Being your own boss can be very appealing so many truck drivers consider making the transition to become an Owner-Operator. However, there is much more to the role of owner-operator than one might expect. Below are some key items to contemplate when you are considering the transition or have already put the peddle to the metal.
Every dollar counts
Many times people in trucking become numb to dollar amounts because everything is so expensive with $500 for tires, $300 for fuel, and a $20,000 engine rebuild and the list goes on. So it is not uncommon to overlook a $20 charge/fee that happens on a regular basis. But by the end of the year that charge/fee on a regular basis could mean thousands of dollars. Make sure you are working with partners who don’t add unnecessary fees that will add up over time.
Fuel, fuel, fuel
Once you become an owner-operator what you are spending on fuel becomes more of a concern since it will directly impact your earnings. Reasonable speed and highly maintained equipment is significant to fuel efficiency. Having a fuel program is another important fuel consideration. It will be beneficial to find partners who offer programs such as fuel cards, fuel discounts and fuel advances.
Think about where your freight is coming from
Regular freight from people you can trust will make things easier on you. The key is to build relationships even if you are taking brokered freight, you will make more money over the long haul. It may also be beneficial to find partners and resources that offer free load boards.
Be very leery of extremely high paying freight, it boils down to risk versus reward. If someone is paying a rate that is out of the norm it is because you have a lower chance of getting paid. The best rate per mile on a load that doesn’t pay is not good. Reputable brokers and shippers know what the going rate is for all their transportation needs.
Keep your wheels turning even if you have to take a poor paying load. Certain areas of the country don’t pay well due to supply and demand. Chances are if there isn’t good paying freight in a certain area today, then the freight won’t pay well tomorrow either. Get moving!
Additional financial considerations
When you work for a trucking company they handle all the finances so you don’t have to worry about the financial aspects of running the business; including submitting freight bills, collecting on freight bills, insurance for you and your truck and more. Once you make the switch to becoming an owner-operator things change. If keeping up with all these requirements is too much work or will keep you off the road for longer than you can afford, you might want to look for a partner who can help with some of the financial aspects. One option would be a freight bill factoring company who would be able to help you with the “back office” operations of your new business. Some will handle invoicing, processing, postage, collecting and more so you can keep focused on generating revenue.
Getting the equipment you need
The benefit of working for a trucking company is they will take care of getting you the equipment you need, but when you become an owner-operator that falls onto your shoulders. You must consider what equipment you need and what you can afford. There are several ways to obtain the equipment you need. This includes purchasing with cash, getting a loan or leasing. Of these options, the one you may be the least familiar with is leasing. Leasing can lower your initial out-of pocket expenses as well as cover costs such as warranties, maintenance, parts and installation. Leasing can also offer more flexible terms than a loan and provide tax benefits.
Regardless of your experience, if you are considering becoming an Owner-Operator you should research and think through all the positives and negatives of making this change.