If you have been in the business for a while working for other companies and want to test out the waters and drive for yourself there are some keys to success you need to follow.
What is an Owner Operator in the Trucking Industry?
An Owner Operator in the Trucking Industry is someone who operates their own business. This can be them actually driving their own truck or it could be that they own equipment and hire drivers to run the trucks for them. Either way, they call the shots of what to load, when to load, and how much time the truck spends on the road.
What Are The Steps to Becoming an Owner Operator?
Becoming an owner operator isn’t necessarily a linear path and can come in a multitude of ways, but a lot of the basics are the same. Many owner operators are drivers who have driven for a company for some time and are looking for more freedom in their work life. They want to be able to decide what and when they’re hauling as well as for deciding when they can make it back home. They also know that there is a larger room for profit when there aren’t as many people in the chain taking their part. Here are a few of the basics of becoming an owner operator.
- Obtaining Your CDL. In order to operate a commercial vehicle for hire, you must have a valid and current Commercial Driver’s License. If you have been a company driver before then you understand what it takes to get one, how important it is to keep it updated and to make sure it never expires. It is also important to remember that the longer you have your CDL and keep your record clear from violations or accidents not only does it make you a better driver but it can also help your insurance rates.
- Evaluate your Personal Situation. Are you someone who is going to be able to get yourself out the door even if there isn’t a higher-up telling you where to be and when? The rules are still the same if your wheels aren’t moving there isn’t money to pay the bills so you have to be able to motivate yourself to work consistently. Are you needing a more predictable schedule due to family obligations? Do you have the ability to create and build a successful business? Some people’s personalities are more suited to being told what to do. Knowing yourself and what you are capable of is important when deciding if you can be a successful owner operator.
- Review Your Finances. When beginning your own trucking business you need to make sure you have plenty of cash flow upfront because until things get rolling you will need to foot a lot of the start-up costs. Things such as insurance, filing fees, new authority fees, vehicle maintenance, fuel, and accountant fees along with anything else that comes up will have to come out of your pocket. There are many instances when you first begin hauling for a shipper that it could be 30-90 days before everything is finalized and you get paid. You need to make sure that you are going to be able to cover these as well as any other expenses that might pop up, especially at the beginning.
- Form a Corporation or LLC. When you are becoming an owner operator it will make paperwork a lot more simple and easier to maintain if the business operations are separated from your personal name and finances. Having any equipment listed in your personal name can become an issue down the line if you happen to get caught up in any lawsuits due to claims with the equipment. Having it separated out will keep your business in one lane and your personal finances and vehicles in another. This will also make things easier when it comes time to do your taxes at the end of each year.
- File for a US DOT#/Get Authority Active. It is kind of a balancing act after you have formed your business or LLC name and begin to apply for your US DOT# and operating authority. You can’t get insurance under your DOT# until it’s active and they don’t like to make your authority active until you can prove you have insurance. Be sure and reach out to a permit office as well as an insurance agent that is both familiar with the commercial trucking industry and can help you get everything lined up correctly. An added bonus would be if they work together and can help move things along more smoothly.
- Keep All Documentation. Keeping records of all your paperwork in both an office area as well as in your tractor units is vital at all times. Random DOT inspections can make or break your business. Having all of your documentation ready and organized is a great habit to start when becoming an owner operator.
Tips for First Time Owner Operators
So you have been driving for a while and feel like you are ready to become an owner operator and you have completed all of the above steps to get your business off the ground. Here are a few tips to follow as you start out building your business.
- Start Small. There will always be lots of shiny, flashy things you think you need once you become an owner operator, however until you build your business up it is best to keep functional, well taken care of equipment, but nothing too over-the-top. You don’t want to just be working to be getting by, the goal is to build something that can thrive.
- Build Relationships With Your Shippers. The shippers you haul for are going to be a big factor in whether or not your business is successful. Prove to them that you are dependable by showing up on time, having paperwork ready and available, and giving them all of the reasons to continue using you to haul their products. This is a major component of becoming a successful owner operator.
- Calculate Real Costs. When you’re calculating your fixed expenses such as fuel, maintenance, insurance, equipment payments, and other money that will need to go out be sure that you are being realistic. It is much better to overbudget in case unexpected occurrences come up than if you are underbudgeting and find yourself scrambling to get out on the road.
- Remember Everywhere You Go You Are Your Business. When you are working for someone else you are a direct representation of them when you are sitting behind the wheel. If you are your own boss that goes another step in that you are your business everywhere you go, even when you are not on the clock. Remember that word-of-mouth is still one of the best ways to grow any business. Be sure you are representing yours well at all times.
Once You Are A Successful Owner Operator How Do You Look at Building Your Trucking Business?
Many insurance companies will not allow growth within the first two years of covering a new trucking business. They want you to prove that you are dependable and will take care of your equipment and drive responsibly.
Once you get those first two years under your belt and have a clean track record then could be a good time to decide if you are interested in expanding your trucking business. One of the most critical things to remember is that when you are hiring drivers to add to your company if they mess up it goes on your DOT score, and can stay there for 3 years. Vetting your drivers and their equipment will go a long way in keeping your trucking business successful and prosperous.
Whether you’re looking to be an owner-operator or a veteran in the industry, Truckbase can help you handle your office load with our document storage, manage your loads and avoid costly disputes if you have time-stamped photos. So that you can focus on what counts. Schedule a demo today and find out why so many truckers are moving to Truckbase!