The trucking industry is full of opportunities and it's important that you educate yourself on the different options that are available so that you can find the one that will work best for you. If you have just started driving, you will probably benefit the most from working under a company and gaining some crucial experience not only on the road but on how a successful trucking business is run.
If you have been driving for companies for a while and are looking into getting your own authority so you can have more say over your income and your schedule this article is going to break down some of the pros and cons of going out completely on your own or choosing to lease your equipment to a larger motor carrier.
What It Means to Get Your Own Trucking Authority
In order to get your own trucking authority, you must first form a legal business. Many choose to do this under an LLC name to make sure they keep their personal and business assets separated. After you have your legal name you can use that to apply for your EIN number, your MC and DOT numbers, get your insurance locked in, and make sure you are aware of any local or state regulations in your area.
Once all of the paperwork is in place and you have your equipment road-ready with all of the proper markings on the outside you are then ready to start putting that authority to good use.
Getting your own authority is a major step in the trucking industry, both from a financial standpoint as well as investing in your future as an owner operator.
Benefits of Being an Owner Operator Running Under Your Own Authority
When you’ve made the decision to embark on owning your own business and operate your unit under your authority there are many benefits that you will find starting on your first run.
- An abundance of Opportunities: You are now only limited by you. You choose where you load, when you load, what you load, and how often you load.
- Higher Profit Margins: Since you are booking your loads you are in charge of negotiating your rates. You know what you need to pay your bills, and anything after that is your profit. You do have to keep in mind that the market is competitive and there is always going to be somebody out there that will move the load cheaper, but you also want to make sure you don’t cut yourself short since you don’t have a safety net of a large company behind you.
- Ability to Expand: If you are able to get 2 years of successful operating under your belt (no accidents, tickets, safety violations on your SAFER score) then many insurance companies will allow you to slowly expand your business by adding on drivers and tractors under your authority.
- Choose Who You Work With: Have you ever delivered to a shipper that is never ready for you to load/unload, struggled with getting paperwork completed, had loading facilities that were difficult to get into, or were just frustrating to work with, however you had to keep delivering shipments there because they have a contract with the carrier you work for? When you are driving under your own authority you get to decide what shippers you work with. It gives you the opportunity to build positive business relationships with shippers that you can rely on for prompt payment, efficient loading/unloading facilities, and a user-friendly paperwork system. When finding shippers that you work well with it will make profits and efficiency better for you and for the shipper.
Difficulties Faced with Operating Under Your Own Authority
We have gone over some of the benefits and positive reasons to operate under your own authority but as in every business opportunity, with the good also comes some not-so-good features to factor in.
- No Benefits: When you are employed by a large company you typically have access to benefits such as health insurance, 401K, vacation/sick time, and access to the company’s maintenance and tire facilities. These all become expenses that you will need to take out of your profits to make sure that you cover yourself at all times. Since most people are not used to factoring these in since they have always had someone else take care of them it can really sneak up on you if not planned for.
- Multiple Responsibilities: When you operate under your own authority you are no longer just focusing on driving. You are now the CEO of your business, along with the bookkeeper, accountant, dispatcher, maintenance tech, safety director, permit agent, insurance representative, and any other position that comes into play for your business. Now you could hire some of these responsibilities out depending on your financial situation, but more than likely when you’re first getting started your profit margins aren’t going to allow for a lot of extra staff.
- Finding Consistent Loads: While we did go over it being positive that you can choose your own loads you are also starting from scratch as far as building relationships with shippers where many big companies already have these built up and have consistent loads at all times. At the beginning when shippers are first learning they can trust you the loads might be harder to find. If you choose to use load boards when starting out you may also lose the negotiation range versus working directly with a shipper that knows you. This is a negative that should only affect you at the beginning of building your business. Once you prove you are a reliable carrier it should work itself out.
No matter which avenue you choose to take as an owner operator there will be both positive and negative factors to figure into the equation. If you truly enjoy business and all of the different aspects that make it successful then running under your own authority could be a great fit for you.
If you prefer doing more driving and less paperwork and bookkeeping then it might be a better option to lease your equipment to a larger company until you are more comfortable with the other aspects of running a business.
Either direction you choose to go a high-quality Truck Management Software. Truckbase is a great easy-to-use option for new trucking companies to stay organized and save time.