July 8, 2022
Can I Afford the Jump to Owner Operator?
If the transition from fleet driver to independent owner operator were easy, just about everyone would do it. It’s an appealing career move for drivers who know the industry inside-out — be your own boss, accept the jobs you want, work your own hours, and best of all, increase your potential profitability by running the show yourself.
The hangup for many, however, is the financial investment needed to start a new business from scratch. That’s why it’s critical to know ahead of time what resources you’ll need so you can make sure you’ll have sufficient funds to afford the jump to owner operator.
First, Develop A Complete Business Plan
A successful jump into independent trucking is largely contingent on your level of preparedness. Many drivers see the appeal of branching out as an owner operator, but making the leap takes some understanding of your new responsibilities and careful financial planning.
Experience on the road won’t necessarily translate to the administrative tasks involved with small business ownership, which means potential owner operators need to adopt new skills quickly to stay organized and keep business expenses, insurance, endorsements, licenses and equipment organized and up to code. It’s possible to hire employees or outsource these added responsibilities, but be aware that doing so will raise the upfront financial costs considerably.
Establishing yourself as an owner operator also requires some idea of what you plan on hauling. The more types of specialized jobs you’re qualified to accept, the better rates you can charge and the more work you’ll find right out of the gate. Obtaining an endorsement in at least one special type of trucking will set you well ahead of your competitors.
Explore All Available Financial Resources
Truckers are in high demand, now more than ever, which is why several resources have been made available to prospective owner operators to ease the financial barriers to entry. Chief among these resources are various trucking grants, which can provide funds to new independent companies as they register and secure their equipment without the risk of financing a loan (though loans can be a major boost too if you’re careful about managing them).
The following organizations are common grant distributors for new owner operators:
- SBA Business Development Program
- The National Association for the Self-Employed
- The Department of Veterans Affairs
- USDA Rural Business Enterprise
- Your own trucking school or training program
Grants are the ideal solution, but several organizations, including the SBA, also offer low-interest loans for a wide range of business startup expenses.
Additionally, being an owner-operator qualifies you to join several helpful trucking associations that have extended networks with established access to valuable discounts.
Understand What You Need to Get Started
As you evaluate financial aid options, keep in mind a few of the freely available resources you can access elsewhere on the Motor Carrier HQ website. The startup cost calculator is a good place to start for an overview of the basic expenses you can expect when kicking off your owner operator career. Plus, you have the option to speak with a coach for a more detailed discussion of your current financial circumstances and how to plan for your future business.
One theme you’ll notice as you pick up more responsibilities as a behind-the-scenes business owner is, in addition to more time spent on the road, the need for precise accounting practices. Startups and operating expenses should be detailed as granularly as possible while also taking into account the numerous variable expenses involved as your business gets off the ground.
Industry trends like rising fuel costs, long lead times on getting a truck ordered, and difficulty adding drivers to your growing fleet requires keeping a careful eye on what you can afford and can severely impact whether your cost-per-mile is moving in a positive direction.
Safeguard Yourself Against Economic Downturns
Planning ahead can save a lot of headaches from the start, but the ability to adapt to changing environments is also critical to life as an owner operator. You can check out Motor Carrier HQ founder Chris Vernon addressing how current economic shifts have impacted life as a small fleet owner in April’s Haulin’ Assets economic update episode, with additional insight into Vernon’s own business in that same month’s financial report.
Though economic volatility is nothing new to the trucking industry, new owner operators may not be experienced in managing company growth and maximizing the stretches of profitable business to account for potential downturns.
Other Money-Saving Tips
The long-term impact of your daily spending habits will have noticeable effects on your business. We’ve recently produced a whole blog strictly on money-saving tips due to drivers frequently underestimating how much they spend when they’re on the road. Looking into driver-specific perks, like widely-used fuel cards providing discounts on fuel at participating stations around the country, can lessen the sting of the current fuel prices over the course of thousands of miles.
Other small adjustments to your driving and living habits on the road can also aid new drivers significantly in cutting costs. Planning meals and snacks ahead of time, researching the cheapest fueling stations, making the most of free wifi over cellular data, and even setting up fixed business expenses on auto-pay for small monthly discounts add up over the course of a year.
It’s also worth spending some time digging through available tax deductions over the IRS’ trucking tax center detailing the latest tax news and updates for owner-operators. Though it’s not the most exciting read in the world, it can save you thousands in taxes if you keep track of which fees, services, and equipment purchases are tax-exempt. The tax center is also the primary source for forms, frequently asked questions, and all the legal information you’ll need to get yourself on the road.
Our Motor Carrier HQ Team Wants to Help
We’ve already collected several resources to aid owner operators in keeping their costs to a minimum. These cover everything from compliance forms, checklists, cost calculators, and even tips on how better driving habits can improve overall fuel economy. Everything you need to financially and legally prepare to start life as an owner-operator can be found within our own stack of resource pages — not to mention our own Haulin’ Assets podcast, which documents the exact steps our own team took to build a successful trucking company from scratch.
Becoming an owner operator can be a game-changer for drivers who know their way around the industry, but getting started on the right foot can be a daunting task. Contact one of our coaches or download the “Getting Started” guide today to learn how you can take control of your own trucking career.