Starting a cargo van business is a rewarding venture that combines practical driving skills and logistical know-how with sharp business savvy. The industry pulls in billions of dollars annually, fueled by a steady demand for local deliveries, e-commerce fulfillment, and last-mile logistics.
This guide will take you through the practical steps of validating your business idea, securing funding, obtaining the right licenses, and acquiring your van to help you launch a successful cargo van business in the U.S.
Step 1: Plan and validate your business idea
Market research and validation
Start by identifying your target customers. You could talk to local businesses like florists, furniture stores, or caterers to understand their delivery needs. This direct feedback is more valuable than generic online research. It helps you find a niche.
Also, monitor online load boards. Websites like DAT and Truckstop.com show real-time freight availability and rates in your area. This data gives you a solid idea of demand and what you can charge for your services.
Startup costs and competitor analysis
Look at your local competition on Google Maps. Note their services and customer reviews. For a deeper dive, you can search the Federal Motor Carrier Safety Administration (FMCSA) database for registered carriers in your zip code to see how saturated the market is.
Speaking of costs, your initial investment will vary. A smart budget might include a van down payment ($5,000-$10,000), an insurance down payment ($1,500-$3,000), and business registration fees ($100-$500). Some new owners mistakenly budget for personal auto insurance, but you need specific commercial coverage.
Here are 3 immediate steps to take:
- Call three local businesses to ask about their current delivery solutions.
- Create a spreadsheet to list and estimate your startup costs.
- Search the FMCSA database for active carriers in your service area.
Step 2: Set up your legal structure and get licensed
Choose your business structure
You should form a Limited Liability Company (LLC). This structure separates your personal assets from business debts. A sole proprietorship is simpler, but it leaves you personally liable if your business is sued. An LLC offers protection that is well worth the initial setup cost.
Depending on your state, filing for an LLC costs between $50 and $500. Some new owners choose a sole proprietorship to save on this fee, but this can be a costly mistake if an accident or lawsuit occurs. The protection an LLC provides is a foundational business safeguard.
Secure your operating authority
Next, get a USDOT number from the Federal Motor Carrier Safety Administration (FMCSA). The application is free on their website. If you plan to haul cargo across state lines, you also need a Motor Carrier (MC) number, which has a $300 application fee.
Once you apply for an MC number, a 21-day protest period begins. During this time, you must file proof of insurance and a BOC-3 form. This form designates a process agent in each state. You can find services to file this for you online for about $25-$50.
Also, check your state’s Department of Transportation website. Some states require separate intrastate authority for jobs that do not cross state lines. These rules vary, so confirm what applies to your specific area of operation.
Here are 4 immediate steps to take:
- File for an LLC in your state to protect your personal assets.
- Apply for your free USDOT number on the FMCSA website.
- Submit your MC number application if you plan to work across state lines.
- Find and purchase a BOC-3 filing service online.
Step 3: Secure your insurance and manage risk
Required insurance coverage
You need Commercial Auto Liability, not a personal policy. Most brokers require a $1,000,000 Combined Single Limit (CSL). You will also need Motor Truck Cargo insurance, typically for $100,000 in coverage, to protect the goods you haul.
Some new owners buy a policy that does not meet broker requirements. Always confirm coverage amounts before you commit. Annual premiums for a new venture can range from $9,000 to $20,000, so this cost is a significant part of your budget.
In addition, you should consider General Liability insurance. This protects you from third-party claims like an injury at a loading dock that is not related to your vehicle. It provides another layer of financial safety for your business.
Find the right insurance provider
You might want to work with an agent who specializes in trucking. They understand the FMCSA filing process and can often find better rates. Consider providers like Progressive Commercial, OOIDA, or Great West Casualty, as they have deep experience with new motor carriers.
Here are 3 immediate steps to take:
- Request quotes for a $1,000,000 CSL Commercial Auto policy.
- Confirm you need at least $100,000 in Motor Truck Cargo coverage.
- Contact an insurance agent who specializes in commercial trucking.
Step 4: Acquire your van and equipment
Find your vehicle
You can find a reliable used cargo van for $20,000-$35,000, while new models like the Ford Transit or Ram ProMaster start around $45,000. Before you shop, get pre-approved for a commercial auto loan from your bank. This gives you negotiating power at the dealership.
Many new owners try to save money with a standard-roof van, only to find it limits the jobs they can take. A high-roof model costs more upfront but allows you to haul bulky items like furniture, which often pays better and expands your service options significantly.
Get your gear
With your van chosen, you need to equip it for jobs. A heavy-duty dolly or hand truck costs about $150-$300. You will also want quality ratchet straps and moving blankets, which together run about $300-$500. Look at suppliers like Uline for these items.
As for a location, you likely will not need a commercial office. Most owners operate from home. The main thing to confirm is parking. Check your city or HOA rules, as some areas restrict parking commercial vehicles overnight, which can be an unexpected snag.
Here are 4 immediate steps to take:
- Get pre-approved for a commercial vehicle loan from a credit union or bank.
- Research high-roof cargo van models to determine the best fit for your niche.
- Create a shopping list and budget for equipment like a dolly and straps.
- Check your local HOA and city parking regulations for commercial vehicles.
Step 5: Set up your payment processing
Brokers often pay on Net 30 terms, meaning you wait a month for your money. For direct clients like local businesses or residents, you should require payment upon delivery. This practice improves your cash flow significantly.
You need a way to accept payments easily. Many solutions have high commission rates, often between 2.5% and 3.5%, and may require extra hardware. Look for a system with low, transparent fees that works on the go.
For jobs that require payment on-site, JIM offers a streamlined solution. You can accept debit, credit, and digital wallets directly through your smartphone—just tap and you are done. At just 1.99% per transaction with no hidden costs, it is great for collecting payment right after a local delivery.
The payment process is simple:
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available on your JIM card as soon as the sale is done, with no waiting for bank transfers.
Here are 3 immediate steps to take:
- Decide on your payment terms for direct clients, such as payment on delivery.
- Download the JIM app to see how it works on your phone.
- Calculate potential savings with JIM’s 1.99% rate versus other options.
Step 6: Fund your business and manage finances
Secure your startup capital
The Small Business Administration (SBA) is a great resource. Their 7(a) loans and Microloans are well-suited for new ventures. For a microloan, you might secure up to $50,000. Lenders typically look for a credit score of 650 or higher and a solid business plan.
Another path is equipment financing. Since the van itself acts as collateral, these loans can be easier to obtain. Some owners make the mistake of using a personal loan, but a commercial equipment loan often has better terms and protects your personal credit profile.
Plan your working capital
You need cash reserves to handle expenses while you wait for payments. Plan to have enough working capital to cover three to six months of costs. For most new cargo van businesses, this means having $15,000 to $25,000 set aside after your initial purchases.
Your budget should account for major recurring costs. These include your monthly insurance premium, fuel, van loan payments, and a fund for unexpected maintenance. Underestimating these costs is a common reason new businesses struggle with cash flow in the first year.
Here are 3 immediate steps to take:
- Contact an SBA-preferred lender to discuss 7(a) or Microloan options.
- Create a detailed budget for your first six months of operation.
- Explore equipment financing offers from commercial lenders.
Step 7: Hire your team and manage operations
Hiring your first driver
You will likely start as a solo owner-operator. Once you have more work than you can handle, it is time to hire. Look for a Cargo Van Driver. A typical pay range is $18 to $25 per hour, depending on your location and the driver’s experience.
Many new owners mistakenly think a Commercial Driver’s License (CDL) is required. For most non-hazardous cargo van work, it is not. Your driver will need a clean driving record and a valid DOT medical card, which confirms they are healthy enough to drive commercially.
Managing your daily schedule
As you add jobs and drivers, manual scheduling becomes inefficient. You might want to use route optimization software like Routific or Onfleet. These platforms can plan the most efficient routes, which saves significant time and fuel costs. They often have monthly subscription fees starting around $50.
A good rule of thumb is that a driver’s generated revenue should be at least three times their wages. If you pay a driver $4,000 a month, they should bring in at least $12,000 in revenue to keep your business profitable and growing.
Here are 4 immediate steps to take:
- Research local pay rates for delivery drivers on sites like Indeed.
- Confirm the process for obtaining a DOT medical card in your state.
- Explore a free trial for a route optimization software like Routific.
- Calculate your target revenue goal for your first hired driver.
Step 8: Market your business and get customers
Build your digital storefront
Start with a free Google Business Profile. Fill it out completely with photos of your clean van, your logo, and your service area. After each job, ask your customer for a review. Positive reviews are your most powerful and cost-effective marketing asset.
Many new owners overlook sites like Thumbtack or Yelp, but residential customers often search there for local movers. Creating a basic profile on these platforms can broaden your visibility without any upfront cost, putting you in front of a different audience.
Connect with local businesses
While load boards provide work, direct clients offer better rates and repeat business. Make a list of local businesses like furniture stores, florists, or event planners. Visit them with a simple one-page flyer that outlines your services and contact information.
A frequent misstep is to rely only on digital leads. A personal connection with a local business manager can secure a steady contract that provides consistent revenue, which is far more valuable than sporadic, low-margin jobs from load boards.
Run targeted local ads
Once you have steady cash flow, you might test paid advertising. With Google Ads, you can target keywords like "cargo van delivery [your city]". You could start with a small budget of $20 per day. A successful campaign might acquire a new client for $50 to $100.
Here are 4 immediate steps to take:
- Create and complete your Google Business Profile with photos.
- Make a list of 10 local businesses to contact this week.
- Design a one-page flyer with your services and rates.
- Join two local community Facebook groups to monitor for moving requests.
Step 9: Set your pricing strategy
Common pricing models
You have three main ways to price your services: per mile, hourly, or a flat rate. For longer trips, a per-mile rate of $1.50 to $2.50 is standard. For local jobs with multiple stops, an hourly rate of $50 to $75 works better.
Some new owners underprice their services to win bids. This is a mistake that can quickly sink your business. Instead, calculate your cost per mile, which includes fuel, insurance, and maintenance. Then add a 30-40% profit margin to set a sustainable rate.
Researching your market rates
To see what others charge, check the rate data on load boards like DAT or Truckstop.com. You can also call a few local competitors and ask for a quote on a sample delivery. This gives you direct insight into their pricing structure and what customers expect to pay.
A flat rate is best for routine, predictable jobs. For example, you might charge a local furniture store a flat $150 for any delivery within a 10-mile radius. This simplifies invoicing and gives your client a predictable cost, which they appreciate.
Here are 4 immediate steps to take:
- Calculate your all-in cost per mile, including fixed and variable expenses.
- Check DAT or Truckstop.com for current per-mile rates in your area.
- Call two local competitors to get a quote for a sample job.
- Create a simple rate sheet with your hourly, per-mile, and flat-rate prices.
Step 10: Maintain quality and scale your business
Establish your quality standards
Your reputation depends on consistent service. Aim for a 98% on-time delivery rate and a zero-damage record. You can track these metrics weekly in a simple spreadsheet. After each job, send a one-question survey to gauge customer satisfaction, with a goal of 4.5 out of 5 stars.
Some owners get so focused on driving that they neglect to track performance. This oversight can damage your reputation before you even realize there is a problem. Early tracking helps you identify and fix issues before a client complains, protecting your hard-won relationships.
Know when to grow
Growth should be a calculated decision, not a reaction. When you consistently turn down 20% or more of qualified job requests for a month, it is a strong signal to expand. Another indicator is when you personally work over 60 hours a week just to keep up with demand.
Once you add a second van, manual dispatch becomes difficult. You might want to look at fleet management software like Samsara or LoadTrek. These platforms help you track vehicles, optimize routes, and manage jobs, which frees you up to focus on finding more clients.
Here are 4 immediate steps to take:
- Create a spreadsheet to track your on-time delivery and damage rates.
- Set up a simple customer satisfaction survey to send after each job.
- Define the monthly revenue or job rejection rate that will trigger your expansion.
- Review the features of a fleet management software like Samsara.
Starting your cargo van business is a journey of practical steps. Remember that your best work will often come from direct relationships with local clients, not just digital load boards. You have the roadmap, now it is time to put the key in the ignition.
As you get paid, a simple payment system helps your cash flow. JIM turns your phone into a card reader for a flat 1.99% fee, with no extra hardware needed. It makes getting paid on the spot simple. Download JIM to get started.
