Is Being an Owner-Operator Worth It?
Anyone who has worked as a company driver for long enough has eventually asked themselves if they should go for the coveted owner-operator position. Is it worth it? That’s a good question, and we’ve outlined some key points that might help you find the answer.
Owner-Operator vs. Company Driver
As the name suggests, an owner-operator both owns and operates the truck that he is driving. Owner-operators are responsible for all expenses incurred while operating the truck, such as insurance, fuel, maintenance, etc. Although the driving skill set is the same between company drivers and owner-operators, there are several key differences between the occupations. The most notable of these is the pay difference, which we will highlight below. On the plus side of being a company driver, you will have more free time, your job ends when you park the truck at the end of the day, it’s much easier to change jobs if you feel so inclined and there are no start-up costs (aside from any costs incurred from training). On the plus side of being an owner-operator, you will have more time spent at home since you won’t be spending extensively long periods of time on the road, you can adopt a lenient rider policy, you get to choose your truck instead of simply driving the truck that you’re given and the respect that comes with the title of owner-operator will help prevent you from being taken advantage of by some carriers.
How Much Do Owner-Operators Make?
Owner-operators tend to make around $100 – $150k (USD) per year gross, normally placed right around the $141,000 mark.
Your Trucking Business Plan
Coming up with a good business plan is the first step for any new business aiming for success. This, of course, includes a business in the trucking industry. Creating a solid business plan for a trucking company means taking a detailed look at the financing and operational specifics of the business within the needs of the industry as a whole, and of course the individual goals for that company.
Describe your trucking business in detail by writing down a description of the company that you’re starting. This includes your reasons for starting it and the exact type of trucking that you intend to carry out; identifying the expected financial costs and gains from your trucking business by describing the capital you currently have (or have access to), and outlining the expected costs that you anticipate for the future; outlining the marketing and advertising that will help grow your trucking business; allocating marketing costs and deciding if you will carry out the marketing in-house or contract an outside firm; identifying the specific operational and management details for your trucking company; making sure that you acquire experienced or highly credentialed drivers familiar with transporting cargo on the road and confirming who your drivers will be and how you will go about hiring them.
Understanding Owner-Operator Expenses
There are several expenses that come with being an owner-operator. To list a few: fuel, tires, preventative maintenance, road use taxes, tolls, fuel taxes, personal and/or corporate taxes, breakdown costs, personal insurance and more. On top of all that, installing a new tractor can cost over $100k!
Understanding Owner-Operator Contracts
Several owner-operators, instead of offering their services to a leasing firm, opt to obtain their own authority. Basically, an authority in the trucking world is permission by the FMCSA to transport goods for profit. Within authority types, there are common carriers, who hire themselves out to whoever is looking to pay to have legal goods transported, and contract carriers, who haul freight exclusively for firms that they have signed a contractual agreement with.
Tips for Buying a Tractor-Trailer
Your choice in tractor-trailer is key to your endeavor as an owner-operator. Factors like the age of the truck (mileage, warranty, and amenities), your area of operation, fuel economy, the type of equipment you choose to run and how long you’ll be on the road should all be covered prior to purchase. Additionally, before buying your own tractor-trailer, it’s important to consider whether you wish to lease your truck to a company, or are looking to go truly independent. Of course, it is tempting to pine for full independence as an entrepreneur, and this option does come with more freedom, however leasing the truck to a company offers the security of knowing that you will have a much steadier base of freight from which to get loads.