Home » 10 Steps to Becoming an Owner Operator
For the last year, our Becoming an Owner Operator series aimed to help those interested in becoming an owner operator navigate the ins and outs of the trucking industry. Here are our 10 steps to becoming an owner operator:
Step #1 Evaluate Your Personal Considerations
Whether you’re an individual considering a career that allows you to travel across the country, or you’ve been driving a motor carrier’s rig your whole life, there are many things to consider and tasks to accomplish before even considering tackling the road on your own. Our Becoming an Owner Operator series began by assessing four personal considerations: personality, family, health and career goals.
Step #2 Obtain Your CDL
Obtaining a CDL is not as easy as getting your driver’s license. You must pass a DOT physical, choose a license type, determine if you need any additional endorsements, take the knowledge test, obtain your permit, and take the CDL skills test.
Step #3 Consider Your Financial Situation
You’ve taken into account the personal considerations (family, health, etc.) of becoming an owner operator and have obtained—or are on the way to obtaining—your commercial driver’s license (CDL). That means it’s time to tackle your finances and form a business plan that will ideally prevent you from going bankrupt within your first year on the road. This means taking trucking equipment, business loans and licensing, owner operator insurance, and living expenses into consideration.
Step #4 Purchase Trucking Equipment
Purchasing trucking equipment is arguably one of the most frustrating and exciting aspects of becoming an owner operator. Not only does one need to consider his or her financials when it comes to purchasing a truck, but also the type of operation he or she hopes to run. This post aims to help those who are looking to purchase trucking equipment carefully consider what they need for their specific operation.
Step #5 Get Licensed and Registered
Driver’s are required to have certain licenses and endorsements just to drive a commercial vehicle. This post will build off of the foundation laid in Step 4 and discuss other registrations owner operators must attend to before hitting the road.
Step #6 Lease onto a Motor Carrier or Obtain Your Own Authority
There are two classifications of owner operators; those who are leased to a company and those who operate under their own authority. This post will discuss the differences between the two in an effort to help those of you just starting out determine what will work best for your lifestyle and financial situation.
Step #7 Purchase Trucking Insurance
The trucking insurance coverages you need depend on whether you’ve decided to lease onto a motor carrier or operate under your own authority. Take a read to make sure you’re properly covered in the case of an accident.
Step #8 Decide if a Master Insurance Policy is Right for You
Our previous step toward becoming an owner operator discussed the different trucking insurance coverages an owner operator needs. These differ depending on whether s/he decides to lease onto a motor carrier or operate under his or her own authority. This post is for those who have leased onto a motor carrier and are exploring their insurance options.
Step #9 Determine if Load Boards are Right for You
Today’s load boards are typically an online site where owner operators find loads posted by shippers and freight brokers. Sometimes, online load boards also have a Smartphone App option, enabling truck drivers to find loads without having to physically be seated at a computer with an Internet connection. The load boards of today can also be filtered by origin/destination, trailer type, and other determining criteria. Read more to learn the difference between public and private, as well as free and paid load boards.
Step #10 Explore Invoice Factoring as a Cash Flow Solution
Unfortunately, invoice factoring only pertains to those who have chosen to operate under their own authority. However, it never hurts to take a read, especially if obtaining your own authority may be in your future.
Becoming an owner operator is not a decision that should be taken lightly, especially if you wish to operate under your own authority. Truck Writers is here to provide you with the trucking insurance needed to succeed within the trucking industry. Contact Truck Writers today!
August 20, 2019
The United States has a tremendous shortage of truck drivers despite a strong economy and increasing demand for shipping services. More and more people are purchasing products and goods online, increasing the demand for the shipment of products. But with an aging demographic of retiring truck drivers and no new drivers to take their places, there is no end in sight to the shortage of truck drivers. The American Trucking Association estimates that there is already a shortage of at least 50,000 truck drivers and that number is expected to grow.
As the demand for new drivers increases, so do wages offered by carriers. In 2015, the median annual wage of a truck driver employed by a private trucking company was $73,000, which is much higher than the overall average salary for individuals in the United States. Despite high wages, the shortage remains and difficult lifestyle is likely a key factor.
Difficult lifestyle is a factor in the driver shortage
Truck drivers often face a difficult lifestyle, due to a lack of home time and the significant amount of time spent away from family and friends. The lifestyle of a truck driver can be unhealthy because it requires you to sit for extended periods of time, while eating meals on the go. Some say there is a serious lack of respect for truck drivers and that they often face harassment from other drivers, police, and enforcement agencies. There is also a lot of stress on truck drivers to keep up with the ever-changing technology and rules of compliance. Aside from the potentially challenging lifestyle truckers can face, there are a host of benefits of becoming an owner-operator truck driver.
Benefits of getting into truck driving
Becoming a successful owner-operator is not likely high on the list of many youth, but it should be. For one, becoming a truck driver does not require a college degree. Obtaining a commercial drivers license (CDL) is straightforward and can be a relatively quick process. For students out of high school who are uninterested or unable to attend college, or for those who did not obtain a diploma, going into trucking is reasonable way to make a high wage. The earning potential in trucking is high, especially if you get on a track to become an owner-operator.
How to become an owner-operator
Becoming an owner-operator is challenging but poses a good opportunity for young people looking to start their own business. Below is a sample procedure for what it takes to become an owner-operator in trucking:
- First and foremost, you must gain experience in trucking before working to establish your own business. Learning the rules of trucking, compliance, regulations, and getting driving experience, takes time. Gain experience working as a company driver for a private fleet while earning a respectable salary.
- Next, and this may be the most challenging part, is to determine where your funding will come from. Do you have capital of your own to put towards ownership? Or are you going to take out loans and financing? Do you have good credit? Research your credit score, interest rates and fees before taking any action. Either way, you should develop a business plan that outlines your projected costs and strategies.
- Familiarize yourself with all current and coming federal regulations; such as the FMCSA ELD mandate.
- Acquire the basics: Apply for a US DOT number and Motor Carrier (MC) number, and obtain health and truck insurance coverage. Determine your business structure, and register your business, filing all appropriate paperwork.
- Use telematics as part of your strategy to keep costs and risk low.
- Fuel tracking – Gain insights into fuel economy and lower your fuel costs.
- Compliance – Automatically track HOS and DVIR, reducing the likelihood for violations for long haul drivers
- Fleet dashcams – Mitigate risk and potential reduce false claims
- Understand how to calculate your profits
- Determine the total cost of ownership (TCO) for any assets you currently have and use this figure to estimate costs of purchases you are considering.
- Calculate your revenue per mile
- Calculate your cost per mile
Other types of ownership options
Becoming an independent owner-operator is probably the best route to profitably owning your own trucking business, but many drivers don’t have the equity upfront to make that dream a reality. There are other options for drivers to look into including:
- Lease operators
These drivers lease a truck from a freight company and continue to haul freight for that company. Essentially, you pay to lease the truck from the freight company and they pay you to drive it. This is typically considered a less profitable option, but for drivers looking to gain experience in the short term, it’s a good way to get started.
- Leased owner-operators
This option is best for drivers with experience who are looking for more control but don’t have the capital or credit to purchase their own truck outright. As a driver, you’ll lease a truck and then work hauling loads independently. Major considerations include health insurance and benefits provided by big companies. Profit is typically higher when you are a business owner, but if your lease rates are high and you have to pay high rates for insurance, you might consider sticking with a private fleet until you have enough equity to purchase a truck outright.
Why now is the perfect time to start your own trucking business
If you’ve been in trucking for some time and have been considering starting your own business, and being your own boss, now is a great time to take action.
If you have that business savvy, entrepreneurial spirit and experience in trucking, you may already know that the sky’s the limit when it comes to profitability. And now, more than ever, drivers are needed to fill the growing shortage of drivers. The right person, with the right plan, has an opportunity in front of them to transform the trucking industry and to make a lot of money while doing it.
Kevin Aries leads Global Product Success for Verizon Connect, helping build software solutions that optimize the way people, vehicles and things move through the world.
Even if you are new in trucking, you’ve already heard about owner-operators. You know that they’re independent drivers who own a truck and have a great income. But don’t be fooled by the opportunity of making money.
If you are considering to become an owner operator you should know about all the requirements to do so. And think about rushing into this business or not.
What are the Requirements and Are You Ready for Them
Like any other business, you can’t start being an owner operator if you don’t meet special requirements, don’t have resources, and experience. The last one is the one you interested in. Let’s run through requirements.
- Money. You need a large pile of cash. You need to buy a truck, you need to get the CDL, you need to get your own authority and DOT number. All these things require money. Also, you need to have back up savings if something would go wrong.
- CDL and other permits. Just by getting a truck you won’t become an owner operator. You need a Class-A CDL, DOT number, and own authority to run like an independent driver.
- Experience. The first requirement for all owner-operators is at least 2-year experience in OTR trucking. Without experience, you can’t work on a professional level.
What to Do if You Don’t Have the Experience But Have a Will to Work?
If you are still down to become an independent driver, you should start searching for owner operator jobs with no experience. There are a small number of companies who cooperate with owner ops without experience.
Owner Operator Land works with companies who can hire owner operators without the experience. You must prove that you are a competent, adequate, and responsible driver.
Being an owner-operator has many advantages. It puts you in charge of your truck-driving career. Your truck, your choices of where to go, when to go and what to haul. But it is also more difficult: you have to keep your truck running, find jobs, pay for gas, cover all of your expenses yourself, there is no carrier to do it for you.
Being an Owner-Operator
You long for the life of the open road, sitting behind the wheel of your truck, driving across the country hauling loads far and wide. But you want more than to be just a driver for a carrier, you want to be your boss, and make your own decisions.
Being an owner-operator can have many advantages over driving for a carrier. Owner-operators can make quite a bit more money than they would drive for a company. Many successful owner-operators even go on to buy more trucks and hire their drivers as well, creating their fleets.
But being an owner-operator is much more difficult than merely being a truck driver. When you own your truck, you are in charge of all upkeep of your vehicle. You are in charge of buying gas. You are in charge of all payments to keep you on the road. It can prove to be quite expensive.
Because you don’t just have a job, you have your own business; you also have to pay for many things that usually a carrier would pay for: health coverage, dental coverage, truck insurance, life insurance, workman’s compensation, etc.
Being an owner-operator is a very involved business, far more so than driving a truck. If you want to become an owner-operator, the most important thing is: be prepared. Before you make the step into the world of owning and operating your truck, make sure that you know what you’re doing. You might be a great driver, but to succeed you also have to be a good businessman.
Don’t Jump in Too Fast
A sad fact in the owner-operator world is that many owner-operators can fail or go bankrupt within the first year of running. One of the primary reasons for this is truck breakdowns. When you own your truck, there is no carrier to pay for significant repairs; you have to pay for it yourself.
What happens if the truck you have bought has a significant breakdown and you don’t have the money to pay for the repairs? You can’t make any more money because your truck is out of commission. What are you going to do?
Before deciding to become an owner-operator, it is best to make sure that you have a significant amount of monetary resources to fall back on should something go wrong. Something doesn’t always go wrong. That is the exception to the rule. But if something happens, you need to be prepared, or you could see everything you’ve worked you will lose. There is no safety-net for the owner-operator besides the one you make yourself.
Buying a Truck
One of the most important parts of being an owner-operator is, of course, buying and owning your truck. Trucks can be costly, and you can find that a large part of your profits in your first years on the road as an owner-operator is being eaten up merely paying off your truck.
The first concern when buying a truck is: do I want used or new? Used vehicles are significantly cheaper than purchasing a new truck, but they are also of course used. They’ve already been on the road, and thus have a higher chance of running into mechanical problems. But there are many solid used trucks out there that could work correctly for you.
Take your time in purchasing your new truck. When you buy your vehicle, you are putting your future into the hands of that truck. It is no minor decision; you dedicate your business and your life to this truck. Get the best truck that you can afford, without overstepping yourself and putting yourself in a hole of debt so thick that you can’t climb out of it.
The Lease-Purchase Option
One option that some new owner-operators take is a lease-purchase from a carrier. It is mostly a lease to own program, where the operator leases the truck for a specified period, usually about three years. You must still make a down-payment, but this is generally much smaller than when buying a new vehicle on your own.
At the end of the three years, the operator can either purchase the truck for what is left over between the price of the truck and what he has paid off in the lease. He can switch the truck for another lease truck, or he can sell the truck and keep the difference between the selling price and what he still owes on the truck.
One major problem with the lease-purchase option is that they will often control what loads you take, and besides the basic lease payments made every week, they can often take off money for every mile you drive to pay for maintenance and other costs on the truck.
The advantage of the lease-purchase option is that it allows you to purchase your truck with much less money up-front. But you can find yourself out of control of your vehicle and your own business for the first years of being an owner-operator, being controlled by the carrier from which you lease the truck. While the lease-purchase option might seem like the fast track to success, it is usually better to wait until you have the money for your down-payment and purchase the truck for yourself.
Finding Jobs as an Owner-Operator
Once you have your truck, the essential part of being an owner-operator is, of course, finding jobs.
There are many companies out there who hire owner-operators, and it can take time and patience to find the best one. While generally companies who hire owner-operators will not pay for things such as breakdowns, or gas, or provide other benefits, this is not always the case. Some give quite good benefits, although these can be very difficult to find.
Like everything with becoming an owner-operator, it is essential to do your research. The internet can be an excellent tool for helping you find the best jobs in your new career as an owner-operator.
The internet is a powerful resource in the hunt for jobs. Use it. The web allows you to get information on hundreds of companies from around the country all at your fingertips with the click of a button
If the trucking industry is a place where you want to work, becoming an independent contractor is one of the ways to go. However, it can be complicated for some applicants, as there are strict requirements you should meet.
Along with the requirements, an independent contractor has a lot of responsibilities, although you have more freedom, higher income, and a flexible schedule.
Difference Between Owner Operator and Independent Contractor
Driver classification is a total mess. If you look at the definition, owner operator and independent contractor are the same things, like a freelancer. However, that’s not true, when you see the real thing.
Owner operator owns their own truck or equipment, has their own authority, finds their own loads. Owner operator doesn’t lease to any company. And here is a catch, not all independent contractors are owner operators. Independent contractor can lease a truck from the company they work for. It brings out a question of how many control the company has over the driver, they’re leasing to.
Can a Truck Driver be an Independent Contractor
Yes, they can. The criteria for that are common:
- 21 y.o. and older
- Valid CDL
- US citizenship
- Clear driving history
- 1 or 2 years of driving experience
- Ability to pass DOT Drug and Physical Screen
You don’t necessarily need to own a truck because you can lease it from the company you want to work for.
How Much Does an Independent Truck Driver Make
The income of the independent contractor is much higher than the company driver. You choose what loads to carry and their number. But don’t be lured by the illusion of having a lot of cash.
Your full salary depends on what kind of loads you haul and what equipment you have. Our advice to you is to always have extra credit in case your customer will not pay on time.
How to Start an Independent Trucking Business
Being an independent contractor means that you need a trusted company to work with. After receiving the CDL and own authority, the next step is to find loads. You can search them on load boards or try sticking with a company.
Owner Operator Land gives you a big opportunity to find a reliable carrier company. We work with numerous carriers who would like to hire an experienced driver. Just call us and we’ll find the best business partner for you.
Becoming an owner operator is considered a bit of a holy grail in the trucking industry. Everyone has considered it, and some eventually become successful owner operators. Essentially it’s like running your own business, and comes with more independence and flexibility. Be careful though, as being an owner operator involves a great deal more responsibility and management tasks. Generally you’ll want to consider being an owner operator only after years of experience on the road as a company driver. Once you’re there though, here’s what you need to do to become an owner operator.
Evaluate and Decide
So you’ve spent nearly a decade as a company driver on all sorts of hauls and trucks across the country, and you feel you’re ready to become your own boss. Now is the time, right? Not so fast!
There are many things you need to take into consideration before being sure that you’re ready to be an owner operator. The first set of factors is professional and financial. Are you financially ready to run your own business? Do you have enough in savings if things don’t pan out for 6-8 months? Where and how will you find a place for closing deals with transportation companies?
If you’re successful, you could be making over $100,000, but many more owner operators will be struggling before they start making a profit.
Perhaps more important than the financial considerations are the personal factors. Are you and your family ready to make such a large commitment? How will this decision impact your family and home life? How will your health be impacted by being on the road for so long? Will your family be able to help you with the business-side? Take all these questions into account before making a decision.
The first step is to acquire the proper authorization. You’ll need to acquire the US DOT (Department of Transportation) and MC (motor carrier) numbers. There is a one-time $300 filing fee to request an MC number with the Federal Motor Carrier Safety Administration (FMCSA). You can learn more and acquire the MC number here.
As an independent truck operator, you’ll also need to be covered by the mandatory health and truck insurances.
Aside from being enforced by the federal law, truck insurance will protect you as an owner operator in the event of unpredictable situations.
There are different types of coverage depending on the goods you plan to haul. Learn more about insurance coverage and requirements here.
In general, the trucking industry is heavily regulated. As a company driver you probably didn’t have to worry about this too much besides making sure you follow the regulations the company made you aware of. As an owner operator, you’ll need to be aware of all the regulations ahead of time, and make sure you are in compliance. For example, you’ll need to find out everything you can about the electronic logging device (ELD) mandate and find the right ELD solution for you.
Get a Truck
The next step is to find your own truck. This can be the most exciting and the most frustrating parts of becoming an owner operator. You’ll need to decide what type of operation you want to run to determine what type of equipment to obtain. Having experience with certain kinds of trucks and hauls will give you the edge in making this decision.
You could choose to aim for very general and generic hauls or pick a niche that suits you best. Or you could aim to strike a balance between the two.
For getting the truck itself, you generally have two options. Either buy your truck and trailer entirely or acquire them through financing with the bank. As you can see, this depends heavily on the state of your finances. Most people choose to go through the bank to acquire a truck.
Since this is one of the most cost-intensive steps, remember these two tips: find the best truck deal for yourself and find the bank with the lowest interest rates.
Keep in mind that the bigger your down payment on the truck, the lower your monthly payments will be. Banks will consider a number of factors for the loan including your credit score and history, whether you’ve had a permanent address, and if you’ve had a stable job. This is where your years of experience and preparation will count.
Being your own boss in the trucking industry isn’t easy. All of a sudden you’ll have to master all sorts of concepts you didn’t think of too much while a company driver. Regulations, compliance, cost per mile, gross revenue, maintenance costs, tax filing, and accounting are only a few of the various aspects of a job. Hopefully you’ve been exposed to all of these for years as a company driver and feel ready to master them.
Most importantly, you need to start being more cost conscious. Your profit is going to depend on two factors: how much revenue you bring in and how much you can cut costs. In fact, you should familiarize yourself with the “golden equation”, which simplifies your finances.
The golden equation is:
- Revenue per mile – Cost per mile = Gross revenue
- Gross revenue – Taxes = Net Profit
Once you’ve processed this, you’ll find new ways to cut costs like finding the quickest and shortest routes, avoiding maintenance issues, and reducing vehicle idling. You’ll also need to develop a system for finding loads. Using load boards is a popular method to find freight. These are online sites where owner operators can find loads posted by shippers and brokers. Many of these will have mobile apps for your convenience. Take to your owner operator buddies as contacts to get recommendations of who to work with and who to avoid.
Becoming an owner operator is one of the biggest decisions you’ll make as a truck driver. Ideally you’ve prepared for it for years, and you feel comfortable and ready for the impact it will have on your life. While you stand to profit more, and enjoy more independence, it comes with many challenges. While this covers the basics of how to become an owner operator, you should also research and talk to many other drivers before making the decision to become an owner operator.
Find an Owner Operator job
We match owner operators with jobs based on their qualifications and lifestyle preferences.
As companies expand their operations and cater to new customers, they need someone to transport their products. One group of truck drivers, owner-operators, own their own trucking business and enter deals to deliver products for these companies. Owner-operators often work independently, which gives them more freedom and flexibility than traditional truck drivers. In this article, we explain what an owner-operator is, what they do and how to become one.
What is an owner-operator?
Owner-operators own their business and also may contract with a company or own their own truck and any equipment they use to transport goods. Because they own the business, owner-operators keep the revenue generated by the business, and they also pay the costs of ownership, such as insurance, taxes and equipment costs. They can also choose which jobs they want to accept, decide their own schedule and personalize their truck or other equipment.
What does an owner-operator do?
Owner-operators transport goods for companies, either as a contracted employee or an independent operator, and they manage their own business. This can include searching job boards for companies who need a driver to transport products or accepting assignments from a company the owner-operator contracts with. They may transport this freight themselves or assign transportation duties to other drivers who work for them. Owner-operators also record and manage expenses, create work schedules and perform maintenance on their truck and equipment.
How to become an owner-operator
Owner-operators have a great deal of freedom to decide what they want to do, and they also have a lot of responsibility for their business and any employees they might hire. You can follow these steps if you want to become an owner-operator:
1. Evaluate your situation
Consider your current circumstances and what you will need to succeed as an owner-operator. Ask yourself how much you know about the trucking industry and how many people you know in the industry. Look at your finances to decide if you can afford everything you need to start your own business.
Like any other truck driver, owner-operators drive for long periods of time and often travel long distances. Consider whether you are physically fit to complete the work and if long hours away from your home suit your lifestyle. If you have less than three to five years of experience, consider working as a truck driver first to gain enough experience.
2. Research the industry
Consult owner-operators you know and others who know about running a business, such as tax professionals or small business owners. They can give you firsthand information about what you can expect as an owner-operator and offer advice from their own experiences. Consider whether you want to lease onto an existing trucking company or work completely under your own authority. Leasing can be helpful for new owner-operators because companies often supply loads to transport, but working independently can be lucrative and allow you more flexibility.
3. Get your commercial driver’s license (CDL)
Check your local laws to be sure you meet all the requirements to earn a CDL. For most states, you can follow these steps:
- Be at least 21 years old
- Get your driver’s license
- Get your CDL permit
- Take a CDL training program
- Pass a road skills test
Depending on your experience in the trucking industry, you may already have a CDL. Regardless of whether you already have one, be sure you have the correct class of CDL for your intended cargo. For example, if you plan to transport hazardous material, you need a hazmat endorsement on your license.
4. Get the equipment you need
Consider what equipment or tools you might need for your company. For example, you will need a truck and trailer for most loads, but you may also need specialized equipment for long or wide loads. You can purchase a truck and trailer or lease one from a trucking company. Your options may include:
- Lease: If you choose to lease, you may need to perform work for the company you’re leasing from as part of the lease arrangement.
- Lease-to-own: Some companies may offer a lease-to-own option, which may mean leasing on a payment plan until either you pay it all off or pay a certain amount before owning it outright.
- Purchase: If you want to purchase your truck, you can look for a bank with a low-interest loan if you need one. A high credit score, stable work history and permanent address can help you qualify for a loan with a bank.
5. Apply for truck licenses
Check your local laws and legislation, including anything that applies when you cross state lines. Typically, you need a U.S. Department of Transportation (USDOT) number and a motor carrier (MC) number. If your vehicle travels through multiple states, you may also need an interstate license for your truck. These licenses may take some time to process, usually four to six weeks, so be sure to apply for them before you have to have them.
6. Buy trucking insurance
Research the laws in your area to ensure you have the correct trucking insurance and consider speaking with an insurance broker to discuss your options. Typically, owner-operators need general and primary liability coverage to operate their trucks legally. These types of insurance will cover damage to another vehicle or driver in the event of an accident and any damage to a loading facility or cargo during transportation.
7. Reduce costs where you can
You can lower your costs without affecting important items in your budget by keeping your equipment functioning properly to avoid repairs and changing some of your habits. You can improve your fuel efficiency by driving close to the speed limit and keeping your speed as consistent as possible. You can also avoid idling by looking for routes with limited traffic or delays and drive safely by braking gradually and turning slowly. Look for routes that will be fast and short, and consider looking for jobs that begin near your destination.
8. Look for work on load boards
Load boards collect information from companies who need someone to transport their products and list the jobs where drivers can access them. Some load boards are free and others require payment to use them, and while many of them are accessible through a website, some are apps you can check on your phone. Consider which option would be more convenient for you while you decide which job board to follow. Jobs can pay by a percentage of the load that you transport or by mileage.
Running your own trucking operation is an attractive career path with a great many benefits and advantages. But how to become an owner-operator truck driver?
Take a look at our guide and learn all about the steps to becoming an owner-operator truck driver.
The First Steps: Understanding Your New Career
Before you begin to build your owner-operator truck driver business, there are a few things you need to consider.
- Is this the right career path for you? If you love driving and logistics, the answer to this question is likely to be yes.
- Are you willing to strike out on your own? It can take time to recoup your initial investment as an owner-operator truck driver. Bear this in mind and prepare for the potential stress and anxiety of running your own business.
- Do you have the necessary pre-qualifications? Before you obtain your commercial driver’s license, or CDL, you will need a clean standard driving license and no outstanding legal judgments.
- Are you aware of the expenses you will encounter? Ongoing truck maintenance, insurance expenses, and applicable taxes are just a few of the costs you will encounter as part of running your new business. Be prepared to meet these expenses and understand their impact on profitability.
- Are you committed to your new career? If you run your owner-operator truck business in the right way, you will experience great rewards and ROI. However, this requires commitment, so make sure that you are ready to devote your time to this goal.
Getting Started: the Practical Steps to Becoming an Owner-operator Truck Driver
In order to begin your career as an owner-operator truck driver, you first need to obtain your commercial driver’s license. This is an additional license to your standard driving license that permits you to operate heavy goods vehicles or vehicles with cargoes that have been registered as hazardous. The CDL represents your first major step towards running your logistics business.
Part of the CDL application process involves a Department of Transport physical examination to assess your physical fitness. You will also need to select the right type of license for your business model, as different types of commercial vehicles require different license levels.
Understand Owner-operator Truck Driver Expenses
An effective business starts with an effective business plan. Review your finances and get on top of all the expenses you will meet in your first 12 months of operation. Think about owner-operator truck driver expenses, such as the equipment you need, as well as insurance and general living expenses.
Building a strong trucking operation takes time, and it is likely that you will not begin to see proper returns on your investment until at least a year into your new career. This may take even longer in some cases. Understanding your finances and formulating a plan will help to protect you from the risk of bankruptcy.
Bear in Mind Owner-operator Truck Driver Tax Deductions
As you formulate a business plan, remember that many of the expenses involved also count towards your owner-operator truck driver tax reductions. Equipment costs, maintenance costs, and other expenses can be subtracted from your annual tax bill.
It is important to remember this point, as the savings you will make on your tax payments will make it easier to properly plan your business’ future.
Build Your Set-UP
You will need a substantial amount of equipment to make a success of your owner-operator business. Of course, the truck itself will be the primary expense here, and you should take time to select the right vehicle to support your new business. Consider what kind of cargo you will be carrying and the kind of routes you will be covering.
Stick to your business plan and your budget when building your equipment set-up. If you find that your original research and estimates were wildly incorrect, you may need to go back to the previous step and create a new business plan.
Register Your Business
The CDL is the starting point for your license and registration as a commercial truck driver. Depending on the state you operate in, you may need to obtain other licensing before you can carry cargo out on the road. The Department of Transport in your state or jurisdiction will help you understand what licenses you require.
You will also need to register your business. It is likely that your owner-operator business will cover several different states, but you will need to register your business in the state your headquarters is based in. You may decide to headquarter your business in your own home to save on costs, but you will still need to register this as your place of business.
Decide your Career Path
As an owner-operator, you may decide either to operate under your own authority or lease to a company. There are a number of advantages and disadvantages to each option.
If you decide to operate under your own authority, you will be responsible for finding clients and developing your operations. You will also enjoy more flexibility and freedom as you run your business.
Leasing to a company will make it easier to find the loads and contracts you need to build your business, but you will be dictated to by the terms and conditions of the company you lease to. Give both options the appropriate consideration and decide which business model best suits you and your short- and long-term plans.
The decision you make in the previous step will also dictate which insurance you need. If you decide to work with a company, this organization may be able to provide some of the insurance you need. If you decide to operate on your own terms, you will be responsible for all insurance yourself.
Different states and jurisdictions will have different insurance requirements. It is important that your insurance covers you across all of the different areas you plan to operate in, providing comprehensive legal compliance and complete peace of mind.
Plan how You Will Connect With Jobs
Finding loads to carry and jobs to take on is a key part of your work as the owner-operator of a trucking company. You can use online load boards to help you find loads from freight brokers. This is an effective means of finding the jobs you need to build your business.
As you develop stronger relationships with clients and customers, you will find it easier to find the loads you need to secure a return on your investment. You may even find that you need to expand your operations to fill the demand.
Reach Out to Logity Dispatch and Start Your Owner-operator Business Off in the Right Way
Here at Logity Dispatch, we can help you get your owner-operator business up and running smoothly. Reach out to our team today to find out more.