Having been a professional truck driver and trainer for more than 30 years, I find that you never, ever know it all. There are always new things to learn. My primary goal with this blog is to help other drivers (especially newer ones) with pertinent information and tips to enable them to work happier and more safely. Guest posts, contributors and feed-back are always welcome and wanted!
The idea of being your own boss, making your own schedule and choosing the loads you haul seems perfect, right? If only being an Owner-operator was that easy. When you work for a trucking company there is someone else who is responsible for all the financial considerations of the business but when you go out on our own as an owner-operator those responsibilities become yours. Below are some key items to contemplate when you are considering the transition or have already put the peddle to the metal.
Fuel – finding ways to save and pay for it
Once you become an owner-operator what you are spending on fuel becomes more of a concern since it will directly impact your earnings. Reasonable speed and highly maintained equipment is significant to fuel efficiency. Having a fuel program is another important fuel consideration. It will be beneficial to find partners who offer programs such as fuel cards, fuel discounts and fuel advances.
Work smarter not harder – watch out for hidden and unexpected fees
Many times people in trucking become numb to dollar amounts because everything is so expensive with $500 for tires, $300 for fuel, and a $20,000 engine rebuild and the list goes on. So it is not uncommon to overlook a $20 charge/fee that happens on a regular basis. But by the end of the year that charge/fee on a regular basis could mean thousands of dollars. Make sure you are working with partners who don’t add unnecessary fees that will add up over time.
Finding freight to keep your truck on the road
Regular freight from people you can trust will make things easier on you. The key is to build relationships even if you are taking brokered freight, you will make more money over the long haul. It may also be beneficial to find partners and resources that offer free load boards.
Be very leery of extremely high paying freight, it boils down to risk versus reward. If someone is paying a rate that is out of the norm it is because you have a lower chance of getting paid. The best rate per mile on a load that doesn’t pay is not good. Reputable brokers and shippers know what the going rate is for all their transportation needs.
Keep your wheels turning even if you have to take a poor paying load. Certain areas of the country don’t pay well due to supply and demand. Chances are if there isn’t good paying freight in a certain area today, then the freight won’t pay well tomorrow either. Get moving!
You are now the owner, driver, CFO and more – how do you manage the bookkeeping, working capital and other financial considerations?
When you work for a trucking company they handle all the finances so you don’t have to worry about the financial aspects of running the business; including submitting freight bills, collecting on freight bills, insurance for you and your truck and more. Once you make the switch to becoming an owner-operator things change. If keeping up with all these requirements is too much work or will keep you off the road for longer than you can afford, you might want to look for a partner who can help with some of the financial aspects.
One option would be a freight bill factoring company who would be able to help you with the “back office” operations of your new business. Some will handle invoicing, processing, postage, collecting and more so you can keep focused on generating revenue. Freight bill factoring can also get you immediate access to working capital. When you work with the right partner it can also be fairly easy. Here is how it works:
You deliver the load.
You submit the freight bill to the factoring company.
You get access to the funds within hours.
The factoring company waits to get paid by your customer.
It is important to find a freight factoring company who will be transparent and offer no hidden fees such as no Documentation Fee, Application Fee, ACH/Direct Deposit Fee, Filing Fee, Due Diligence Fee, Administration Fee and Termination Fees.
Without a truck you have nothing – how do you get the equipment you need?
One of the benefits of working for a trucking company is they will take care of getting you the equipment you need, but when you become an owner-operator that falls onto your shoulders. You must consider what equipment you need and what you can afford. There are several ways to obtain the equipment you need. This includes purchasing with cash, getting a loan or leasing. Of these options, the one you may be the least familiar with is leasing. Leasing can lower your initial out-of pocket expenses as well as cover costs such as warranties, maintenance, parts and installation. Leasing can also offer more flexible terms than a loan and provide tax benefits.
Regardless of your experience, if you are considering becoming an Owner-Operator you should research and think through all the positives and negatives of making this change.
ABOUT JEREMY ROBISON
Jeremy is an expert at helping transportation companies of all sizes grow by giving them access to the working capital they need. He has been involved in various roles within the transportation industry, including: freight factoring, equipment financing, equipment purchasing, lease operator program, driver manager, recruiting, payroll and equipment maintenance. Jeremy is President at Tetra Capital (www.tetracapital.com), a freight bill factoring company and can be reached at email@example.com.