Being an owner-operator of your own truck can be a very rewarding career path. The challenge lies in making sure you factor in all of your expenses so that you come out with good profits at the end of the day.
Benefits of Being an Owner Operator versus Working for a Trucking Company
There are many benefits to being an owner-operator on the road. You get the freedom to choose which loads you haul and have control of the process from pick up to delivery. The rates for loads can vary dramatically if you are being paid by percentage or mileage and can play a huge role in your ability to make the most profit.
Do you prefer driving at night when there is less traffic on the road? Being an owner-operator and setting up your own loads means you choose which hours you work. This is one of the main reasons many drivers prefer driving for themselves.
If you have a special event going on at home such as a kid’s football game or family wedding you have the flexibility to build your workload around those events to make sure you can get home.
Many companies come with politics and policies that aren’t always the best for each employee. Being an owner-operator means that you are your own boss. You are not only in charge of your own earning potential, but you are in charge of how much you work, where you work, and what your day looks like.
Working for a trucking company comes with more stability, fewer expenses, and less paperwork for the driver, but it comes at a cost to your profit margins and the flexibility that comes with being an owner-operator. Paperwork struggles shouldn’t stop you from being an owner-operator. Truck Base helps you easily manage all the paperwork you need to be successful.
Expenses of Running your Own Trucking Company
Expenses are the part of being an owner-operator that you must factor in correctly if you are going to be successful. They can take on average up to 70% of your gross income. There are many factors to take into account and if you don’t approach them correctly they will quickly erode your profit margin.
Unlike at a trucking company where basics such as insurance (trucking and health), tires, fuel, maintenance, and taxes are taken care of by somebody else, as an owner-operator these are all your responsibility to maintain.
With trucking, as with most small-business ventures, you will have both fixed and variable expenses. Your fixed expenses are things like your truck payment, insurance, and taxes. These, for the most part, will be the same every month and make it easier to plan as you go. The variable expenses would be fuel, maintenance, breakdown costs, tolls, and living expenses such as food and laundry expenses.
Carrying the correct trucking insurance is vital when you are running your own truck. There are always opportunities for claims to arise and knowing you are taken care of is a vital step. Choose an agent that specializes in the trucking industry and can take the information you give them and choose the best coverages for your business. With being an owner-operator you will need liability, bobtail, physical damage, cargo, and possibly General Liability depending on the shipper’s requirements. These are just the basics, and the right insurance agent can save you not only money but also headaches when claims or issues come up.
You can sign up for some rewards programs at your favorite fuel stops which can help some, but your day-to-day living expenses are where you have the most flexibility to save. Many truck stops have food options but they are often overpriced and not good for your health. Keeping food in your truck and picking up an inverter for the microwave or fridge can save you from buying fast, convenient foods, and can also save you money in the long run by keeping your body healthy.
Your Profits After Expenses
Whether your goal as an owner-operator is simply to be your own boss or if you are chasing making the most money possible while out on the road you must do your work of figuring out how to make profits after clearing all of your expenses.
Planning for a worse-case-scenario in your expenses is the best option, especially when you are first starting out. You can’t control what fuel prices will do or when your truck might break down and leave you with a large bill. If your truck is not moving there is no money coming in.
By keeping up the proper maintenance, and providing a cushion from good planning you will give yourself the best opportunities to bring home larger profits. You can also give yourself a better opportunity for larger profits by directly interacting with your shippers and negotiating the rate at which you will haul their loads. Whether you choose to be paid by percentage or by the mile, you have the upper hand in the negotiations because you know exactly what you need to be profitable.
If you are choosing to use load boards or paying dispatchers for your loads, you will need to factor that into your budget and expect that you will not be bringing as much money directly back to you. The more middlemen you can cut out, the better chance you have at strong profits.
No matter how you get your loads booked, you must verify when and how payment will be made. Make sure the shipper has all of the paperwork they have requested with plenty of time, as they can hold payments until all requirements are met. Their payment fee and schedule is usually hidden in the carrier packets that can often be 10-15 pages long. These snags can cause major bumps in your cash flow if you have to wait weeks or months for payments to be processed. Always be aware of businesses or clients that look too good to be true, as they usually are. Scammers are not exempt from the trucking industry.
Being an owner-operator and taking control of all facets of the business can be challenging but it can also be very rewarding and can set you up for a career where you are literally in the driver’s seat.
Learn how Truckbase’s fleet management software helps you save time and money on dispatch and paperwork today!