Becoming an Owner Operator
Many truck drivers who have successful careers owe a portion of their success to becoming owner operators on a dedicated business model. An owner operator is a self-employed commercial truck driver or a small business that operates trucks for transporting goods for its customers.
There are two main reasons truck drivers choose to become owner operators – job security and higher pay. Despite a poor economy, low freight rates and high fuel costs, many owner operators have found a way to remain profitable and in their dream career.
If you’re ready to put yourself on the road to success, there are a number of critical decisions and self-assessments that need to be made. Following our steps to becoming an owner operator will increase the chance of having a successful career. So use this guide as a starting point to build a profitable, self-sustaining business.
- Financial Consideration
Your finances will impact your entire life and it will be a critical component in your success or failure as an owner operator. It’s important that you examine your financial house to ensure that everything is in order. Your financial house may not be perfect, but you do need to be in decent financial shape. Some of the things to consider include:
- Personal Budget – This is a financial lifestyle that allocates money equitably to all of your bills so that everything gets paid. Getting a handle on your income and expense items, creating and living by a reasonable budget, and planning for a rainy day are all critical to your financial health.
- Emergency Fund – What would you do if you have a true emergency? By setting aside 3 to 6 months of your living expenses, you won’t be dependent on your dispatcher for cash if something comes up.
- Disability Insurance – If you get sick or injure yourself, you will need cash for everyday living expenses as well as having the means to continue making your truck payment while you are out of commission. You may have an emergency fund, but that money will be gone in no time, especially if you have a truck payment each month.
- Credit – Your overall credit situation paints a vivid picture about the overall state of your financial success. Your credit affects your ability to access the capital you need for equipment, fuel cards, credit cards, etc. It’s important to eliminate your debt or any hurdles that can prevent your credit application from being approved. Checking your credit report for inaccuracies, clearing any judgments, unpaid bills, etc. can improve your chances of being approved for truck financing.
- Personal Assessment
Taking a good look at your work ethic, habits and other factors can give you answers on whether you will or will not succeed as an owner operator. By honestly assessing your own personal needs and goals, you can ensure that becoming an owner operator passes the compatibility test.
- Driving Preferences – Do you like to run maximum hours and get as many runs in as possible or do you like to take your time and sight see along the way?
- Home Time – If you prefer weekends at home or you care about what time off you can get your hands on, staying on the company payroll may be the best for you.
- Insurance – If you need employer sponsored health insurance, you might need to stay on as a company driver. Insurance can be costly and it may be out of your reach.
- Family Considerations – Does your family rely on your health insurance? Do you have a spouse with a strange work schedule and kids that rely on you being home? While it’s possible to successfully manage these issues, there may be times when home time may have to be sacrificed in order to remain profitable.
The type of equipment you choose to run and the type of operation you have determines the profitability of your company. Consider these factors when buying your truck.
- Age of truck (mileage, warranty, etc.)
- Your area of operation
- Fuel economy
There are no rules when it comes to being an owner operator and selecting the equipment that you will operate. Remember to look at the habits and driving style of the person behind the wheel so you can choose the right truck.
- Legal and Accounting
In order to become an owner operator you will have to choose a business structure for your trucking business and plan ahead for taxes. You will need qualified professionals that can provide you with sound advice to help ensure your success.
- Go Independent or Lease to a Company
Choosing to go independent or leasing on to a company is something you have to decide for yourself. No two truckers are alike, you will have to weigh the pros and cons and make the best choice for you and your trucking business.
- Benefits of being an independent owner operator
- You select the loads and lanes that best suit your lifestyle
- You decide when you run
- No dispatcher retaliation for refusing a particular load that might not be to your liking
- Benefits of leasing your truck onto another carrier
- Access to company-provided fuel cards
- Company-provided trailers
- Load and freight consistency
- Not having to worry about obtaining your own operating authority
These factors will weight heavily on your decision making process because they will also impact the income you can generate with your truck. The best way to know which way is best for you is to crunch the numbers and see how things turn out for you.
The life of an owner operator is entrepreneurial. Much like any other business, there will be highs and lows. There is money to be made in the trucking industry. Whether you choose to become a motor carrier authority or get your broker authority, Motor Carrier HQ is here for you. We can file your new motor carrier authority for a low cost and we guarantee it gets filed correctly.