ComplianceLegalFinanceTax & AccountingJanuary 20, 2021

How to Start a Moving Company

One-in-five U.S. adults are either moving to a new city or know someone who is, according to a Pew Research Center survey. With COVID-19 on the rise and more people working from home, many Americans have reason and incentive for a change of address.

If you’re thinking about starting a moving company, consider these steps so you can build a long-lasting successful business.

Understand the many types of moving companies

There is a surprising range in types of moving companies, from residential and commercial to auto transportation, specialty item movers, and more.

Before starting a moving business, you need to determine the type of moving business, as well as the scope of services you want to offer.

  • Local moving company: Transports customer’s items to a new home address within a 100-mile radius.
  • Long-distance moving company: Transports customer’s items to a new home address outside of a 100-mile radius or across state lines.
  • International moving company: Helps customers ship their items by air freight or ocean if they are moving to another country.
  • Commercial moving company: Moves customer’s office equipment, furniture, and sensitive documents to a new business location.
  • Moving container company: Drops off large metal boxes for customers to pack, then transports the container to a new location.
  • Auto transportation moving company: Helps customers transport their vehicles across the country or to an overseas destination.
  • Specialty items moving company: Specialized in moving items that require particular care, such as antiques, musical instruments, artwork, or animals.
  • Small items moving company: Helps customers transport small items, boxes, or shipments that weigh less than 3,500 pounds.
  • Full-service moving company: Handles all aspects of the entire moving process, from packing and loading to transporting and unloading.
  • Partial moving company: Handles just certain aspects of the moving process with customers doing some parts themselves. An example would be a partial-packing service, where the movers will be responsible for packing certain items, but with the rest of the packing being handled by the customers.

Draft a business plan for your moving company

As with any other entrepreneurial venture, you should have a business plan. According to Harvard Business Review, entrepreneurs that begin with a robust business plan are 16 percent more likely to succeed. This document provides a clear and strategic framework for your business concept and serves as a roadmap for your first few years in business.

In addition, if you need financing, lenders and investors want to see a detailed, numbers-driven outline of how your start-up can grow into a scalable model. Here are a few details to include in your business plan:

  • Name of the moving business and explanation of the services offered.
  • Breakdown of startup costs, overhead expenses (ex. rent, insurance, utilities), operating expenses (ex. gas, trucks, labor), and other line items on the budget.
  • Estimate of how much revenue the business will need to generate to make a profit.
  • Analysis of who the competitors are and how your services can stand out in the marketplace.
  • Projection of trends in the market and consumer behaviors. This addresses problems or demands the business will need to solve.
  • Outline of logistics. such as price scale, delivery boundaries, hours of operation, staffing, equipment, and so on.

Choose your legal business entity

Your legal entity type (also referred to as a business structure) has huge financial and legal implications, and can even impact how you run your day-to-day business.

You can choose either an LLC or a corporation, as both will shield you from having to personally assume business debts and liabilities.

One major distinction between an LLC and a corporation is how they’re taxed. An LLC does not have to pay federal income tax. Business income equals personal income, so the owner pays the tax on his or her personal return, and it's taxed at the individual rate.

With a corporation, you may run into double taxation issues. In a C Corp (the default corporation type), the business profits and losses are taxed at the corporate rate. Then, any additional profits to shareholders are taxed as personal income.

A corporation may decide to become an S Corp, which has pass-through taxation. This means that no taxes are imposed on the corporation itself passed through to the owners. But the IRS has certain restrictions on which corporation can elect to become an S Corp. the business revenue is taxed as personal income, similar to an LLC. Plus, there are other nuances to the tax code for all entity types, which is why it’s best to consult with an attorney or accountant on which option makes the most sense for you.

Whether you decide to become an LLC or corporation, it’s important to keep your business and personal transactions separate. You will want to open a bank account for the moving company, as well as obtain a business credit card that’s not personally linked to any of the owners. This will help the moving company establish a good credit history, which can yield financial benefits.

Obtain the necessary business licenses, permits, and insurance

The following thought has probably crossed your mind: What licenses and permits do I need to start a moving company? Since the business deals with transportation and logistics, you will need to be aware of legal requirements specific for your industry. For example, you may need an oversize load permit issued by the state your business is registered in.

This is in addition to the general licenses and permits for running a business required at the state and local levels. And as always, permit and license requirements vary not only by state but also at the county and city levels.

You will need to insure the moving business with general liability and commercial auto coverage. Some other forms of insurance to consider include business interruption, workers compensation, and inland marine. Your insurance needs will depend on numerous factors such as the type of items you’re moving and the number of employees, among others. So it’s best to work with an insurance professional to be sure you’re completely covered. 

Calculate the costs associated with starting a moving business

The overall cost to start a moving business will depend on what you’re doing and how fast you plan to grow. In addition to the fees associated with licenses and permits, forming the business entity, and insurance premiums, there are equipment and logistical costs to factor in as well. (This information would of course be included in your business plan.)

Some of the basic expenses include:

  • Equipment, including moving accessories and the trucks themselves
  • Gas and vehicle maintenance
  • A building lease if you run an office
  • Staff payroll
  • Marketing (Ex. business cards, website, advertising)

Remember that the costs of other moving supplies can add up, including dollies, floor protectors, furniture covers, moving blankets, t-straps and bungee cords, packing materials, GPS software, uniforms, and ergonomic seat cushions for truck drivers. 

When you know these costs upfront, it's easier to budget effectively and allocate your cash flow as the business expands.

Market your moving company

Now refer back to your business plan where you identified and analyzed the target customer base—this is the group you want to build a marketing plan around. Consider the following:

  • Do these clients need a hyper-local marketing approach, or do you attract customers from all over the region?
  • What seasons, months, or days of the week are your services in the highest demand?
  • Does the moving business tend to gain most of its traction and visibility online, in print, or on both channels?

Once you compile this information through market and consumer research, you can adjust all promotional campaigns and materials to best serve the audience. Generally, the most efficient method to diversify the customer reach is to use both print and digital media, combined with word-of-mouth referrals as you form an existing customer base.

Establish the tools for lasting success.

Long-term success comes when you invest in tools and processes that will carry you all the way. Here are some small, yet valuable, items to put into place now for long-term success:

  • Follow through on your word. For example, if you and a customer agree on a specific time frame, price quote and service rendered, be there on time and follow through with the details you’ve quoted them.
  • Be courteous and transparent in all your external communications, whether on the phone, over the internet, or in person. Use social listening tools to make sure you’re tuned in to what customers and people within your communities are saying.
  • Listen intentionally to the customer’s needs, questions, feedback, or concerns. If an issue occurs, take the steps to resolve it thoroughly and quickly.
  • Remain in contact with all satisfied customers once the moving job is finished. Send e-newsletters, mail postcards, and connect on social media to inform them of any specials, discounts, or rewards programs. This will keep your business on their radar next time they or someone they know is moving.

Start a moving company

With the right planning, you can build a successful moving business. There are a number of options to choose from within this industry, and the potential for growth is evident.

Ready to get started? Check out BizFilings incorporation options.

Mike Enright
Operations Manager
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