Should I become an Owner-Operator?
As most company drivers can attest, they have all asked themselves at one time or another, if they should pursue the owner-operator position. That’s a good question, and we’ve outlined some key points that might help you find the answer.
So what’s the difference between an Owner-Operator and a 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 in more detail below.
Some of the benefits 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).
- 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).
- it’s much easier to change jobs if you feel so inclined
- there are no start-up costs (aside from any costs incurred from training)
Some benefits of being an owner-operator:
- You are essentially your own business.
- If you have your own authority, you have even more control over what loads you take and what you don’t
- – As a result, 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
- 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?
According to Indeed.com, Owner-operators tend to make around $100 – $150k (USD) per year gross, normally placed right around the $141,000 mark. Important to note that those earnings are gross income, not your net (or take home income). Because you are your own business, an Owner-operator will make more income but also will have more expenses. How you manage your business and your expenses will determine how much your net income will be, and that number varies.
Your Trucking Business Plan
Coming up with a good business plan is the first step for any new business aiming for success. 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.
- Include your reasons for starting it and the exact type of trucking that you intend to carry out;
- Identify the expected financial costs and gains from your trucking business by describing the capital you currently have (or have access to)
- Outline the expected costs that you anticipate for the future
- Outline the marketing and advertising that will help grow your trucking business
- Allocate marketing costs and decide if you will carry out the marketing in-house or contract an outside firm
- Identify the specific operational and management details for your trucking company
- Make sure that you acquire experienced or highly credentialed drivers familiar with transporting cargo on the road
- Confirm 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.
A list of a few expenses to consider:
- preventative maintenance
- road use taxes
- 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! These are all considerations to factor into your decision.
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.
Buy a truck or Lease?
While leasing programs are one of the easiest ways to get started as an owner operator, they can also set some drivers up for failure. Newly trained drivers just out of school who try to make the jump to Owner-operator right away, tend to have a much higher failure rate. Many experienced owner operators do not recommend that drivers who just completed truck driver training join one of these programs. Most will recommend signing on as a company driver for a good carrier, and then make the decision to go independent after gaining a year or two of experience. Getting that experience under your belt, gives you a much better understanding of all that goes into truck driving and also time to learn about the business side and what it takes to make the jump to becoming a successful owner-operator.
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.
Factors to consider:
- The age of the truck (mileage, warranty, and amenities),
- Your area of operation, fuel economy,
- The type of equipment you choose to run
- How long you’ll be on the road
These 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.
At the end of the day, OTR truckers can earn more as an owner operator. Whether or not they do will depend on the trucker’s own personal work ethic and desire to run his or her own business.
More information on becoming an owner operator: