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Starting a Moving Company: Key Costs in 2024
Written by: Parth Parth
Last Updated by
María Sol Fernández Amato: April 19, 2024
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The Moving industry is huge in the USA. A lot of people are moving to the suburbs or places with cheaper costs of living. As such, a moving company might be a lucrative business option to look at in the upcoming time. Whether someone is moving across towns or across the country, they will need someone to move all their stuff—and you can come in there!
Read on to find out more about the moving industry and the costs of starting a moving company of your own. We also have a list of companies that you can franchise with if you do not want to start from scratch.
Table of Contents
How big is the Moving Industry in the USA?
The growth and development of a global, interconnected economy has ushered in the age of technology and e-commerce. The packing and shipping industry connects businesses offering products with consumers in a wide range of locations. And will continue to be an extremely important aspect of the economy.
Small businesses and individuals use packing and shipping franchises across America to satisfy all their commercial needs. From shipping products, to printing advertisements, to notarizing documents. These franchises provide an excellent investment opportunity with the promise of continued growth and stability.
The packing and shipping industry is experiencing a unique shift in primary services. As the need for traditional mailbox services has declined significantly, the expansion of e-commerce has called on shipping and packing outlets. Small businesses use third parties to send out their products and connect their products to a nationwide (or global) delivery network.
Currently, in revenues, the size of the market is $2.1 Billion. The industry continues to grow steadily — over the past 5 years, the market size has increased at an average annual rate of 2.2% and is expected to grow 1.4% in 2021.
The ratio of market value to the net sales of a packing & shipping franchise is about 44%. The average UPS Store Franchise makes $579,101 annually in sales. This leaves its market value estimate of around $254,804. In other words, the owner of a pack & ship franchise can expect the value of their invested capital to equal about 44% of their annual sales.
How much does it Cost Starting a Moving Company?
Startup costs for a Moving Business for just one person are going to be on the lower end. Your biggest purchase cost would be a truck or a van or whatever you will move the stuff in. Other than that, you’ll need things like dollies, rope, moving pads, furniture belts, moving boxes, and packing and wrapping materials.
If you have to rent a truck for a day, it will be in the range of $80—$160.
Ongoing costs are relatively low in the business compared to many other businesses. Most people start out running the company out of their homes, moving to a warehouse location when the business has grown significantly.
Your largest expenses when starting a moving company will be payroll and payroll taxes. Vehicle maintenance, insurance, and fuel costs come in a close second. Other than that, all you need is a phone line, website support, and a regular marketing strategy.
How much Profit can a Moving Business make?
Business owners that are willing to put extra effort to build their businesses report profits of over $49,000 in the first year. Moving companies who focus on winning contract bids with local businesses make significantly more, reporting earnings upwards of $450,000. Your profits are directly tied to the amount of services you offer, how much you put back into your business, and your goals for long-term growth.
You can also charge additional money for things like packing and unpacking, moving things in tall buildings or over flights of stairs, and storage of items.
What should be your Target Market when Starting a Moving Company?
When starting out, you should really do your market research. Most people that have used your business once are probably not going to need it again. As such, this is a business with high customer turnover and a non-existent concept of customer loyalty. However, you will get a lot of leads from word-of-mouth from current and previous customers.
What Paperwork do you Need to start?
As with any business, you will need some paperwork to establish a Moving Business. Below, we have an indicative list of what things you might need to do before you start your business. Again, check with a lawyer in your area to find out if you’re all set to start.
- Business License: Registering your business with the state, county, city, etc.
- Bond: You may need to pay a bond before you can get a license to operate a moving business in your area.
- Sales Tax Registration: Register your business with the Internal Revenue Service (IRS) for tax purposes.
- Federal License: If you plan to offer long-distance moves, you will be probably operating across state lines. In this 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 the state’s department of transportation or a similar state agency if you want to start a moving company. Local agencies often require a special license or permit for moving household goods.
You can start a small moving company with a modest truck or an SUV. However, if you plan on using a large vehicle, you will most likely 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 or bureau of motor vehicles) to find out how to get a CDL.
It is very necessary to have insurance when you run a moving business. You do not want yourself to be liable for any damages you cause—or at least not pay for all of it. Below there are some kinds of insurance you need to worry about:
- Liability insurance covers any damage you might incur while running your business.
- Workers’ compensation to cover for injuries to you or others while on the job.
- Vehicle insurance to cover damages to your moving vehicles (trucks, vans, forklifts, etc.).
- Cargo insurance to insure any cargo you are moving in case it is lost or damaged.
We also recommend that you establish an LLC and do all of your business through it. If you do not, you can get sued for any damages caused and your property can cover any damages you cannot pay. And if you’re working through or for an LLC, only the LLC will get sued and only its property can cover the damage.
This is not legal advice. You should definitely talk to a lawyer about these topics before starting your own Moving business.
Can I Buy and existing Company?
According to BizBuySell, Moving and Shipping Businesses usually sell for between $400,000 and $800,000 and they often go for around 70% of their asking price. Below, we can look at some examples:
Look for existing businesses in your area that might be willing to sell. There are also listings on BizBuySell you might want to look at. These listings come and go, that’s why you should keep your eyes out for people wanting to sell their existing moving businesses.
What are Franchising Options in the Moving Industry?
College Junks
College Hunks promises Honest, Uniformed, Nice, and Knowledgeable Service to its customers. They provide services in the moving industry, ranging from junk removal to local and long-distance moving. College Hunks was founded by Omar Soliman and Nick Friedman when Omar noticed an opportunity to sell services that moved people’s old furniture to their new homes when they were buying new furniture at his mother’s establishment.
The initial (Company) Franchise Fee is between $45,000 and $65,000. You have to pay this upfront fee when opening a (Company) franchise. They also offer a $7,500 discount for veterans or a company owned at least 51% by veterans.
The estimated total investment necessary to begin the operation of a College Hunks Franchise ranges from $158,700 to $283,500. The following costs are part of the upfront costs included in the initial investment for a College Hunks. Many of these are onetime fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a College Hunks franchise in 2022.
Company Franchise Cost (Detailed)
| Site Built Location | |||||
| Type of Expenditure | Estimated Amount Low | Estimated Amount High | Method of Payment | When Due | To Whom Payment Is to be Made |
|---|---|---|---|---|---|
| Initial Franchise Fee | 45,000 | 65,000 | Lump Sum | When you sign the Franchise Agreement | Us |
| Rent | 1,600 | 4,500 | As arranged | As arranged | Landlord |
| Lease, Utility and Security Deposits | 2,000 | 5,000 | As arranged | As arranged | Landlord, Utility Companies |
| Paint and Signage for Service Vehicle | 3,100 | 5,500 | As arranged | As arranged | Approved Suppliers |
| Down Payment on Service Vehicle | 3,000 | 24,000 | As arranged | As arranged | Approved Suppliers |
| Equipment and Hand Tools | 2,000 | 8,000 | As arranged | As arranged | Approved Suppliers |
| Office Equipment and Hand Tools | 2,000 | 6,000 | As arranged | As incurred | Suppliers |
| Business Licenses & Permits | 500 | 3,000 | As arranged | As incurred | Local and other State Government Agencies |
| Professional Fees | 1,000 | 2,500 | As arranged | As arranged | Various Service Providers and Contractores |
| Insurance Deposit | 7,500 | 24,000 | As arranged | As arranged | Insurance Providers |
| Training Expense | 1,500 | 5,000 | As arranged | Payments terms arranged with suppliers and your employees | Suppliers and your Employees |
| Pre-opening Business Ramp Up Advertising | 9,500 | 11,000 | As arranged | As arranged | Suppliers |
| Additional Funds (6 months) | 80,000 | 120,000 | As arranged | As needed | Us, Suppliers, Employees and other Creditors |
| Total Estimated Initial Investment | 158,700 | 263,500 | As arranged | ||
Based on the median sales provided by College Hunks’s franchise locations (at an average of a 15% profit margin), it will take around 2.5 years to recoup your investment. This is very fast compared to a lot of other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, and competition in the marketplace. The presence of other moving company stores; the extent of market penetration and brand awareness that College Hunks stores have attained in your market. Also, the quality of management and service at your Franchised Store will affect customer retention and satisfaction.
When you go to sell a College Hunks franchise based on the median multiple of .44 and net sales averaging between 2020 and 2021 of $1,204,266, it would sell for $529,877. This is almost double the midpoint investment of $221,100.
Over the last three years, the company has been expanding. Franchised units have almost doubled as the franchises have opened at an average rate of 3 units a year. This is an indicator that these stores might be performing well.
College Hunks offers people the opportunity to be a part of a business that is not going out of business soon.
1-800-GOT-JUNK?
1-800-GOT-JUNK? is a franchise for the operation of retail junk removal in the Home Services industry. Brian Scudamore, the founder and CEO, developed a unique method for operating and franchising junk removal businesses. Their System includes proprietary software, brand development, training, marketing programs, and access to the exclusive service of the call center and online booking system.
Brian Scudamore founded the Rubbish Boys in 1993, which is a Canadian-incorporated company. 1-800-GOT-JUNK? is a subsidiary company that offers franchise locations in the United States. Mr. Scudamore formed 1-800-GOT-JUNK? LLC in October 1998 and has been its Chief Executive Officer since formation. He is also the Chief Executive Officer of O2E Brands, which encompasses 1-800-GOT-JUNK? Shack Shine, and WOW 1 DAY PAINTING.
Brian Scudamore has successfully scaled this innovative junk removal service to currently 130 franchises across the United States.
The Initial Franchise Fee for this franchise is $160,000. This figure includes the Sub territory Initial Fee of $25,000 for the first Sub-territory. This is plus $15,000 for each of the nine additional Sub-territories. The normal size of a new franchise has 10 sub-territories. The total investment necessary to begin the operation of a 1-800-GOT-JUNK? franchised business ranges from $241,800—$289,680.
The company does not grant exclusive territory. You may face competition from other franchisees, from outlets that they own, or from other local or national junk removal services such as College Hunks.
1-800-GOT-JUNK? is a well-established that has been around since 1998 and has shown strong revenue figures from its franchisees. Brian Scudamore has run three successful franchise companies. And this one is their premier national business!
UNITS Moving and Storage
UNITS Moving and Storage also offers franchises where the franchisee will operate a distinctive self-storage rental and moving business featuring the delivery, warehouse storage, and transport of mobile, modular self-storage.
The minimum investment amount required to open a UNITS Moving and Portable Storage franchise is $616,700 and can go all the way up to $1,154,000. Keep in mind that you should also allocate additional funds to live off of while your UNITS Moving and Portable Storage franchised business ramps up. This can take as little as 6 months to over 2 years, depending on the franchise opportunity.
You should speak to at least 5 UNITS Moving and Portable Storage franchisees to understand the true cost of opening the franchise and how long it takes to: 1) start a UNITS Moving and Portable Storage business 2) pass break even 3) hit significant income.
Owning a UNITS franchise requires an 8% royalty fee and 2% marketing fee. These two expenses represent the main ongoing costs you can expect to pay the franchisor throughout the franchise relationship.
Remember that there is also an initial UNITS Moving and Portable Storage franchise fee of $55,500. This is included in the initial investment amount of $616,700 to $1,154,000. Depending on the franchise agreement you sign, you might have to pay the full franchise fee again. This is just if you decide to extend the UNITS Moving and Portable Storage franchise relationship.
Based on the median earnings reported by UNITS’ franchises in 2021, it will take between 7 to 10 years for you to recover your initial investment.
Conclusion
In the end, starting a Moving company of your own is a good business opportunity if you can find the right market. Do your own market research, hire a lawyer, and you will be off the ground in no time.
While this may be the business for you, make sure you also check out other businesses offered on Vetted Biz and in the Home and Building Services Industry. Read more about Packing and Shipping here.
