How To Lower Your Owner-Operator Expenses
If you’ve been an owner-operator for any amount of time, you discovered that there are a ton of expenses that come with being an owner-operator, and they all pull a portion out of your gross income. The most successful owner-operators have learned how to strategically reduce their expenses to the bare essentials. Below are some tips to give you a better understanding of the type of expenses that come with being an owner-operator, and what drivers can do to lower those expenses.
Typical Owner-Operator Expenses
- Fuel costs
- Truck costs
- Food and drink
- Cost of finding loads
- Licenses (along with permits, emissions, and tolls) EZpass or BestPass.com can help reduce costs
- Lodging (clclodging.com offers discounts for truckers)
What’s the cost of being an Owner-Operator?
Every owner-operator will have their own unique expense sheet at the end of the year, and this all depends on how they run their operation. However, there are some fundamentals to these expenses that all aspiring owner-operators should keep in mind.
- Fuel is easily the highest of all costs, with the average owner-operator spending between $50,000 to $70,000 per year on fuel.
- Truck costs are the second-biggest expense. They include the cost of the truck as well as maintenance and tires.
- Insurance on one truck tends to cost between $5,000 and $10,000 per year, and there aren’t any caps on insurance costs, as the rates can go up quickly depending on the custom coverage that you’re looking for.
- Food is surprisingly also one of an owner-operator’s biggest expenses, and can quickly add up if not kept in check.
- The cost of finding loads is not the first expense that comes to mind, but it is significant since it can cost a percentage of income from the load paid to a broker (usually between 10-20%).
- Licenses, permits, emissions and tolls will depend largely on the state or region you’re driving through.
- Lodging can certainly be a significant expense if you find yourself often sleeping overnight in places other than your truck’s cab.
Your Owner-Operator Budget
When creating your owner-operator budget, it’s important to maintain good fundamentals of general budget making, such as;
- Creating an account of your own personal spending style (Understanding how you’ll have to alter it in order to reach your financial goal)
- An assessment of current balances for your accounts (A list of your sources of income as well as your fixed and variable expenses)
- A plan to achieve your financial goals.
Then, you’ll have to figure out a budget in relation to the general expenses that come with being an operator, which we went over above.
Reducing Owner-Operator Expenses
When budgeting, always account for the slow times that will inevitably affect your operation down the line. Be aware of your costs of living and keep your budget in mind throughout every transaction. Not staying true to your budget can lead to the depletion of your finances, which can result in a spike in your expenses.
Additionally, searching out carriers who serve industries of growth and building long-term relationships with them can lead to consistency and stability, which means that your truck has a lower chance of just collecting dust in its parking spot and costing you money. Consider acquiring a team of accounting, legal and business advisers. This may seem costly at first, but their services can end up saving you a considerable sum of money in the long run. Of course, it’s great to keep the work in-house when possible, but professionally outsourcing certain tasks can sometimes be the smarter option.
We hope this helps you in understanding the challenges of being an owner-operator, while encouraging you to have a well thought out plan so you are ready to handle any obstacles when they come.