Starting a moving company can be a great business idea, especially as people are in constant need of moving services, whether relocating within the same city or long distances. Moving is hard work, and many people do not want to do all the heavy lifting themselves.
While it may sound simple, launching a successful moving company requires more than just having strong arms and a truck. There are important legal steps, sizeable startup costs, industry knowledge, and business planning involved. Our guide is here to provide you with an overview of what it takes to start a moving company..
In simple terms, a moving company helps individuals, families, and businesses relocate their belongings from one place to another. Services can range from local to long-distance relocations and may include packing items, loading them on a truck, transporting them to a new location, and then unloading them.
Moving is definitely not an unusual event in the U.S. In fact, over the next 12 months, over 30 million people, around 19% of the U.S. population, are estimated to move at least once.1 People and companies move for many reasons, such as better jobs or larger spaces, so the industry stays active. While the economy might slow down or speed up the amount of moving, overall, it’s a solid industry.
The moving industry in the United States plays a significant role in our economy, with its effects felt in both the private and commercial sectors. In 2022, the moving industry generated $23.6 billion in revenue2, supported by the 28 million Americans who moved.3
Steps To Start A Moving Company
Step 1: Write a Business Plan
You might think you’re ready to jump in and start your moving service. The excitement is real, and the urge to get moving (no pun intended) is strong. But before you kick things off, it’s recommended to sit down and write a solid business plan first. Having a clear plan can make the difference between a smooth start and a costly mistake.
Clarifies Your Vision and Goals
A business plan isn’t just a bunch of paperwork. It’s a tool that helps you define what you want your moving company to be. What are your goals? Maybe you want to be the best local mover in town or the go-to company for commercial relocations. Or perhaps you’re thinking about handling specialty items like pianos or antiques. Setting these goals in your business plan gives you clear targets to aim for.
Understanding Your Market
You might think everyone needs a moving company at some point, but who exactly are your customers? Are they families moving to new homes, businesses changing offices, or maybe people needing specialty moving services? Doing your homework on moving demand in your area and who you plan to serve is the core of a business plan, as it helps you focus your marketing efforts and tailor your services to meet actual needs.
Crunch the Numbers
Now, let’s talk about money. Starting a moving company means spending money before you make money. Trucks, equipment, insurance – these things add up. In your business plan, you’ll estimate these startup costs and figure out how to make your business profitable. Also, moving services can be seasonal, meaning you’ll have busy times and slower times. Your financial projections need to account for this so you can manage your cash flow throughout the year. And if you’re thinking about getting a loan, they’ll want to see these projections to know you’ve got a solid plan for paying the loan back.
So, don’t rush to hit the road just yet. Take time to write up a business plan first. It will offer you peace of mind and the clarity you need to set up your moving company for success.
Related: How to write a business plan
Step 2: Source Funding
From purchasing a moving truck to paying for insurance and hiring employees, the costs can quickly add up. One considerable challenge for many new moving companies is getting the necessary funds in place. So, where can you find the money to start your moving company? Here are some options:
The first place to look is personal savings. This allows you to avoid taking on debt or giving up any ownership stake in your company. However, it can take some time to save up enough money, so it may not be the best option if you want to start your business quickly. Make sure you have enough saved up to cover all the necessary expenses and have some cash left over in case revenue takes a little longer to come in than expected.
Contacting your bank for a business loan is a common option for financing a moving company. This can be a good choice if you have a good credit score and sufficient collateral. Lenders typically require the borrower to invest at least 15% of their personal funds towards the total cost of the project. If a bank feels that the loan is too risky, they can use a Small Business Administration (SBA) loan guarantee to reduce their risk.
The largest expense when starting a moving company is the cost of the truck(s). Vehicle financing or leasing can be a useful option as the interest rates are usually lower than a business loan, while leasing reduces your initial expense.
If you own a home, a home equity line of credit (HELOC) is an alternative if you’re a homeowner. This option allows you to borrow against the value of your home.
You can consider borrowing money from friends and family. It’s a way to secure funds with less hassle than through a bank, but be sure to put everything in writing upfront to maintain harmony.
Last, microloans can be a good option for smaller funding needs or when mainstream lending options are out of reach. Local economic development organizations offer these loans, with some even providing business training alongside funds.
Step 3: Register the Business
Starting a moving company involves several tasks to make sure everything is set up properly. Every state has different requirements, but here is an overview to help you register your business and make it legal:
Choose Your Business Structure: The first thing you’ll need to do when setting up your moving company is to decide on your business structure. Each type of structure has its own advantages and challenges:
- Sole proprietorship: This is the most straightforward structure to set up, as you’ll be the sole owner of the business. It’s less costly compared to other structures but offers no liability protection.
- General partnership: In a partnership, you and one or more other people own the company. It’s still easy to set up but, like a sole proprietorship, doesn’t offer liability protection.
- Corporation: When you form a corporation, your company becomes a separate legal entity that protects you from business liabilities. However, it’s a complex structure that can be costly to set up and maintain.
- Limited Liability Company (LLC): An LLC combines the benefits of a corporation and a sole proprietorship or partnership. It provides liability protection and is easier to manage than a corporation.
For a moving company, an LLC is commonly chosen due to its liability protection and relative ease of setup and management. The LLC structure can safeguard personal assets in case of business liabilities, which is particularly important in a business involving significant physical activity and valuable property.
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Commercial Driver’s License (CDL) and other specific licenses: If you are operating large trucks, you may need a Commercial Driver’s License (CDL). The class of CDL required (Class A, B, or C) depends on the weight and size of the vehicle, and some states may require additional endorsements or requirements for specific types of vehicles or cargo.
Also, if you’re planning to operate across state lines, you may need a federal Department of Transportation (DOT) number and a motor carrier (MC) number.
Laws regarding estimates, deposits, & cancellations: When operating a moving company, it’s important to understand the laws related to estimates, deposits, and cancellations. Under the Federal Motor Carrier Safety Administration (FMCSA), federal law requires moving companies to provide customers with a written estimate before the move takes place.4 The estimate should include the total cost of the move, transportation charges, and any additional fees. It’s also important to understand the laws related to deposits and cancellations. Generally, a deposit cannot be more than 10% of the total cost of the move, and it must be refunded if the move is canceled within a specific period of time.
Obtain business licenses and permits: In addition to specific moving company requirements, a variety of general registrations will likely be needed. This could include a business license, seller’s permit, and Employer Identification Number (EIN).
Step 4: Set Up Operations
After all of the planning and preparation, the next phase in launching your moving company is setting up operations. This stage is where your ideas and strategies begin to materialize, setting the foundation for your business’s day-to-day activities.
The first step in operational setup is finding a home base. This is where you’ll store your moving trucks and equipment, and potentially offer storage services to clients. Before signing anything, you also need to check local zoning regulations to ensure that a moving company is allowed to operate in this location.
Next, you’ll need to equip your business with the necessary tools. This includes purchasing or leasing moving trucks, as well as getting equipment like dollies, furniture pads, and packing materials.
Finally, with the physical setup in place, you’ll want to implement a system for managing your day-to-day operations. This includes setting up a system for providing estimates, scheduling moves, and billing customers, and even integrating with your website, so clients can request quotes, view your services, and book their moves online.
Step 5: Hire Staff
Hiring employees for a new moving company is a significant step that comes with a range of responsibilities and legal requirements. As an owner, you will be responsible for managing the business, but you will also need to hire employees to help you with the work.
When it comes to hiring, you can choose between employing workers as employees or contractors. It’s important to understand the legal differences between the two before making a decision. Employees are people who work for you. It means more stability, but it also comes with more responsibilities and expenses for you, like payroll taxes and workers’ compensation. Contractors, on the other hand, are often a good choice if you need extra help during peak seasons. They are considered self-employed and responsible for managing their own taxes and benefits.
Regardless of whether you opt for employees or contractors, ensure everyone is covered under business insurance to protect your business against potential liabilities from accidents or damages during moves. Additionally, thorough background checks should be conducted as they will be handling customers’ personal belongings and entering their homes.
Step 6: Prepare to Launch!
We’ve hashed out the major steps to start a moving company, like planning your business details, getting the right permits and licenses, and hiring. Now, it’s time to take a look at some additional steps you might need to consider on the road to launching your business. Every business will have different needs, but let’s discuss the most common ones:
Business insurance: No one wants things to go wrong, but sometimes they do, and business insurance coverage can help you be prepared for those unpleasant surprises. This should include liability insurance, cargo insurance, and workers’ compensation insurance if you have employees.
Setting up bookkeeping: To handle daily transactions, taxes, and financial statements, it’s essential to have an effective bookkeeping system in place. You can hire a bookkeeper or use accounting software like Wave Accounting (FREE) or Quickbooks.
Contracts: In the moving business, you’re likely to use a Service Agreement (to describe the terms of service to clients) and a Bill of Lading (a receipt given to clients). RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.
Opening a business bank account: Separating personal and business finances helps simplify accounting processes and tax filing.
Creating a marketing strategy: Having a plan on how you will let people know about your moving company is important. You can set up a professional website, use local Search Engine Optimization (SEO) strategies, and list on business directories like Google My Business to increase online visibility. Don’t overlook traditional advertising methods such as newspapers, business cards, and flyers. Also, building relationships with local estate agencies, corporations, and move brokers could also generate more leads for your business.
Joining industry associations: There are associations for movers that can provide benefits to you as a business owner. The American Moving & Storage Association (AMSA) and the International Association of Movers (IAM) are two worth considering. In joining these, you have the chance to learn from other movers, share experiences, and develop your business skills.
Common Questions When Starting A Moving Company
How much does it cost to start a moving company?
The total cost to kickstart such a moving company varies widely depending on several factors such as location, size, and scope of services. A rough estimate for starting a small moving company could range from $50,000 to $100,000. The main expenses include:
Moving trucks and equipment: The most significant expense will likely be for the moving trucks. A newer commercial moving box truck can cost anywhere from $25,000 to $50,000, depending on size and features. Additionally, essential equipment like dollies, furniture pads, and packing materials can cost about $2,000 to $4,000.
Location: Renting a space for operations, including parking for trucks and storage for equipment, will vary greatly based on your geographical location. Considering commercial rental prices and deposit requirements, the initial deposit for renting such a space could range from $2,000 to $6,000.
Insurance: Moving companies require various types of insurance, including liability insurance, cargo insurance, and auto insurance. The initial cost for these can range from $3,000 to $5,000.
Marketing: Initial marketing costs for setting up a website, online advertising, and printing traditional marketing materials like business cards and flyers might range from $1,000 to $3,000.
Business registration and legal fees: Depending on your state, the cost of registering your business can range from $50 to $500.
Employee training and uniforms: If you plan to hire employees right away, training costs and uniforms can add up to about $500 to $1,000, depending on the number of employees and the complexity of the training required.
How profitable is a moving company?
The profitability of a moving company can depend on a range of factors, including the volume of business, operating costs, and the pricing of services.
To estimate the potential profitability of a moving company, we can make some assumptions based on industry averages. Let’s assume an average moving job costs the customer around $1,000. If a new moving company completes about three jobs per week, that’s approximately $3,000 in revenue per week or $156,000 annually.
Expenses for a moving company can include salaries for employees, truck maintenance, fuel, insurance, marketing, and office rent. If we assume these expenses total around $6,000 per month, that’s $72,000 in annual expenses.
Subtracting the expenses from the revenue gives us an estimated gross profit of $84,000 ($156,000 – $72,000). This is a basic estimate and actual profits can vary based on factors like pricing, number of jobs, and specific operating costs.
While profitability is good, make sure you maintain a cash buffer for slow times. Peak moving times tend to (but not always) happen more in the summer, as many families don’t want to disrupt the household during the school year.
Staying on top of maintenance is important to keeping a moving company profitable. If a truck goes down during the peak season, revenue will likely go down as a result.
What is the NAICS code for a moving company?
The NAICS code for a moving company is 484210, which also includes furniture moving, office moving, and van lines.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.