Steps to Becoming An Owner-Operator
Becoming an owner-operator can be a way to take your logistics career to the next level. While many people are drawn away from traditional truck driving jobs for the additional income, it's also exciting to be your own boss. Bear in mind, though, that going from being a company driver to being an owner-operator means doing a more than just driving loads from point A to point B. You're also a business owner, which adds new levels of complexity and opportunity to what you do on the road. If you're thinking about transitioning into being an owner-operator, here are the six steps that you need to follow.
1. Get Trucking Experience
Before starting a business and taking on the cost of your own truck, make sure that truck driving is for you and that you are skilled at it. A few years of truck driving experience should be enough time to hone your skills and to decide if you really want to make a long term commitment to the industry. When you're a company driver, you can easily quit and do something else. If you're at the beginning of long-term financing for a brand new truck, it's a little harder to change careers.
2. Decide If It's Right for You
Once you've decided that trucking is right for you, the next step is to really think about whether being an owner-operator is the right option for you. Being a company driver has real advantages. Your loads get provided for you. Your truck gets provided for you. And you don't have to worry about anything other than showing up and driving.
When it's your business, all of that changes. Do you have the business knowhow to manage a profit and loss sheet? Are you willing to take on the risk of financing a truck that can easily cost $100,000 or more? Are you willing to spend some of your off-the-road time taking care of your truck and your business instead of relaxing with your friends and family?
If you're okay with those challenges, being an owner-operator has huge benefits. You can make a great deal more money and you get more control over where you go and when. When it's your truck, you drive what you want, and you get to set it up for yourself without worrying about someone changing it.
3. Get Your Papers in Order
When you decide to become an owner-operator, you need to set your entity up properly. First, you need to get a US DOT (Department of Transportation) number from the Federal Motor Carrier Safety Administration. Next, you'll want to also get a Motor Carrier number from the same agency. These allow you to legally operate as an owner-operator. Keep in mind that, since you're setting up your own company, you may also want to set up a legal entity -- such as a limited liability company (LLC) or corporation -- and may also need to get an Employer Identification Number (EIN) from the Internal Revenue Service.
In addition to setting up your registration and entities, you'll also want to get the rest of your business in order. This means looking into insurance coverage for yourself and your vehicle. At some point, you will also need to set up bank accounts, an accounting system and other basic business tools.
4. Find... And Finance... Your Truck
Once you've got your business up and running, it's time to turn to the exciting part: getting a truck. There are two questions that you need to consider: new or used, and owned or leased. New trucks are more expensive up front but are also likely to have lower maintenance costs. If you choose a used truck, look for a reliable model in good condition with comprehensive service records and a history of meticulous maintenance.
When you buy a truck, you might spend more money both as a down payment and in ongoing monthly payments, but you control your destiny. Leasing a truck can be less expensive, but you don't own your truck. When you lease from a company, you could also end up tied to them and their loads.
5. Get Loads
Once you have your truck, it's time to find loads. If you lease from a company that provides work, this step can be simple. If you're on your own as an owner-operator, though, finding loans can be trickier. Load boards can be good source to find jobs posted by brokers. Alternately, you could make connections directly with end clients who need transportation services.
6. Watch Your Dollars and Cents
As you are out there working as an owner-operator, remember that you aren't a truck driver any more. You're a business owner. This means that your goal is to have as much money left over after paying your bills as possible. Profit can come from finding good paying work. It can also come from watching expenses, controlling idle time, finding shorter routes, and driving at reasonable speeds to maximize fuel efficiency.
Being an owner-operator is different from just being a company driver. It requires investment, and you will need to develop new skills. In exchange for the additional work, you can earn more money, have more control over your life, and ultimately build a more fulfilling career.