly with the disaster itself, it deals with the aftermath. Besides ensuring the health and safety of all personnel, the objectives of a business continuity plan should include minimizing interruption to the business’s ability to provide service. In a trucking company’s case, this could mean renting equipment or contracting another hauler to move the customer’s freight. Along with computer systems' protection from attack, a complete backup of the systems along with policies and procedures to enact post-attack are essential. In short, a business continuity plan should minimize financial loss, and provide for the resumption of critical operations within a specified time after a disaster or major incident.

The goal of a business continuity plan is to preserve and protect the essential elements of any company and maintain an acceptable level of operations throughout a crisis and afterward, as the company recovers.

It’s always easier to minimize risk than to recover from a setback. Those who prepare financial statements know that failure to identify risks correctly can have financial consequences severe enough to put a company out of business. It is only a small stretch, mostly common sense, to identify and minimize risks that could destroy a business regardless of the source. That is the underlying purpose of a business continuity plan.

Federal Motor Carrier Safety Regulations

The Federal Motor Carrier Safety Regulations (FMCSRs) are the federal regulations that set safety and operational standards for companies operating trucks, vans, buses, and other vehicles involved in interstate commerce. TheFMCSRs apply to drivers and companies operating commercial motor vehicles (CMVs).

CMVs are highly regulated by the U.S. Department of Transportation. Rules found in the FMCSRs include those regulating drivers’ work hours, vehicle inspections and maintenance, driver training and licensing, vehicle lease agreements, insurance, vehicle marking, and a variety of other topics. The rules are enforced by the Federal Motor Carrier Safety Administration (FMCSA) and its state partners.

The FMCSRs are found in the Code of Federal Regulations (CFR) under Title 49, which contains all regulations of the U.S. Department of Transportation. Within Title 49, the FMCSRs are found in Subtitle 3, Chapter III, Subchapter B, consisting of Parts 350 through 399. Other parts typically associated with motor carriers include Part 40, related to drug/alcohol testing, and Part 325, the noise emission standards. Parts 356 through 379 are regulations from the former Interstate Commerce Commission (ICC), now administered by the FMCSA and commonly referred to as “economic” or “commercial” regulations.

Though the FMCSRs apply only to interstate commerce (relating to cargo or passengers that cross state lines), many states adopt all or a portion of the FMCSRs and apply them to vehicles operating strictly within state boundaries.

Vision, values, and strategy

• A vision statement outlines the company’s future plans and goals and provides clear decision-making criteria.
• Core values are the beliefs that a company follows when taking action or making decisions.
• Corporate strategy is a definition of how a company will achieve its stated goals and objectives.

An integral part of business planning is how the vision statement and core values guide the planning process, and consequently the strategy to achieve short and long-term objectives. It is important to know the meaning of each concept.

Vision statement

A vision statement outlines what a company wants to be and where it wants to go. It concentrates on the future, it is a source of inspiration, it provides clear decision-making criteria, and it is timeless.

Core values

A company’s core values are the beliefs that the company lives by. Core values are the inner beliefs that are held by everyone within a company and should guide all employees in their actions and decisions. These values do not change over time and are what you collectively bring to work each day; not what the company is trying to become.

Strategy

Strategy refers to how a given objective will be achieved. Corporate strategy is a definition of how a corporation will achieve its stated goals and objectives. Corporate strategy defines the markets and businesses in which a company will operate. In the context of trucking, this could be defined as long-haul or regional, flatbed or dry van, dedicated or general. A corporate strategy is typically decided within the context of defining a company’s mission and vision.

There are several considerations to take into account when developing a corporate strategy. Consider the company’s growth, size and profitability goals, which markets they will compete in, and in which geographic areas. In the context of a trucking business, the corporate strategy could include how many trucks will be operating, what types of freight will be hauled, and what freight lanes will be operated in.

Business policies and procedures

• A policy and procedure manual should convey the organization’s purpose, philosophies, policies, and good business practices.
• A policy and procedure manual is a playbook that defines each employee’s role, where they should be, what they should be doing, and how their actions affect the success or failure of the company.
• Policies are different than rules which inform employees of what is acceptable and what is not.

Effective corporate policies and procedures convey a consistent understanding of the organization’s purpose, philosophies, policies, and good business practices to everyone involved. It provides employees with guidelines pertaining to their authority, responsibilities, and expectations. Policy and procedure manuals also promote consistency, improve efficiency, and increase overall profitability.

A policy and procedure manual could be seen as a playbook for your business. A playbook for a football team for example, tells every player what their responsibilities are for every play. If followed correctly, each player on the field knows where they should be, what they should be doing, and how their actions relate to and affect the total team’s success or failure. If everyone does their job, they make a touchdown. A policy and procedure manual should define each employee’s role, where they should be, what they should be doing, and how their actions apply to the continued success or failure of the company.

As a company grows, their policy and procedure manual may grow. It may be divided into sections such as Administration, Sales, Employment, Finance, Management, and Safety. The policies and procedures need to be clear, consistent, and current. A good playbook doesn’t say, “Just go down the field and I’ll throw you the ball.” A good policy and procedure manual doesn’t say, “Just show up at work and we’ll figure it out as we go.” With some careful thought and attention to detail, a policy and procedure manual will result in a “touchdown” for the business in employee satisfaction and continued profitability.

Policies and regulations

Company policy is often related to a strategic plan that defines the nature or the intent of the company’s purpose. An example is the difference between a truckload carrier and a less-than-truckload (LTL) carrier. A truckload carrier’s policy may be to transport shipments from origin to destination without any excessive handling and/or to consolidate that shipment with other shipments. An LTL carrier’s policy is just the opposite. They utilize a network of terminals that routinely load and unload shipments through a relay operation that mixes multiple shipments all destined to a similar regional area. Generally, neither one is competitively equipped to handle the other’s type of business. This is largely due to their functional policies, which strategically define and separate the two.

Another form of policy is used as a guideline for establishing boundaries and limits by which decisions are made. A “Manager of Maintenance” may be authorized through company policy to purchase parts, accessories, or tools necessary to keep the fleet running. However, a higher position in the organization will make the decision to purchase vehicles and other assets. This authority is set as company policy. This doesn’t mean that the Manager of Maintenance will not be allowed to have input into this type of purchase. A degree of discretion within the policy will allow the Manager of Maintenance to participate.

Most policies are written and enforced through an operational need to set standards and may be confused with rules. Rules are explicit orders that inform employees what is acceptable and what is not. No smoking on or in company property; personal vehicles must be parked behind the fence — these are examples of work rules.

Some policies in the workplace are created due to the consensus among management that the current state does not reflect the desired state. An example is, “All driver applicants must meet or exceed the minimal standards established in the Driver Qualification Policy to be considered for employment.”

More commonly, policies are applied to maintain a certain standard of quality in the workforce. Cargo handling policies, rider/passenger policies, and weapons in a company vehicle policy are examples of this type of policy. The important issue here is the enforcement of the policy.

Management may have a difficult time enforcing a policy if training, including an awareness of the characteristics of the situation that caused the policy, is not provided when the policy is implemented. In cases such as these, it may be necessary to obtain a signed statement from the employee acknowledging receipt of the training and/or awareness of the company policy. Legal consultation is advised if any uncertainty exists with the administration of discipline due to a violation of company policy.

See Safety Management Cycle Policies and procedures.

Developing action plans

• Operational objectives are the clearly established focal point of any operational plan or action plan.
• Action plans are the means by which the operational plan is accomplished.
• Action plans should state the objective, action steps, accountability, schedule, resources, and feedback mechanisms of the plan.

Operational objectives have been clearly established as the focal point of any operational plan or action plan. Action plans define the results desired in specific, measurable terms.

Action plans

Action plans are the specific means by which operational objectives are accomplished. Action plans incorporate these five factors:

1. The specific steps or actions required.
2. Who will be held accountable for seeing that each step or action is completed.
3. When these steps or actions are to be carried out.
4. What resources need to be allocated in order to carry them out.
5. What feedback mechanisms are needed to monitor progress within each step.

Most action plans, regardless of how simple or complex the objective is, contain five to ten major action steps. Fewer than five action steps indicate that insufficient consideration may have been given to the amount of effort required. More than ten action steps suggest that more detail may have been included than is appropriate.

What is the purpose of an action plan?

The most important purpose of an action plan is to clearly identify what needs to occur if the objective is to be accomplished. The importance of this consideration becomes dramatically apparent when something is overlooked, causing significant problems in the accomplishment of an objective. Such failure occurs because someone neglected to do something that is normally expected. Thus, an additional value of an action plan, whether at the company or individual level, is to make certain that the obvious is not overlooked.

The second purpose for an action plan is to test and validate the objective itself. Objectives are often established based on the results desired, with no real assurance that they are truly achievable. Once a draft objective is established, breaking it down into smaller pieces, the action pieces provide an opportunity for a reality test. The action plan creates a more rational basis for determining whether:

• The objective can be reasonably accomplished within the time period projected.
• The knowledge, skill, and equipment necessary to carry out the plan are present in the organization
• All necessary information is known.
• There are other alternatives that need to be considered.

The establishment of a detailed action plan may lead to the conclusion that the objective is unrealistic. This could result in a decision to modify the objective, modify the action plan, or postpone or even abandon the objective. If your objective is to have twenty trucks in operation by the end of the year and you currently have one, with limited financial resources to expand, maybe the objective needs to be revisited. The decision not to pursue an objective at this point is just as valid as a go-ahead, and it is considerably less expensive and traumatic to make such a decision before significant effort and resources have been expended.

A third purpose for an action plan is to serve as a communications vehicle for others within the organization who need to contribute to, or will be affected by, what takes place. This is especially important when there are several different parts of the organization that have a distinct role to play in the achievement of the objective.

Going back to the example of adding twenty trucks by year-end, who else needs to know? How about the head of vehicle maintenance? What about the recruiting department? Through the identification of all relevant parties, and the fixing of accountability on each of the action steps, there is less likelihood of delays or voids in the pursuit of the objective. Furthermore, the communications process that is involved in developing or interpreting the action plan can have a positive impact on the motivation and ownership of those who significantly influence the outcome of the objective.

Planning for growth

• Businesses must plan for growth in the areas of equipment, revenue, location(s), personnel and other parts of the company that flex as it matures.
• If a business stays true to their plan for growth, new opportunities will naturally fit into the business when the time is right.
• Businesses should also plan for periods of non-growth, to allow for the stabilizing of all pertinent business matters associated with the company.

Growth in a company is not something that should just happen; it should be a planned, measurable expectation. Planned growth can be in the area of equipment, revenue, physical location(s), personnel, or any other part of the company that flexes as it matures.

An incorrect assumption often made by new businesses is that they want all the business they can get, regardless of the associated costs. This train of thought coincides with the adage, “any business is better than no business.” Pursuing this path of unplanned growth can be disastrous if it does not coincide with the original mission and vision for the company.

For example, a new trucking company has started up and they have two trucks and a small handful of satisfied customers. These customers have helped the company realize their vision and the company may feel a certain level of loyalty to them. They are right on schedule based on the action plans that they developed earlier.

One day the company gets a call from a new potential customer. The new customer says, “I want you to haul all my freight and I need to know how soon you can accommodate me.” The company’s immediate thought may be, “what an opportunity!” They may think of all the new revenue they could realize with an immediate increase in their freight volume. They may tell the new customer that they can start next week; all they have to do is figure out how to get more equipment.

Here is where the problems start. The new customer needs to move 10 trailer loads of freight a week, and goes to areas of the country that the company had not previously explored as far as return freight feasibility, associated costs, etc. As a knowledgeable business owner; does this make good business sense? Remember, the company only had two trucks and a few loyal and very satisfied customers. Can they obtain more equipment and drivers immediately? Can they really afford to increase their company’s equipment debt based on an assumed increase in revenue? Will their current customer base experience shipping delays because they are stretched too thin? Will the people that have supported the company thus far feel abandoned and start looking for a new company to haul their freight? If a business doesn’t take care of their customers, they will.

As a business owner, here’s the most important question to ask whenever presented with a situation such as this: “Is this part of my company’s vision and plan for success?” If the answer to this question is no, then a company must turn down the new customer and move on. The lesson to learn is the importance of honoring a company’s plan for growth. Consistent, planned business growth is sustainable and ultimately much more profitable.

These kinds of opportunities will come again and again. If a business stays true to their plan for growth, they will naturally fit into the business when the time is right. Remember the dream and vision for the business. Many companies have tried to be all things to every customer that walks in the door or calls on the phone, only to fail miserably in the attempt. Nowhere in the creation of a business plan and the careful and thought-out development of a company’s vision and values did it state that the company would do everything for everyone. Don’t let outside forces drive a business away from their well-thought-out plans for success.

Planned non-growth

Even though the normal assumption is that a profitable company is always growing, there may be times where a business has planned non-growth. This could be due to the realization of preset benchmarks for equipment, personnel, or capacity. This could also be because of changes in the industry, re-evaluation and changes in the company’s action plans, or changes in management or business structure.

Every business as it is created has a “life cycle.” Coming to the end of this life cycle may be another reason to have planned non-growth. For example, as discussed in the section on succession planning, the valuation of a business needs to be determined when presented with ownership changes due to death, disability, or retirement. This would be an ideal time to have a specific plan for non-growth to allow for the stabilizing of all pertinent business matters associated with the company. This would then allow for a clear picture of the business’s overall structure, and provide a solid footing to make informed decisions, pertaining to the future ownership of the company.

Another approach to non-growth planning in a company may be in one area of the company as it pertains to the company’s overall progress. An example would be if the company was planning a major shift in their business location.

How should business structure change to support growth?

• Businesses must make important decisions on adding departments, supervisors and employees; or to outsource various aspects of a business.
• Equipment needs to be maintained and business owners need to decide what maintenance can be done by the company, what maintenance needs must be completed by others, and if an in-house maintenance department may be feasible at some point.
• As a business grows, it is important to hire competent management and personnel that share in the company’s vision for continued success.

Most business owners hope their business will grow in size and structure. Others want to remain a one person, one-truck business. Growth can be positive, but it can also generate a whole new set of problems that some business owners don’t want to deal with. Even one truck businesses that want to remain that way may need to develop a support structure to help them succeed in their business venture.

With growth comes more responsibility. Every business owner will come to a point in their life where they may not be able to do everything themselves anymore. The decision to add departments, supervisors, and employees, or to outsource various aspects of a business, is an important one. It’s important to remember through this process that this is still a business. Business owners need to decide what to keep under their direct control, what they can hand over to others within the business, and what they can allow outside entities to do for the business.

Common areas that a small trucking business may use outside businesses in creating their support structure are licensing, permits, and accounting. These three areas are heavily regulated, can involve tremendous amounts of time, and may directly affect the continued success and life of the business. Businesses can certainly do these things on their own or hire an employee to deal with them, but there are excellent companies out there that can take the worry out of a company’s hands and allow them to concentrate on customer service, revenue building, sales, or driving the truck; whatever they do best.

Equipment maintenance

As a business grows, decisions will need to be made in the areas of equipment repair and maintenance. Again, it will be important to determine what tasks the business can do themselves, what tasks the business should do, and what others can do for the business. Many truck drivers perform basic maintenance on their vehicles every day. Some do major repairs as well. For example, unless a company is in the business of being a mechanic, they may need to look to others for help in this area. They may hire a part-time person to do minor repairs and maintenance, while using a major repair facility for the big jobs. Eventually, it may be feasible for the company to have their own repair facility and do all the work in-house. The size of the fleet and the current profitability of the company will help dictate what direction to go in this area.

Staffing

Another area of concern is office staffing. In the beginning, a business may be able to handle everything on their own but now phone calls are being missed, customers are being ignored, and the reputation of the business is starting to falter. It takes a lot of hard work to build a business to this point; don’t let the business suffer due to an “I can do it myself” attitude. Whether the business hires office personnel directly, or they use a temporary staffing service, it’s important to continue to present a professional attitude to customers and the industry. If no one can get through on the phone, or all they get when they call is a recording saying, “We appreciate your business, please hold,” they will quickly go somewhere else. If the business is a one-truck business conducting business from the driver’s seat, a landline or “800” number at a message center may be an option.

As the business continues to grow, areas that were originally outsourced can be brought in-house with the development of specific departments and the hiring of competent management and personnel in those areas. When considering this step, look to people for their expertise in the specific area or department which is being created. A good driver doesn’t always make a good dispatcher. Just because someone has a good safety record doesn’t mean they’d be a great safety director. A business needs to do their homework and hire the best. That way, the business can feel confident that their employees and staff are competent in what they do and that they share in the company’s vision for continued success.

How is an action plan developed?

• An action plan involves specific activities or events which will lead to the accomplishment of an objective.
• An action plan may be developed using a problem-solving approach to determine the appropriate course of action.
• An action plan should be formatted to include an objective, action steps, accountability, a schedule, estimated resources, and feedback mechanisms.

An action plan can be developed through one or more of the following:

• Specific activities or events, not necessarily interrelated, which will lead to the accomplishment of the objective. For example, an objective related to the addition of a new type of freight or trailer (straight truck, van, flatbed, heavy-haul) might include separate activities related to advertising, special promotions to new customers, establishment of routes, securing financing, and any other activities that may have an impact on the effective introduction of this new shipping method. Presumably, the successful carrying out of each of the activities, either independently or in combination with others, will lead to the successful accomplishment of the objective.
• An analytical or problem-solving approach, incorporating a series of interconnected events. Through this process, the problems to be overcome or the circumstances to be changed are first clearly identified; these are then analyzed to determine appropriate courses of action, which are implemented sequentially, leading to the eventual accomplishment of the objective. For example, an objective of adding more equipment could start with the identification of principal competitors and the equipment they use. Then specific, detailed plans can be initiated to either exceed the service of the competitor or expand on what is offered to the customer, leading eventually to the accomplishment of the objective; adding more equipment.
• A series of smaller or shorter-term objectives that break the larger objective down into smaller pieces that can be more reasonably accomplished. A common example of this plan is the quarterly or monthly revenue figures required to achieve an annual revenue objective. These could also be broken down by region, truck, freight type, or a variety of other indicators that might be worth tracking.

What is the format of an action plan?

An action plan format is designed to identify the key factors that need to be included in the plan. It should therefore be flexible enough so that it can be modified to meet the information needs of the manager or department using it. The purpose of using a set format to prepare an action plan is to provide the visibility needed to get the job done in the most effective and efficient manner. An action plan should not inhibit this process. The following is a list of headings that should be included in an action plan format, and an explanation of each:

• Objective: The specific operational objective for which the action plan is being prepared.
• Action Steps: The five to ten major actions or events required to achieve the objective.
• Accountability: The specific individuals (or departments) that will be held accountable for ensuring that the action step is carried out. This should be listed as Primary which represents the individual or department that has ultimate accountability for completion of the step and Others which represents anyone else with a key role to play in that particular step.
• Schedule: This shows the total time frame that the action step need to be carried out within. This should be further identified with a start date and a complete date.
• Resources: The total estimated costs for completing each of the action steps. This should not only include all actual costs for equipment, materials, systems, and supplies, but also employee time (in hours, weeks, months, etc.) needed to complete each action. Time is separate from dollars in order to provide data for scheduling and staffing needs.
• Feedback mechanisms: This refers to the specific methods that are available (or need to be developed) for providing the information required to track progress within each step. Feedback mechanisms can be simple or as involved as the development of an information system to provide a report.

Completion of a list that follows this format will help ensure that key factors in the plan have not been overlooked.

Operational objectives have been clearly established as the focal point of any operational plan. They define the results desired in specific, measurable terms. In planning a trip, the first thing to determine is the destination and the date or time of desired arrival. However, several other key decisions must be made if that trip is to be successful. These include routes to be followed, necessary fuel and rest stops, vehicle size, weight, and configuration, permits, weather, construction, etc.

While these come almost as second nature to the seasoned driver, failure to give serious attention to even one of the key factors could result in an unsatisfactory or even disastrous trip. Drawing on this analogy, objectives are defined as the destination, while action plans describe how to get there.

How can niche markets help growth?

• Successful small businesses separate the industry into manageable market niches.
• A company’s market niche should be what they are familiar with or have been successful at.
• Understanding and determining a company’s market niche is important because it relates to the business plan and how the business will market their company.

The trucking industry in its entirety is too broad in scope for any but the largest companies to tackle successfully. The best strategy for a smaller business is to separate the industry into manageable market niches. This is easily done in trucking, as niches can relate directly to types of freight and methods or modes of delivery.

A company’s niche in the trucking marketplace should be what they are familiar with or have been successful at. For example, if a business owner used to be a company driver and hauled mainly flatbed freight, as a new company owner, their niche quite possibly should also be flatbed freight. If a farmer or rancher is new to trucking, their niche may be livestock hauling. This is where their knowledge base is and where they can probably promote their best business practices and develop a solid customer base.

Equally important to keep in mind when determining a market niche, is where the company’s trucks will go and the freight unique to the niche. For example, a business needs to decide if they are going to be a nationwide hauler, or if they’re going to concentrate on local or regional opportunities. They’ll need to determine if they’re going to specialize in certain types of flatbed freight, such as construction material, military vehicles, or time sensitive deliveries, or if they’re going to haul all types of general flatbed freight to all areas of the country. Again, it’s important for the business to go with what they know.

Understanding and determining market niche is very important as it directly relates to the business plan and how the business will market their company. Knowing where a business fits in the “transportation chain” and what the company can “sell” to their customers go a long way toward the continued success of the company.

Private carrier development plan

• A private carrier is different from a common carrier in that its main purpose is to transport its parent company’s product.
• As the primary source of freight transportation for their parent companies, private fleets are integral to the management and control of inventory, including supplies, raw materials, and finished product.
• A private carrier development plan must be well thought out and researched to assure continued and long-lasting success of a business.

A private carrier provides transportation and delivery of goods or services for a single entity, often a larger manufacturing corporation or central warehouse facility. Usually, the entity’s primary business is not transportation but rather something else. Examples of businesses that create and use their own private fleets include large grocery chains and various manufacturing organizations.

A private carrier is different from a common carrier in that its main purpose is to transport its parent company’s product. A private carrier may haul general freight for other customers, but this is usually as a backhaul to reduce operating costs. Private carriers can prioritize their parent company’s freight over all others and may refuse to sell their services at their own discretion, whereas common carriers must treat all customers equally.

As the primary source of freight transportation for their parent companies, private fleets are integral to the management and control of inventory, including supplies, raw materials, and finished product. Private fleets operate between manufacturing facilities and distribution centers as well as customer locations.

Simply put, private fleets are the backbone of a company’s supply chain. In many instances, they are the logistics arm of their manufacturing parent, providing local, regional, and national freight transportation services. This places them in competition with for-hire carriers, demanding that they operate as productively and efficiently as possible in order to remain cost competitive.

In the development of a private carrier fleet, it is imperative that there is an understanding of the expense-to-revenue ratios of a company in order to decide how the fleet will support the total business plan.

Transportation is a necessary cost to get a company’s products to their customers. A private fleet is often viewed as a pure cost. However, if the cost of a private fleet is directly compared to the overall cost of transportation of the parent company, and equipment is utilized efficiently, a private fleet can be a break-even or better, a profitable division of the parent company.

Why would a business create a private fleet or offer their services as a private fleet for another company? The opportunities for growth of the company in the transportation industry are endless. If this is a direction that a company wants to take, it should be part of their business plan, their mission, and their vision. When should the business become a private carrier? This should be identified in their action plan. It may be one year, five years, or twenty years; a business needs to plan their route and follow that plan.

Remember, business plans and action plans are ever-changing and evolving. It may be a good idea to start a trucking business as a common carrier to learn the many intricacies of the transportation industry. As the company grows in knowledge and strength, the concept of being a private carrier, or even creating a second division of the company as someone else’s private fleet, may become a viable and profitable consideration.

It’s important to note that a private carrier development plan, just like any business plan, must be well thought out and researched in order to assure continued and long-lasting success of the business.

For more information, see:

• For-hire carrier authority
• Private carriers
• Brokers of general freight and household goods
• New entrant requirements
• Operating Authority and UCRA
• Unified Carrier Registration (UCR)
• Unified Registration System (URS)
• International Fuel Tax Agreement (IFTA)
• International Registration Plan (IRP)

FMCSR Exemptions

Sec. 390.3 of the FMCSRs describes the types of operations that are exempt from most of the FMCSRs (although NOT exempt from the commercial driver’s license (CDL) or drug/alcohol testing standards):

• All school bus operations (home to school or school to home) as defined in Sec. 390.5;
• Transportation performed by the federal government or a state or local government (but not including transportation by contractors or others on behalf of the government);
• The occasional transportation of personal property by individuals when there is no compensation involved and the transportation is not business-related;
• The transportation of human corpses or sick and injured persons;
• The operation of fire trucks and rescue vehicles while involved in emergency and related operations;
• The operation of commercial motor vehicles designed to transport between 9 and 15 passengers (including the driver), not for direct compensation (these operations are not completely exempt from the FMCSRs, however); and
• Drivers of vehicles used to respond to a pipeline emergency or used primarily to transport propane winter heating fuel, but only if the regulations prevent the driver from responding to an emergency situation requiring immediate response.

Refer to Sec. 390.5 for important definitions of many of the terms used above.

Applying for a waiver or exemption: Drivers and motor carriers can apply for their own limited waivers or exemptions from the rules. Waivers and exemptions both provide temporary relief from one or more of the FMCSRs, but waivers are only good for up to three months while exemptions are good for up to five years and can be renewed. The process for applying for a waiver or exemption can be found in 49 CFR Part 381.

The following are other exemptions contained in the FMCSRs.

Private motor carriers of passengers: Private motor carriers of passengers (PMCPs) transporting more than 15 passengers are broken into two groups for purposes of compliance:

• PMCPs involved in a business activity which provides transportation in support of a commercial purpose (such as companies that use buses to transport their own employees, private schools, or professional musicians who use buses for concert tours) are subject to all of the FMCSRs except the insurance requirements.
• PMCPs engaged in nonbusiness activities but providing transportation of some kind (such as churches, civic organizations, scout groups, or other organizations that may purchase or lease buses for the private transportation of their respective groups) are subject to many of the FMCSRs but not most recordkeeping or insurance requirements.

9- to 15-passenger vehicles: Companies operating passenger-carrying vehicles that are designed or used to carry 9 to 15 passengers (including the driver) may be exempt from most of the FMCSRs as long as the vehicles weigh or are rated at less than 10,001 pounds and there is no “direct compensation” involved. There is “direct compensation” if the passengers (or a person acting on behalf of the passengers) pay the company for the transportation service being provided, and the payment is not included in a total package charge or other assessment for highway transportation services. If the vehicles weigh or are rated at 10,001 pounds or more, regardless of compensation, then the rules apply due to the weight alone. If the vehicles weigh less than 10,001 pounds and there is no compensation of any kind for the transportation (such as a company transporting its own employees), then the vehicles would qualify for the exemption. See Sec. 390.3(f)(6) for details.

“Emergency” exemptions: Sections 390.23 and 390.25 provide for an exemption from hours of service limits in sections 395.3 (property carriers) and 395.5 (passenger carriers) in local or regional emergency declarations. Only declared emergencies by the President of the United States provides an exemption from all of Parts 390-399 of the FMCSRs for carriers that are providing direct, emergency assistance to help save lives or property or to protect public health and safety during a government-declared emergency. This exemption may only be used when an authorized FMCSA, federal, state, or local official has declared an emergency, and may only be used while providing direct assistance, but no more than 5 days for a local emergency, 14 days for a regional emergency, or 30 days for a Presidentially-declared emergency (effective December 12, 2023). See the regulations for details, and Sec. 390.5 for important definitions.

Note that these provisions do not exempt carriers from compliance with CDL, drug/alcohol testing, or insurance rules.

“Pipeline welding trucks” exemption: Section 390.38 provides a broad exemption from many parts of the FMCSRs for the operation of a pipeline welding truck, defined as a pick-up style motor vehicle that is owned by a welder, is equipped with a welding rig used in the construction or maintenance of pipelines, and has a gross vehicle weight rating, gross combination weight rating, and actual weight of 15,000 pounds or less.

“Covered farm vehicle” exemption: Section 390.39 provides a broad exemption from many parts of the FMCSRs for the operation of covered farm vehicles. A “covered farm vehicle” as defined in Sec. 390.5 is a not-for-hire straight truck or articulated vehicle that is registered in a way that law enforcement can recognize it as a farm vehicle, and it must be used by a farm or ranch to transport agricultural commodities, livestock, machinery, or supplies to or from a farm or ranch. For such vehicles over 26,001 pounds, travel is restricted to either the state of registration or across state lines but within 150 air miles of the farm or ranch. There are no such geographic restrictions on smaller vehicles.

Other farm vehicles: The FMCSRs do not include any other broad exemptions for agricultural operations, but several parts of the rules do contain exceptions from specific requirements for specific types of agricultural operations.