New To Becoming an Owner-Operator?
It’s common for truckers to seek for more independence and wanting to start driving for themselves. If you want to be your own boss, there are a lot of things to think about, plan and know about before you start this new chapter in your life.
About 58% of new trucking ventures will not have authority after one month of applying with FMCSA. In Texas, for example 1,851 new FMCSA applications were received in a recent month. Of those, only 686 ended up receiving authority a month later. Why do so many entrepreneurs not get started? We hope the following tips will help.
I. Have a plan:
At this point, you might have already received your business license, have your application with FMCSA pending, and you have a basic idea what kind of truck you want to drive. Do you already have a separate bank account for your business? Do you know which Load Board, Fuel Card, or ELD provider you will use? If you don’t own a truck, are you aware of the cost to lease one, or the down-payment required to buy one?
II. Create a budget AFTER you have some money in the bank:
Sure, as an owner-operator you will enjoy a much higher pay-per-mile than if you drive for someone else. However, from our experience, the biggest reason that a new trucking venture fails is not realizing how expensive it can be to get started and keep going in trucking. Especially with today’s truck shortage, we have seen prices for new and used trucks that would have been unheard of just year ago. If you haven’t already, start using QuickBooks or a similar program to start keeping track of all the cash coming in and going out.
Having money set aside for maintenance is especially important when you drive a truck with significant mileage on it. And when you that transmission needs to be replaced, be ready to rent a replacement truck for a while. We have been made aware of some repairs sometimes taking over a month due to parts and labor shortages.
III. To Lease or Not-to-Lease?
If you have not already, you need to decide if you want to lease onto an existing company or if you want to become your own authority and find your own loads. There are essentially three options to choose from:
- Become an Independent Carrier: Get your own operating authority. There are higher profit margins and more freedom, but those pros come with more work and oftentimes unwanted obstacles. While you can find consistent work through Amazon Relay, Uber Freight or a number of load boards, it will be up to you to make sure you have work. We strongly encourage having a business partner (i.e. spouse, family member, close friend) that can help you with some of the dispatching and tedious paperwork that is involved in this business.
- Work as a Leased Owner-Operator: After you buy or lease your own truck, you can go through an existing carrier to use their operating authority. You have control over the equipment and who you lease to, but you can’t walk away from the equipment free and clear. The advantage is that, generally speaking, insurance would be less expensive, and you have a company helping you with load procurement. Those come with a cost, of course, and your pay-per-mile may be less that if you operated under your authority.
- Lease-Purchase Operator: Sign a lease or a lease-purchase agreement to get a truck through a carrier or third-party leasing company. This is the easiest way to get a truck with little or no down payment or credit, but many drivers sign a lease before they’re ready and get saddled with expensive equipment. Some contracts restrict decision-making, and others make it difficult to take your equipment to other carriers.
IV. Your Health
Maintaining or improving your health while driving a truck full-time is difficult. You might work extremely long days, in a high-stress environment. Your job requires them to meet tight schedules and stay alert for up to 14 hours a day and you remain sedentary for long periods of time and lack of quality food options provide for poor nutrition and diet. When was the last time you had a physical? While many owner-operators think that their $60,000 truck is their most important asset, the truth is the most important asset is You. If you are not well, the business cannot operate.
Come up with a plan to take care of yourself while at home and on the road. Even simple things such as going for a walk at a truck-stop, keeping some weights or exercise bands in your cab and getting the rest you need can make all the difference.
At DOK TRUCKING, we try to help you with more than just finding you the best deal on your insurance. We will be there for you for the long-haul and are looking forward to finding out how we can help you.
1500 Benson Road South, Suite 201
Renton, WA 98055