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How To Open a Moving Company in 10 Steps

People Moving Boxes

One thing you can be sure of is that people will always be moving in and out of their homes and offices. If your business dream is to help with these moves, these ten steps can help you start a moving company that can be profitable and legal.

1. Create a Detailed Business Plan

To build a successful moving company, you need to create a plan before starting the hard work of packing boxes and moving furniture. A business plan is a formal document that serves as a roadmap for your business. It should include market research and financial projections. The contents of your business plan will vary depending on your business goals and preferences. But there are a few topics every business plan should cover.

Your business plan should contain:

  • Basic information about your moving company. This includes the name, location, and registered agent, if there is one
  • If you create a corporation, the location, and date of incorporation
  • Your business's purpose and goals
  • A list of the company's managers, their powers, and their duties
  • Your marketing plan for getting the word out about your services
  • Financial plans and projections, including funding plans and a breakeven analysis
  • A precise list of startup costs and ongoing operating expenses - It would help to base this on a detailed description of the types of moving services you will offer and your price structure
  • Your startup plans and ideas for expansion

You might choose to start small as you launch your moving company. You could begin by making local moves for friends, acquaintances, and neighbors to build a good reputation. If you are moving customers from home to home within the same town, you can make several trips with your pickup truck. Once you become profitable, you might upgrade to a larger vehicle and lease a commercial office location. Before committing to a lease, make sure local zoning laws allow moving companies in your chosen area.

Your pricing structure is another critical part of your business plan. Depending on your location and customer expectations, you might fare better by offering low prices than premium services. You will need to research your competitors' prices and offerings to find out which strategy is the most effective. The pricing structure for a moving business can get complicated because of the many variables involved. You will need to charge more for long-distance moves and large estates than you will for simple local moves. Make sure to provide for these pricing factors in your business plan.

After you have created your pricing structure, you can start to figure out how to become profitable. Consider all of your expenses against the prices you have calculated. This information will help you to determine how much business you need to do before you become profitable. This is called a breakeven analysis.

As you conclude your business plan, make sure to think through contingency plans for any roadblocks you believe your company might face. For example, how will your business cope with an economic slowdown? Or how would you handle customer dissatisfaction? Consider any other potential problems specific to your business and location to form backup plans.

2. Write a Marketing Plan

Your marketing plan will form part of your business plan. This is your opportunity to get creative and figure out the right ways to reach your customers. Before creating your marketing plan, you need to decide what services you will offer and your pricing structure. You probably established these details in your business plan.

  • Research your target market: As you begin writing your marketing plan, think about who your target market is and which of your services will be in the highest demand. In certain areas, your target customers might be particularly interested in packing services. Customers who need to move quickly or who work long hours may be willing to pay a premium to avoid the hassle of packing boxes themselves.
  • Determine services: On the other hand, if your target market includes young families, they might prioritize speed and value. Knowing your target market can determine whether they are after premium services, low prices, or superior customer service.
  • Encourage referrals: As a moving company, you are unlikely to have a lot of repeat customers. But your customers might refer you to their friends and family by word of mouth. To help your customers give referrals, it's a good idea to pass out business cards. Don't forget to let your customers know about your website and social media too.
  • Build an online presence: To make sure your community knows about your services, you should find ways to spread the word. As with any new business, your moving company will need a good website. It's a good idea to maintain a social media presence too. With social media, you can connect with customers and create an interactive experience. A simple and free way to drum up some business as you start is to put an ad on craigslist. There are other websites and apps out there where you can advertise your business, but they may charge a premium.

Another good place to gather information about the moving industry is your state's movers association. For a list of state movers associations, visit the Federal Motor Carrier Safety Administration. If you choose to join your local movers association, there are several benefits involved. They often offer moving business forums, marketing assistance, and industry education.

3. Choose a Name for Your Moving Business

You will want to think of a business name that describes your moving services and is easy to remember. With that in mind, you need to make sure that your name is unique. You should conduct a thorough search to make sure that your name is available. It would be best to ensure that no other moving businesses or similar companies are using the same name as yours. This is important to avoid claims that you are infringing on another company's trademark. If another business sues you for trademark infringement, you may have to change your name and pay damages.

To avoid this legal hassle, you should search the internet for similar names. Next, search the United States Patent and Trademark Office's (USPTO's) trademark database for similar registered trademarks. Finally, visit your local secretary of state or similar state agency website to search for registered business names. With adequate research, you can be relatively confident that your name does not infringe on another business's trademark.

There are certain restricted words that you will not be allowed to use in an LLC's name. These usually include words that might confuse consumers into thinking that you are a government agency. You should not use words that imply that you have an affiliation to a bank, university, or other entity either.

Once you are satisfied that your business name is unique, you should check to make sure that you are following all of your state's other naming requirements too. There are certain restricted words that you will not be allowed to use in an LLC's name. These usually include words that might confuse consumers into thinking that you are a government agency. It would be best if you did not use words that imply that you have an affiliation to a bank, university, or other entity either. Most states require that limited liability business entities include a reference to their legal structure in their name. You should check with your secretary of state or a similar state agency to learn more.

4. Decide on Your Business's Legal Structure

All businesses have a legal structure, whether they choose one or not. If you open a business by yourself, the default business structure will be a sole proprietorship. If two or more people own it, it is a partnership by default. Your business will remain a sole proprietorship or partnership unless you take action to register it as a different type of legal entity.

As a startup moving company, a good way of structuring your business might be to form a Limited Liability Company (LLC) or a corporation. These structures may come with tax advantages and offer limited liability. Limited liability protects you from being personally liable if someone sues your business. So, forming a corporation or an LLC enables you to protect your home, cars, and other personal assets from business risks. LLCs are relatively easy to set up and have a less rigid structure than corporations. This makes them a popular business structure for small businesses.

To form an LLC, you need to:

  • Have your unique business name ready.
  • File your articles of organization and file a fee with your licensing agency.
  • Write an LLC operating agreement. Although this might not be a legal requirement, it is a good idea for all LLCs to have an operating agreement. It forms the agreement among your LLC members regarding management, finances, and other issues.

5. Open a Business Bank Account

If you form an LLC or a corporation, you must keep your personal and business funds separate. To avoid mixing your business finances with your personal accounts, you should open a bank account for your business. You should only use this account for business deposits and expenses.

You should not use your business account for any personal expenses. This is a necessary precaution if you have a limited liability business structure like an LLC or a corporation. If you mix your personal and business finances, you could lose your limited liability status.

6. Look For Funding

When you first create your startup, you may not need outside funding. If you have a truck or van and are willing to put in some hard work, there might not be much to purchase when you get started. Aside from your vehicle, your main expenses will be:

  • Moving equipment, such as ropes, hand trucks, boxes, tape, moving blankets, and packing materials
  • Fuel and other vehicle expenses
  • Personal safety items like gloves and back braces
  • Insurance coverage

If you choose to expand your business, you might want to make some purchases that will enable you to handle a higher volume of moves. As a larger moving company, you may need more spacious vehicles. You might want to rent a warehouse as well.

To finance your expansion, you could consider applying for a loan or seeking an equity investment. If you have a corporation or an LLC, you will probably need a banking resolution in hand to get a loan. A banking resolution is an agreement that you make with the other members of your company. It spells out your members' duties and responsibilities when it comes to banking tasks. An investor will probably ask to see your business plan and articles of organization or operating agreement before investing.

7. Get the Permits and Licenses You Need

As a moving business, you may need several licenses to operate legally. Depending on your location and moving radius, you might have to get a federal license in addition to state licenses.

  • Federal License: If you plan to offer long-distance moves, you will probably operate across state lines (moving clients from one state to another). In that case, you will need a license from the U.S. Department of Transportation (USDOT).
  • Local and state licenses: In many states, you will need to register with your department of transportation or similar state agency if you want to start a moving company. Local agencies often require a special license or permit for moving household goods. The United States Small Business Administration recommends that you check your state's website to find out about your permitting requirements.

You can start a small moving company with a modest moving truck or an SUV. But if you plan on using a large vehicle, you may need to secure an overweight/oversize load permit. This requirement will vary by state. The USDOT maintains a list of state agencies to help point you in the right direction. As a large commercial motor vehicle driver, you will also need to secure a commercial driver's license (CDL). Contact your state licensing agency (most likely a department of motor vehicles) to find out how to get a CDL.

8. Hire Employees

You may not need to hire staff when you first start your moving company. But as you grow and get more clients, you might find that you cannot do all of the moving by yourself.

A large part of moving business's success will come down to the skills and courtesy of the movers themselves. If you hire employees to represent your business, you should ensure they are careful with your clients' belongings and provide excellent customer service. You should have a good employee handbook and training policy to avoid injury and property damage. If an employee injures themselves, you will need to have workers' compensation insurance in place. Workers' compensation insurance is mandatory in almost every state.

9. Get an EIN and Pay Taxes

To legally employ people, you need to get an Employer Identification Number (EIN). An EIN is a unique number that the Internal Revenue Service (IRS) uses to identify businesses. It is easy to get one, and you can even apply online. Even if you do not hire employees, you will still need an EIN to open a bank account and file your business taxes.

As a business, you will need to pay both federal and state taxes. The types and amounts of state taxes you will pay will vary by state. You should contact a business attorney or check your state website to learn about your state tax obligations. Your federal tax obligations will include income tax, employment tax, self-employment tax, and possibly excise tax.

10. Get a Good Insurance Policy

All businesses need a good insurance policy to protect them against lawsuits and other risks. This is especially important in the moving industry. You will want comprehensive insurance coverage considering all of the heavy lifting, driving, construction, and other physical hazards involved.

A moving company takes on several liability risks. There is a risk of injury to workers and customers, but also a risk of property damage and automobile accidents. Finally, there is the risk of damage to the property that your customers trust you with. So, you will need several types of insurance to cover those different types of risks. Those insurance types include:

  • General liability insurance in case of accidents
  • Auto insurance to cover your moving vehicle
  • Cargo insurance covers the items you are moving if they are damaged in the process of moving - this type of insurance provides you with a financial safety net
  • Workers' compensation insurance in case of employee injury
  • Your state may have minimum requirements for your insurance coverage and types. You should ask your insurance agent or a business attorney if you are unsure about these minimums

How an Attorney Can Help

As you are starting up your own moving company, you may have questions about legal structure, licenses, and more. A business attorney helps you form your legal structure, determine your licensing requirements, and answer your other business law questions.

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

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