17 Pros and Cons of Starting a Local Moving Business

17 Pros and Cons of Starting a Local Moving Business

Starting a moving company can be an appealing venture because it’s a simple business model with low barriers to entry compared to other service businesses, like restaurants or daycares.

But that’s not the entire story, especially if you want to build a long-lasting, scalable business.

Local moving companies are subject to various regulations and licensing requirements.

Compliance with these regulations means more administrative complexity and additional costs that may be recurring.

Starting a local moving business offers opportunities for entrepreneurship and growth but requires careful consideration of the competitive landscape, seasonal challenges, physical demands, regulatory requirements, and liability risks.

This blog will discuss the benefits and drawbacks of starting a local moving company and how investing in a moving franchise can help.

Plus, we answer some of the frequently asked questions about owning a moving business.

The Pros of Starting a Moving Business

Here are the advantages of starting a moving company business from our 13 years of moving people into new homes and offices.

  • High Demand

People constantly move around the United States, creating a consistent demand for professional moving services.

The moving sector in the US is the 403rd largest industry overall, valued at US$21.7 billion in 2023.

For newcomers to the moving business, there should be ample opportunities to secure customers in a local market, especially in areas with a growing population.

  • Rewarding Work

Starting a moving company can be gratifying work. You are solving an immediate issue for your customer and working on something you genuinely care about.

If your company is successful, you could eventually have the financial means to give back to your community through philanthropic activities—giving money to charities or volunteering some of your moving services to people in need.

Helping people relocate their homes or businesses can be immensely rewarding!

  • Low Initial Investment

Starting a local moving company requires relatively low upfront costs compared to many other businesses.

You just need a truck (rental or your own), essential moving equipment, packing supplies, and movers. We all know college students who start moving businesses and work their way up. 

It is worth investing in a good moving franchise opportunity if you have capital because of its support system.

That said, only commitment to the business can solidify your future in the moving industry.

  • Importance of Getting Referrals

People don’t move within one area often, so repeat business is not guaranteed. That said, when you deliver a good relocation experience, referrals are an impactful way to attract and retain customers.

This is a significant advantage if you’re confident in customer service delivery. 

You can implement a referral program incentivizing customers to leave reviews online and tell their friends about your services.

At Let’s Get Moving, we thrive on word-of-mouth marketing, and our reviews prove that.

  • Scalability

You may only be starting, but it’s never too soon to consider scalability. Scaling a business means planning and setting up systems, funding, staff, processes, and technology that support the sustainable growth of your company. 

A local moving company is scalable if you have the right formula of awesome customer service, a robust marketing strategy (online, word of mouth, traditional), and equipment.

When you expand your customer base and drive demand for your services, you can grow in other ways, such as the number of trucks you own, the number of employees you hire, the number of jobs you can take on, and your profit.

  • Flexibility

If you hire the right team and train them properly so that there are no gaps in HR support, payroll, labor, marketing, and customer service, you, as the business owner, should eventually have the flexibility you may desire to travel and not worry like you once did about all of these aspects it took to run the business.

The Cons of Starting a Moving Business

Now that you know all the upsides of building a moving company, here are the advantages of starting a moving service with many moving parts.

  • Intense Competition

The moving industry is highly competitive, especially at the local level. With numerous moving companies vying for business, newcomers may need to invest in marketing that stands out and attracts customers. 

The barrier to entry is low enough that you could find yourself competing with college students with a truck and a savvy understanding of online marketing.

We recommend allocating a monthly budget between $300 and $10,000 for digital marketing services if you are starting. 

Additionally, paid ads and SEO are costly, and the competition in the online world is also cutthroat.

So, if you don’t have these skills or the money to pay for them, the moving industry may not be for you.

  • Seasonal Fluctuations

Moving demand tends to fluctuate seasonally, with peak periods during the summer and slower periods during the winter.

This seasonality can impact revenue and cash flow, requiring careful planning and management.

  • Physical Demands

Running a moving company involves physical labor, including lifting heavy objects and working in various weather conditions.

To ensure this physically demanding job doesn’t result in moving day injuries, hiring and managing a team of movers who can handle this labor for many hours each day may be required.

  • Motivation of Employees

Finding creative ways to motivate your team can be challenging. You must offer appealing incentives and a good work environment for your employees.

Many areas in the USA do not have a specific moving season. In areas where all four seasons are prevalent, there are moving “down seasons.”

During down seasons, laying off employees to cut costs in these seasons helps, as in the construction industry and parks and recreation areas. 

Seasonal workers who are US citizens get unemployment pay while they aren’t working, but keeping employee morale high during those times isn’t easy unless you have formed a strong relationship with them and they have other means of earning.

  • High Employee Turnover

Employee turnover is often high in a moving company, which can be costly and time-consuming for your business.

Avoiding this as much as possible by offering competitive pay, benefits, and a purpose-driven work environment is essential.

For example, you set up a business in areas with extremely low seasons in your industry. In that case, you may need to lay workers off for periods, which puts the company at risk of experiencing high employee turnover.

Let’s Get Moving provides the entire sales team, SEO, social media, and team so new entrepreneurs can focus on running the business instead of worrying about turnover in these departments.

  •  Paying State Taxes and Charging Taxes

As a moving company, you typically pay high self-employment taxes. Understanding what you will be paying in taxes each year is essential to determining if the work you’re taking on is worth it.

Depending on the state you work in, you may be required to charge sales tax. Although this may not impact your finances, creating a process and procedure for this can be a headache.

  •  Last Minute Cancellations

People will cancel your moving services at the last minute, costing you time and money. It may also mean you must charge a down payment to avoid wasting time.

  • Time Commitment

When starting a moving company, all responsibilities and decisions are yours. Although this is not necessarily negative, work life can sometimes take over.

This can strain friends and family and add to the pressure of launching a new business.

  •  Struggling Financially (at First)

If you bootstrap your moving business or choose to avoid paying yourself, it can be financially taxing. It’s essential to adjust your lifestyle and set a plan for yourself so you don’t find yourself in a stressful situation.

  • Learning Curve

Unless you invest in a moving company franchise, you don’t have upper management to provide you with a playbook for your roles and responsibilities.

Being a franchisee is best unless you’re comfortable owning your business decisions. 

  •  Cost of Moving Trucks

Moving trucks are costly to purchase, and over the years, your trucks can get damaged or break down and may need repairs, which can be expensive.

So, you must prepare for these expenses and avoid damage or wear and tear as much as possible.

At Let’s Get Moving, we encourage our franchisees to purchase their trucks rather than renting on a per-job basis because it’s more cost-efficient in the long run.

This means higher profit margins if you own at least one truck to start.

Conclusion: Starting a Moving Business Franchise Is the Best

Starting a moving business presents many pros and cons that aspiring entrepreneurs should consider carefully before venturing into this industry.

On the positive side, a moving business can offer significant earning potential, especially in areas with high demand for relocation services.

The flexibility to set your schedule and the opportunity to work independently or expand into a larger company is also appealing.

Additionally, the satisfaction of helping people transition to new homes or offices can be personally rewarding.

However, there are challenges to be aware of as well. Competition in the moving industry can be fierce, requiring strategic marketing efforts to stand out.

Managing logistics such as transportation, insurance, and equipment maintenance can also be complex and costly.

Furthermore, the job’s physical demands, including heavy lifting and long hours, may only suit some.

Ultimately, the decision to start a moving business should include a thorough understanding of the advantages and drawbacks.

By carefully weighing these factors and planning accordingly, entrepreneurs can increase their chances of success in this dynamic and competitive field.

FAQs

All of your burning questions about starting a moving company are answered here by our 13-year-old company, which has franchises across Canada and the United States.

How do I start a moving company from scratch?

There are two ways to start a moving company – start your own company or own a franchise. 

Before you start your brand, you must understand the costs of starting a moving company, and then there’s the time associated with sales and marketing your business.

Hopefully, you have both of these things because starting with nothing means that you’ll have to make a lot of small lateral moves on the way up as you learn what your target customer wants and expects. 

Starting from scratch by investing in a franchise is an excellent way to get a faster leg up in the industry.

A franchise like Let’s Get Moving takes care of training and helps secure resources like trucks, marketing, and sales.

With a franchise, you learn and benefit from the franchiser’s years of experience and brand recognition.

What permits do I need to start a moving business in the US?

The permits and licenses you will need to begin a moving business in the US will depend on the city and state you are operating.

One box you’ll need to check is having a US Department of Transportation (DOT) number. All moving companies require this permit.

You must also obtain the correct state business registrations and meet general business requirements. That includes:

  • Federal Tax Identification Number
  • Registering with the Secretary of State
  • Commercial auto insurance and general liability insurance.

You will also need $750,000 and $5,000,000 in liability and cargo insurance, including an inland marine policy.

Without a surety bond, which costs $75,000, you won’t be able to get your moving company license.

How can I start a moving business with no trucks?

Starting a moving business without trucks isn’t a significant problem because you can always rent a car until you have enough capital (money) to purchase your own. 

When you can afford one, a well-maintained second-hand truck will help reduce your overall investment.

Several reputable companies offer used moving trucks. Edmunds is one such place where Let’s Get Moving franchisees can find reputable used trucks.

Is a moving company a good business to start?

A moving company is an excellent business to start. It generates income not just for the business owner but also for the employees.

A moving business requires upfront capital investment, administration to secure licenses, insurance, permits, and stiff competition. 

If you have access to money to buy a truck, do the paperwork, and invest in some online marketing, that’s a great start. It’s how Let’s Get Moving started! 

Today, our company offers franchise opportunities to those who want to own their own business and want the support provided by an established brand with a whole sales and online marketing team already in place.

Is starting a moving company profitable?

Starting a moving company is profitable if you have customers.

However, the margins become thinner when you rent trucks and make long-distance moves because you pay for truck rentals and room and board (hotel and meals) for your employees. 

You can increase profit margins by doing some work yourself rather than hiring help.

The best way to increase margins is to scale the business and make it bigger with more trucks that can do more jobs.