10 Tips To Become A Successful Owner-Operator

Trucking is a business, and it can be just as successful as any other business. However, it is important to learn the right ways to go about it. When it comes to being a truck driver, there are two main types of professionals on the road: company drivers and owner-operator truck drivers. Company drivers work for a trucking company, while owner-operators are self employed and run their own business. The path to be an independent business owner is not always an easy one, so if you are considering becoming an owner-operator, there are a few tips you may want to keep in mind. 

Trucking company drivers have the luxury of working in a controlled environment, while owner-operators have to make sure they provide everything they need to keep their business running. Owner-operators are independent drivers who do not work for a company, rather they are self employed. Many own or lease their truck, and some can also own multiple trucks and employ a few drivers themselves, but most often they drive and run their own small business. Owner-operators work directly with shippers or clients, which gives them more autonomy but also more responsibility. 

There are many factors to consider before becoming an owner operator. If you are starting out as an owner-operator or wanting to improve your small business, you need to stay prepared for what may come your way. The time and energy you’ve invested in your current job, the trucking industry, the financial resources you will have available, and your drive are all important factors to consider. 

Prepare Financially

Becoming a small business owner comes with its set of risks and challenges, and one of them is the investment you may need to make into starting your business. If you are buying or leasing a truck, you need to ensure that you can afford it and it will pay off in the long run. If you have bills to pay or a family dependent on your income, you want to make sure you’ve built up a savings cushion before getting into the business, as it can take time to really see money flow in, and some periods will not be consistent, depending on slow seasons.

In order to prepare for your business venture, make a spreadsheet or list of expenses, and necessary income you would need to make to stay afloat, then look into estimating how much your earnings would be running your loads. You need to write up a business plan. This will allow you to calculate approximately how much time you need to spend on the road to make enough. You also want to invest time in developing a bookkeeping schedule and getting the software. You will ideally want an accountant or a professional to help you with your finances.

You must keep a record of your business expenses and all your invoices, because these will come in handy not only during tax season but also at times in case of any discrepancy. Remember to separate your business bank account from your personal one, always.  

Account For Maintenance

You will want to factor in vehicle maintenance as a business expense, because this will save you money and help you in the long run. Your truck is your livelihood, so it's important to keep it running smoothly. Once you do your financial calculations and you are able to pay yourself for the work done, you also want to set aside money into a maintenance account, which will go towards any mechanical issues or maintenance you may need to do. You do not want to leave this to last minute, as this can add up and become costly.

Make Your Business Legitimate

In order to run a business, you will need to register and go through the proper channels to legitimize your company. Look into creating a business structure (such as LLC or sole proprietor), business name, and general idea of how your business will run. You will then need to apply for your USDOT number, and be prepared to respond to any questions the FMCSA may have about your business once you apply for the number.

If you are choosing to become a sole proprietor, meaning you have no employees, that means you are running your business on your own and can make all the decisions, but you’ll also be responsible for the expenses and liabilities tied to your business. If you are opting for an LLC, which is a Limited Liability Corporation, you are separating your business from your personal assets or property, which is something most small trucking companies opt for.

Ensure You Are Licensed

You need to gather all the necessary documents or licenses needed to run your trucking business legally. You will obviously need your CDL, but in addition there are several other documents or permits to consider:

• Any Additional Endorsements (such as if you plan on transporting hazardous materials)
• USDOT Number (identifying your company, especially for inspections or audits)
• MC Operating Authority (this grants permission from the government to haul goods for pay)
• BOC-3 Filing (the form submitted to the FMCSA for appointment of a process agent in each state, remember that one copy has to remain at your place of business)
• IFTA (International Fuel Tax Agreement) and IRP (International Registration Plan) Credentials

Figure Out Your Transportation

Look into whether you are leasing or buying a truck, and make sure your vehicle is ready to go. This decision may take longer for some, as this can make a significant difference in the outcome of your business venture. Look into the type of freight you want to haul and make sure your truck is prepared, for instance if you plan on hauling perishable goods, then you may need to account for a refrigerated compartment. 

Once you have your transport sorted, it is important to purchase insurance. Remember that owner-operators with authority are legally required to have liability coverage. In addition you may want to consider purchasing insurance for cargo, physical damage or personal property.

Remember: Do not forget to get your ELD installed before starting your business venture.

Have a Plan For Finding Freight

You should have a clear idea of where you are going to start getting your loads, once you begin. Your best bet is to use LinkedIn, your own circle or social media to establish a network of connections with shippers that you want to work with directly. If shippers are not your available option yet, then you can use load boards to get loads to start with. Remember that it is a competitive market, so you want to do your research.

If you are trying to find loads, then check out: Top Ways To Find Truck Loads: The Good and Bad 

Account For Deadhead Miles

You will spend a lot of your time on the road, which is a lot of money in gas. If you are going to run a business, you need to factor in deadhead miles, if you end up returning empty. This is where it is important to calculate your target rate per mile, and look at whether the fuel and time spent is worth the load you may end up taking. This is where planning comes into play, as you research potential loads in the area you are heading into (so you can find one on the way back), and whether you are going to be making a profit by running that load.

Work On Your Reputation

While starting out, you may end up dealing with slow payments and issues with invoicing or communication, and these are normal. It will take time to find your best method of dealing with clients. However, your best bet is to remain patient and work on building up a reputation for your business, as this will garner you more clients in the long run and retain your existing ones. Quality service and delivering on your intentions is essential. If you find a client, especially broker, who is consistent or calls you up for specific types of loads, sometimes it may pay off to consider taking smaller loads from them once in a while, and earn a little less, in order to nurture that relationship. Always think ahead.

Strive For Balance

It is essential to take care of your health and wellbeing.  It is important to schedule and pace yourself, so that you have a balance of home and work time. Remember that home time is important for rest and for your mental health, so it is an investment in your business and life. You can set your own schedule as an owner, but be sure not to run yourself ragged, as it may not be worth it in the long run. Burnout is a real possibility, so ensure you are scheduling time off for yourself. 

Lastly...

If you’re thinking about becoming an owner operator, try a few months of tracking your time and costs. Not only will it help you decide if it’s worth the effort, but it will also give you information on what is involved in operating as an owner-operator. You can track your trips, time, and costs associated with running your truck. This should provide you with a clearer picture of what's coming, giving a realistic estimate of how much time it would actually take you to be profitable.

It takes hard work and determination to become a successful owner-operator. There is a lot of time and risk involved in owning and managing your own trucking company. Be sure you understand the demands and the challenges, so you can get started. Becoming an owner-operator is one of the most difficult, but also rewarding things you can do.