Owner-Operator Profit Guide: Tips to Boost Your Bottom Line

Know your numbers

Track your expenses and income

Develop an easy-to-follow system that helps you keep track of your monthly income and see what money is going out the door. While this might seem obvious, actually getting a bird’s-eye view of your spending can be eye-opening, as you become aware of the impact even small costs can have on your bottom line. This helps you become more thoughtful about your spending habits and can motivate you to curb mindless and unnecessary spending. Invest in simple software that keeps your business and your finances organized in less time and with more accuracy than attempting to do it manually.

Understand cost-per-mile to measure profitability

To ensure owner-operator profitability, you need to know your fixed costs and your variable costs. Fixed costs stay the same each month, and they include expenses that don’t change, like truck payments if you have them, insurance premiums, and cell-phone bills. Variable costs change from month to month, depending on how much you’re on the road. They include fuel, lodging, and food. Variable costs impact your cash flow, so they need to be budgeted for and kept in check, depending on how much money you’re bringing in. The good news? You have control over your variable costs.

It’s critical to know your cost-per-mile, so you can lower it to make more money. You can do this by taking steps to reduce fuel consumption, keep your truck in good shape to avoid costly breakdowns, and plan routes that get you home at the end of the day to avoid lodging and food expenses.

Do monthly check-ins

Review revenue and expenses consistently to spot spending trends, control costs, and set realistic financial goals short and long-term. If you’re using a spreadsheet or accounting software, it’s much easier to analyze your spending habits and make necessary adjustments, whether it’s hauling more loads, negotiating higher rates, or cutting costs where you can. You can make month-to-month adjustments as you go to help ensure end-of-the-year profitability.

Use tech tools for tracking

Apps or other tech tools help simplify the accounting process and avoid manual errors. Some apps even track your IFTA taxes on the go, so you know what you owe ahead of tax time and can prepare accordingly.

Know your cash flow

Factoring can help you with cash flow, especially as you are building your business. Factoring loads helps you get paid for a load much faster than waiting for a broker’s pay cycle, which can take several weeks to process and get you paid. Choose a factoring solution that offers more benefits and doesn’t lock you in to strict contracts. Look for a non-recourse factoring solution that helps protect you from fraud and pays you even if the broker fails to pay. Not all factoring solutions offer that, so do your homework.

Control your fuel use

As an owner-operator, fuel is one of your biggest expenses. While it’s true that you don’t have control over fuel prices, you do have control over your routes, your driving habits, and other variables that can help you get better fuel mileage.

Reduce your driving speed

Drive at a speed that stretches your fuel mileage. Driving at 55-62 mph can reduce fuel consumption, lower maintenance costs, and put less strain on the vehicle.

Make aerodynamic adjustments

Simple changes like adjusting the fifth wheel can improve fuel efficiency. Similarly, your tires’ rolling resistance helps you get the maximum mileage for your fuel buck.

Use fuel discount cards and fuel tax strategies

Choose a fuel card that offers discounts on truck maintenance, too, and buy fuel in states where taxes and prices are lower to reduce expenses. Fuel cards can also keep your accounting and finances organized, especially if you put fuel and maintenance costs on one card for easy reviewing and expense tracking. Again, not all fuel cards are created equal, so look for one that offers the best discounts in your area, security features that help protect you from hackers, and don’t charge hefty fees.

Focus on consistency

Try to run your truck in regular lanes

Establishing consistent routes helps build relationships with brokers and shippers, gives both you and your customers stability and reliability, and leads to steadier work and better rates. Once a broker or a shipper gets to know you, they’re likely to send more loads your way, especially if they have a good understanding of your schedule and rates.

Build a network of trusted brokers and shippers

Taking on challenging loads (e.g., high-demand or less desirable loads) builds trust and can lead to long-term partnerships and consistent income. This also lets your customers know you are reliable. If you establish a network of trusted relationships, you’re more likely to gain the respect you deserve and can negotiate higher rates.

Work at getting contract jobs

As the spot market fluctuates and market conditions are unpredictable, try booking some contract work. Contracts provide steady work you can rely on to supplement with spot-market loads, adding up to higher profits. The key is to keep an open mind and remain flexible, so you’re never stuck without a load for long.

Be ready to negotiate

Know the going rates in your preferred lanes. Knowledgeable negotiation will help you get better rates. Do your research and be ready to back up your play for higher rates with data. A good load board should include a rates tool that shows you accurate rate estimates by equipment type, lane, broker, load type, and more. If you’ve done your research, you can almost always negotiate a higher rate on a load. Make sure you take into account fuel surcharges in your negotiations. If you negotiate even a couple hundred dollars more on every load, it’s well worth the extra time and effort. The right rates tool makes it fast and easy.

Manage your time

If you’ve heard it once, you’ve heard it a thousand times: in trucking, time is money. Follow these tips to make the most of your time on the road and eliminate time-consuming office tasks when you should be driving and earning money:

• Prioritize load turnover: Maximize time on the road with profitable loads instead of waiting for the “perfect” load.
• Plan your routes strategically to make an overall profit on your trip: This might mean accepting a mix of high-paying loads with a few that pay a little less to ensure you never drive empty miles that take money out of your pocket and your owner-operator profits. Look for loads that maximize driving hours and minimize delays and decrease deadheading.
• Calculate your profit-per-day: Focus on daily profitability rather than solely on rate per mile. Figure out the total time taken for each load and apply your learnings to future planning.
• Use route-planning software: Make friends with technology. Routing software can improve your time efficiency, estimate route time, help you find loads, and eliminate driving empty.

Practice preventative maintenance to extend the life of your truck

A properly maintained truck is quite literally a money-making machine. As an owner-operator, your truck is your livelihood, and without it, you may not be able to support yourself and your business, so basic maintenance is a must. However, the most successful truckers go a step further, checking their truck’s mechanics as frequently as possible, making small adjustments and ensuring that their equipment is producing the most money per mile every day. Maintenance planning and truck upkeep can save an owner-operator thousands of dollars a year on fuel, tires, parts, and repairs. Further, preventative maintenance helps to keep your truck on the road, which is critical to owner-operator profitability.

Use fuel-efficient equipment

Choose equipment that reduces fuel use and operates well with longer oil change intervals to lower maintenance costs. If you’re questioning if this really helps save a significant amount of money and makes a measurable difference, studies show that improving fuel mileage by just 1 mile per gallon can help you save up to $10k in a single year!

Use a load board

As an owner-operator in a fast-paced, technology-driven market, a load board is an essential tool. The right load board can help you cut through the clutter to find the right load at the right time. Today’s load boards go beyond just finding loads to help you choose brokers, negotiate rates, and plan routes. But not all load boards are the same. Generally speaking, you get what you pay for, and it pays to do your homework before you choose the best solution for your business.

If you’re worried about spending money, you might be tempted to try a free load board. Oftentimes, free load boards are riddled with duplicate loads, old loads, and loads that have already been booked—which can be a frustrating waste of time. Not only that, today’s freight industry has a fraud problem. Most free load boards don’t have the security features you need to protect your business against criminal activity and fraud, including identity theft, payment interception, and cargo theft. Your load board should provide enhanced security, built to handle today’s evolving fraud tactics, access to quality brokers and good-paying loads, and added features that help you negotiate higher rates, cut fuel costs, and save time.

Make the most of your load board

The best load boards feature advanced filtering by the highest rates, preferred lanes, equipment type, and more, so you can get on the road and on to making money. Make sure you use the features available on your load board as they can make the difference between getting by and being profitable.

Make smart business decisions in a down market

During a slow market, it’s more important than ever to curb expenses. To stay in business for the long haul, it’s critical to tighten your belt and strategically plan every haul for profitability. If you can, adjust your plans based on market trends to maintain a competitive edge. Hustle and compete! Leverage your advantage of being a small independent carrier with less overhead, allowing you to quickly adapt to market challenges and compete with the big guys.

Diversify your revenue sources

Keep an open mind and be creative with your business. For example, you might consider power-only loads. If you’re new to the freight industry, you can just purchase a tractor first and start hauling immediately and save for a trailer for the future. If you already have a complete set-up but need to diversify to keep your wheels turning, power-only can be a great option. Power-only loads take less time to complete, so you can haul more loads to increase profitability. Rates vary depending on location, but urban routes often pay more.

Make smart tax decisions

To reduce your taxable income and keep your tax bill as low as possible, make sure you keep track of every expense and maximize your tax deductions. Keep your physical receipts and find an efficient way to track per diem, fuel, meals, repairs, home-office supplies and equipment, and equipment depreciation. Use accounting software to stay organized and save time.

Hire a CPA

The best approach is to hire an accountant if you can. Choose an accountant familiar with the trucking industry to maximize deductions and minimize what you owe to the IRS.

Follow the golden profit ratio

In summary, you need to know your profit margin to gauge how your operation is performing financially. Here’s an easy equation you can follow to determine how much you need to make to be profitable:

• Calculate your gross profit, the difference between your earned income and your operating costs.
• Divide that number by your total revenue, and that’s your profit margin.
• Most experts say you have a healthy business if your ratio is between 10 and 20 percent.

Owner-Operator Profit Guide: Tips to Boost Your Bottom Line

Know your numbers

• Track your expenses and income
• Understand cost-per-mile to measure profitability
• Do monthly check-ins
• Use tech tools for tracking
• Know your cash flow
• Control your fuel use
• Reduce your driving speed
• Make aerodynamic adjustments
• Use fuel discount cards and fuel tax strategies

Focus on consistency

• Try to run your truck in regular lanes
• Build a network of trusted brokers and shippers
• Work at getting contract jobs
• Be ready to negotiate
• Manage your time
• Practice preventative maintenance to extend the life of your truck
• Use fuel-efficient equipment
• Use a load board
• Make the most of your load board
• Make smart business decisions in a down market
• Diversify your revenue sources
• Make smart tax decisions
• Hire a CPA
• Follow the golden profit ratio