There are growing reasons why company drivers often think about becoming independent owner-operators. The main draw is usually that independent drivers enjoy more freedom and set their own hours.
According to ATBS, overall independent owner-operator net incomes have risen to the highest levels the organization has seen since it began tracking the averages 13 years ago. Owner-operators are also now more able to finance new and better-performing equipment than they were following the recession.
But the benefits of going independent come with a big tradeoff: the need to be financially responsible and self-disciplined. The challenge is great, but for those that are successful, the rewards are greater.
Qualities of Success
Most drivers who become owner-operators already know about the need to run a lot of miles while driving safely and legally, but other personal qualities are important, too.
- Responsibility: You’ll need to develop your own business systems and set up a regular truck maintenance program. Plan for the hard times when your business is good. Set specific goals.
- Reliability: Good customer service is vital to your success. Being dependable means you’ll get the loads you need to get the revenue you want.
- Motivation: Without the desire to earn money, the freedom of being an owner-operator won’t amount to much when the truck payment is due. This means being available to carry freight and using the best tools to select and negotiate loads.
- Willingness to Learn: Seek knowledge. Ask questions. Know your limits, and learn to overcome them.
- Mechanical Aptitude: You may not have to do major work on your truck, but every dollar you save by doing simple tasks yourself goes straight to your bottom line.
Rev up your negotiating power with the rate engine built right into the web’s most active load board. With a Truckstop.com Pro account, you can view rate trends per lane and equipment type, so that you never underbid your truck.
Expertise and Advice
Deciding to purchase or lease your own truck requires careful research. If you are new to trucking, consider getting at least one year of driving experience to learn what it takes to be a safe and productive driver.
Talk to other owner-operators about their experiences, what they learned and what they would do differently if they could.
Ownership Risks and Rewards
There is more than one way to be a business owner in trucking. As the degree of independence increases, so do the potential risks and rewards.
- Lease-Purchase Operator: You sign a lease or a lease-purchase agreement to get your truck through a carrier or a third-party leasing company. This is the easiest way to get into the business with little or no down payment or credit. However, many drivers sign the deal before they are ready and become saddled with too-expensive equipment. Some contracts restrict decision-making ability when it comes to the truck, and others make it difficult to take your equipment to other carriers.
- Leased Owner-Operator: You buy your equipment, outright or with a loan, and lease it to a carrier. You run under the carrier’s operating authority. You have total control over the equipment and decide to whom you will lease. However, you don’t have any options to walk away from the equipment free and clear and have severe financial consequences if you default on the loan.
- Carrier: You get your own operating authority and become a motor carrier. You’ll see a higher profit margin and almost complete freedom as to how you run your business. But that freedom brings more work and complexity. Do you want to develop your own customers, soliciting freight directly from shippers? Or do you want to work through load boards and brokers? The latter is easier, thanks to cutting-edge tools like the Truckstop.com Load Board, but requires you to give a cut to the broker.
As a carrier, you’ll be responsible for invoicing, collections, compliance, safety, taxes – and the list goes on. Operations like these will consistently take you off the road.
The most successful owner-operators start modestly and manage well. Until you learn the ropes of owning your own business, focus on managing both business and personal expenses. As you build, you eventually may be able to afford some extras and also save for your future.