This was an article I originally wrote almost two years ago however with the renewed questions about owning a truck for yourself surfacing these days I figured it might be good to circulate it again.
Becoming an Owner/Operator in the trucking industry is a big step and is something that a person should not jump into with both feet, you need to do your research. So let’s look at some of the big decisions you will have to make and what factors are involved in making a decision that is right for you.
Freedom from being a “Company Driver”
That sounds nice doesn’t it? nobody telling you when to drive and when to stop, no more forced dispatch, and best of all you will make so much more money. Well the reality is that you also inherit the freedom to pay for all of the expenses of operating your own truck as well, and I’m sorry to inform you that you won’t always have some of the other freedoms mentioned as they all depend on factors such as if you have your own operating authority, if you are leased on to a carrier, the availability of freight in the area that you are going to domicile your truck.
Are you responsible enough?
Some people will look at this and say what does responsibility have to do with it, you are now a business owner so you call the shots. This means that nobody is going to send a satellite message reminding you to get your truck serviced or inspected at a certain mileage or date, you need to be responsible for filing the associated licenses and taxes in a timely fashion. You will also deal more directly with brokers and shippers to keep revenue coming in. You also need to be very aware of when and where you purchase fuel as this will be a very effective way to save money, it can very well mean the difference between a vacation at the end of the year or being 1 month behind on a truck payment.
The importance of looking at the figures before jumping in as an Owner/Operator cannot be stressed enough, you need to look at fuel prices, fuel mileage, truck payments, maintenance costs, equipment, communications (i.e. cellphones, internet costs). Then you need to balance that against what you would receive as compensation for the freight you haul. The best advice I can give to anyone today is after you crunch the numbers, DO NOT base your decision on what you could “potentially” earn, or even what the average might be. Use a worst case scenario of the net income, if your income requirements are still met during the worst case scenario then you can make one of your first decisions.
Lease Purchase Programs
This is where the brutal honesty comes into play, lease purchase programs are generally designed to benefit the carrier offering the program. Once you run the numbers on a lease purchase truck you will find that many of the programs will only net you about .30 cents/mile after everything is said and done. Keep in mind that while you are operating this truck that the people financing it are also the ones who dictate if you will have enough revenue to pay for the lease, if your relationship with the carrier goes south, then you can expect the miles they give you to go south as well.
While many lease purchase programs are nothing more than money generating options for carriers, there are some that may be a legitimate option for you. Do they offer a walk-away clause that lets you off the hook financially if you don’t get enough revenue to make it work? Do they return or keep any leftover escrow money? Do they report to credit agencies? Are they using forced dispatch techniques or making unreasonable requests in the lease? These are just a few of the details that you need to look at. Ask any carrier offering a program for a copy of their lease so you can take it home and go through it completely, if there is something you don’t understand then have a lawyer look it over (it may be a small fee, but can save you thousands later). If the carrier refuses to give you a copy of the lease then WALK AWAY FROM THE DEAL.
What kind of truck do I need?
This is one of those topics that gets interesting and even comical at times as I hear people tell me “I’m gonna get me a Pete 379 because I will only drive a hood”…… well here comes reality “Can you afford it?”. Will the location that you go to accommodate a large wheelbase truck? Does it meet the requirements of prospective carriers you wish to lease on to?
Of course many are going to want that big 600HP twin turbo 18spd extended hood with all the chrome, but is it going to do the job better than the 500HP 13spd or 10spd version? Not exactly, you see that depends a lot on what geographic area you will do most of your driving and the type of freight you will be hauling. Going overkill on a drive train can end up costing you thousands of dollars that you could have better spent somewhere else. There is no need to sell yourself short either, if you are going to be pulling overweight loads then the 350HP single axle with a 20,000lb rear end is probably not your best option either, even if you get a steal of a deal on it, pass it up for something that will handle the job effectively and efficiently.
Condition yourself to be a business owner
As an Owner/Operator you are essentially the owner of a small business and if it thrives or fails is ultimately up to you. You need to make smart business decisions that include knowing what loads will be profitable for you, knowing when a good time is to take time off, and staying up to date on the ever-changing regulations and rules that will directly affect your revenue. Only spend money on extras when they are well within your financial window and be sure to put money aside for the unexpected.
I have only scratched the surface of many of the different aspects of running your own business in the trucking industry, and I hope that some of the topics discussed here can help make your decision a well-informed and profitable one for you. Becoming an Owner/Operator is not for everyone, so if you look at the factors involved and decide against it then you have no reason to be disappointed as it may not be something that is right for you or where you are at in your life at this time. Please feel free to share this information with anyone else that you may know who is looking at the option of becoming an Owner/Operator themselves as you may just help them as well.