Are you thinking of becoming an owner-operator? If so, you’re in luck. We’ve been in the trucking business since 2012 and want to share our methods for success. This article will cover expenses, equipment costs, credit, financing, incorporating, leasing or having your own authority, networking, and more.
First, are you currently working in the industry? Have you driven for a carrier as a company driver or driven for a fleet owner? If so, you have an idea of what it costs to run a truck. If not, you’ll need to keep track of any expenses that you have. You know how many miles you drive. What is the expense per mile? When we say per mile, we mean every mile; not just the loaded miles or deadhead miles. It is essential to track expenses for each and every mile you drive. We are in a Straight Truck (Expeditor), and it costs us $1.25 for every mile we drive.
Determining Your Expenses
How do you find out the cost per mile for your truck? There are a few major expenses that can help you determine the cost of driving. Here is a list of some but not all of the expenses that can help you calculate your overall cost per mile:
- Truck Payment
- Fuel
- Insurance
- Maintenance
- Taxes
That is a very short list. There are many more expenses, but those are our largest ones. You need to know those to figure out the per-mile cost of running your truck.
Buying Your Truck
Let’s look at approximately what a truck costs to buy. The figures we are going to give you are for a Straight Truck. As you will see, they are quite expensive. We will cover class 8 trucks in our figures.
- New Reefer $355,000
- Used Reefer $140,000
- New Dry Van $270,000
- Used Dry Van $80,000
The prices above are for a very basic truck without all the bells and whistles. The more features you add to your truck, the more the price will go up.
What type of truck you choose depends on what kind of freight you expect to haul. For example, if you plan on hauling automobile parts, then you most likely would not want a reefer truck. You would never utilize its features and it would be an unnecessary expense.
Financing
When you’re ready to buy your truck, make sure you come with good credit. If you have some bumps in your credit report, work to get them ironed out. Good credit helps you get a good finance rate.
How do you choose your bank? We have built a relationship with a small bank. While working with them, we had to explain what kind of truck we were buying and what kind of money we could make. Once they understood our part of the trucking industry, they gave us a loan on the truck. We have found it very easy to work with small banks over huge national or worldwide banks.
To Incorporate, or To Not Incorporate
Check with your financial advisor or tax advisor, but we suggest that you incorporate. Either a chapter S or a LLC. Talk to your advisors and see what best fits your situation. Not just one thing fits all. Do your homework to learn what would work best for you.
Leasing vs. Your Own Authority
Should you lease onto a carrier or get your own operating authority? Our first thought is you should lease on to a carrier. Why? A carrier will do a lot of back-office paperwork for you. For example, they file your IFTA, get your permits, handle a lot of your truck insurance, etc. Another thing is a carrier will have customers with freight. You would not have to go out and find customers and freight.
Ask Questions!
Before becoming an owner operator ask a lot of questions to owner operators that you already know. Educate yourself; find out what they think and if they have any advice for you. Go to truck shows and attend the workshops provided. You can obtain a wealth of knowledge by listening and asking questions.
Build Your Network
Start building a peer network. Surround yourself with people in and out of the industry that you can contact to ask questions. Most of the time what you are trying to do or figure out someone has already done. There is no reason to take forever to figure things out alone when a fast phone call to someone in your network can resolve the issue.
First Impressions Matter
We would like to leave you with one last thought. You only get one chance to make a first impression. Dress for success, keep your equipment clean and well-maintained, always keep a level head, and remember the customer is always right.
We hope this helps you in your journey to become an Owner Operator.