The True Cost of Starting-up a Freight Brokerage

There seems to be an abundance of misinformation online when it comes to the cost of starting up a Freight Brokerage. For example, potential entrepreneurs are often turned off by the idea of putting up $10,000 to secure a surety bond, when in fact in most cases, whereas the owner/partners have positive credit scores, a surety bond requires less than one thousand dollars to secure and post.

In this article we will address the true cost of starting-up your Freight Brokerage. From conception to the first day of operations, we will exam the true cost of start-up, including initial capital requirements, 1st quarter operational cost, and the high cost of failure.

In the beginning there was the conception of a small business idea. Maybe you have a history with the industry, maybe a friend makes a comfortable salary as a freight broker, or maybe you’ve read that the industry is booming and holding steady even in the most difficult of economical times. Either way, undoubtedly this is an exciting time in your life: You’re considering a new venture as a small business owner and you deserve a moment to daydream… there, now that that’s all settled, let’s get down to brass tax.

Local Fees and Requirements – Although fees vary between municipalities, it is common in the United States for your county to require fee-based license and permit requirements to run a business within the limits of the county.  The amount of these fees will vary and may require an investment of between $50.00 and $1000.00. Typical fees for licensing and permit requirements are $500.00 or less.

The Cost of Authority – The cost of authority in the United States i surprisingly low. As of Jan 1, 2012 the cost of acquiring a Motor Carrier’s Authority is $300.00. For this fee you will receive a six-digit authority number, for example, MC# 000000.  This authority will allow you to operate interstate transport. Your authority will last for as long as you remain in compliance with the F.M.C.S.A .

 Surety Bond – A $10,000 surety bond is required by the F.M.C.S.A. to lawfully operate a freight brokerage in the United States. However this does not mean you are required to put up $10,000; there are many services that will happily put this bond up in your name for a fee of $1000.00 or less. This service resembles a loan and requires a positive credit score by the one who seeks to acquire it. If your credit score is not favorable you may wish to invite a business partner in on your plans otherwise you may be required to put up the entire $10,000 bond yourself.

Operational Cost – The cost of starting-up operations will of course vary between brokerages, budget, and location. However, operational cost in most cases is greatly within the control of the Brokerage Owner. Take this opportunity to create a restrictive budget that only allows only for the upmost necessary expenses.

In many scenarios a new freight brokerage opens within the familiar confines of the home. If this situation seems familiar, your starts up cost are likely relatively low.

 You will need:

  • Telephone Line
  • Fax Machine or
  • Computer
  • Printer

If you don’t already own these items, a thrifty minded entrepreneur could acquire all four of these items for less than $500.00.

Office Equipment & Supplies – It’s rather easy for a new business owner to lose his or her way and overspend with excitement when it comes to building a new home office. Remember, you will need every dime of operational income available to you in the near future. Simplify your dwellings now and focus on your earnings. Do this and there will be time for spending and upgrades in the near future.

Website, Hosting, Email Services – When most people hear website, they think of the high cost involved in production. Well, fortunately this isn’t true anymore. There are websites dedicated to freelancer services that allow you to post a job and pay the lowest bidder a small amount to complete your project. For a thrifty eye, these services are available for less than $500.00. Note: Your brochure, business card, and logo services can all also be obtained through the freelancer services sites mentioned above.

 There may be additional needs, requirements, and cost required for the start-up of your business, needs that have been otherwise neglected within this article, further your research to further understand a day in the life of a freight brokerage owner. 

The True Cost of Starting-up a Freight Brokerage


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