As you consider entering trucking, you may be wondering if you could become an owner operator..
Going on your own can have many pluses, as I’m sure you learned at your CDL Training School, in New Brunswick or elsewhere. Being an OO has these great advantages:
- Controlling your own schedule
- Owning your own truck
- Controlling your fuel costs
- Running your own business
- Making your own profit
As an owner operator, you can either lease your truck to a company or obtain your own authority to find business.
Planning ahead is key, however, and you should think carefully long before you take the leap into being an owner-operator. Here are 11 key things to consider as you make the decision.
1. Maintain really good credit before making the decision
You will need credit for two main reasons.
Your truck — whether you lease or buy it, you will need credit. The leasing company or lending bank has to feel safe extending you the credit.
In addition, good credit also makes sure you can pay for trips without significant hits to your cash flow. You can charge items which will be reimbursed by the shipper (or receiver) and thus not have to give them a loan yourself.
BUT — you must also have the discipline to pay the credit cards off every month, and when you get reimbursement, the money should immediately go to the card. Playing with your credit risks disaster.
2. Make sure you’re ready for being an owner-operator of a truck
Make sure you have 3-6 months’ living expenses saved.
During your first year of independence, you may have to pay cash for items which the company used to pay for. Make sure you can cover operational costs as well — having 3-6 months’ reserve at the beginning is a great idea.
Build up a cash reserve during the year or two before you make the jump. Once you’ve established yourself as your own business, you’ll be able to find other ways to pay for trips.
3. Consider getting your own trucking authority — down the road
An “authority” is simply a permission from the Canadian government to seek and find loads for your truck. You won’t need the broker, and thus keep that money for yourself.
It requires more work — while you increase your net per-mile rate, you will be spending more time coordinating loads
You can use your authority to work either for a company under contract, or find loads on your own.
A married owner-operator with their own authority might be able to hire their spouse to manage the bookings from home.
4. You are a professional — use other professionals as you set up your business
Consulting with attorneys and accountants as you set up your business. They will have the knowledge you need to make sure you protect yourself and your family.
In Canada, you can either be a sole proprietorship or a corporation. The sole proprietor has the fewest paperwork burdens in all likelihood, but you are probably liable personally for anything that goes wrong.
Incorporating can be done conveniently and fairly inexpensively, and will protect your home and family if you are liable for an accident or injury.
5. Make sure you’ve covered the benefits you’re losing by leaving a company
Once you go on your own, your retirement, disability, and other benefits from your former company are gone. You will have to take care of them yourself. You will also have more stress because the guaranteed paycheck isn’t there..
As an owner operator, you will now be responsible for those items. Set up a retirement plan and make your contributions weekly or monthly. Cover yourself in the event of disability.
6. Maintain your truck like it’s your own (because it is)
Your life now depends on maintaining your truck — you won’t be able to swap trucks at the company when one needs to go in for maintenance.
You can take care of your truck by not driving in a crazy way. You don’t need to put all those miles on each day. Drive in a way which doesn’t overwork your brakes. Change the oil monthly, and get the grease jobs done weekly.
Consider doing the grease job yourself. It saves a bit of money, but also allows you to look at every portion of the truck regularly. You will know what looks wrong.
You should know how the truck works, and how to maintain it. That doesn’t mean you shouldn’t use mechanics — they’re the professionals. Just know what’s going on so that you can make the best decisions when mechanics recommend work.
7. Take care of your health while on the road
Well, really, take care of your health at all times. But truckers — as you may know — are at risk of letting their health go, especially when on the road for weeks at a time. You might decide to let things go.
Use at least one 30 minute break a day to move around. Walk, stretch, do yoga. Park far away from the truck stop restaurant so you have to wal more.
Install a refrigerator and freezer, crockpot, and microwave in your cab. Eating well will keep you healthy. Sock up on good foods before you head out will help greatly. Try to avoid microwave meals as they tend to have too much salt in them.
Moving around more can increase your energy level — and it’s good for you.
8. Work on your relationships while on the road
Trucking strains relationships. Consider all your important relationships before you head out on your own. Being away for 3-4 weeks at a stretch can strain any relationship, both with spouses, significant others, children, family, and friends.
Make sure you have an unlimited data plan on your cell service, and take advantage of Skype or Zoom — both free — for frequent video chats with your loved ones. Daily contact with spouse and children is crucial. You will find the price of the data plan worth every penny.
Relationships can survive the long-distance life. But they require more work.
9. Watch every penny
You’re now your own boss — every penny you spend is a penny less in your pocket.
Some expenses are, of course necessary. Diesel fuel comes to mind. But take steps to maximize fuel economy. Recently, Canadian truck mileage was rated between 7.26 and 9.35 km/g — New Brunswick came in at 9.3 km/g. You can do better
Raising the average mileage to over 11 km/g could save over $4,600 per year per truck. You can improve mileage by:
- Drive at steady speeds which might be just below the speed limit
- Proper tire inflation
- Control your idling — turn the truck off whenever you can M
10. Make a solid connection with a good freight factoring company.
Using a freight factor can improve your cash flow. A freight factor will, in essence, turn your invoices into almost-instant cash — most within 24 hours. The factor then collects from your customer. The factor takes a small percentage as a fee, and that percentage sometimes is based on the billing cycle time.
Of course, some factors don’t treat truckers well. Make sure you read and understand the contract. Use one which deals mainly or only with the trucking industry.
Your customers and brokers may give you good guidance on factors (and many other things). Be willing to
11. Find a niche in trucking and make it your own
Depending on your location, you may be able to find a niche market, and become the best at it.
A niche market is simply a market which does one or two specific tasks, and doesn’t have a lot of demand. Driving oil tanker trucks between New Brunswick and Ontario (or beyond) is not a niche market. Working with a logging company to deliver logs weekly to the port of Halifax is.
In a niche market you can become known very quickly for reliability. That reputation will increase your business.
Look at the markets the large carriers don’t want to service — those markets might be your nichees.
Being an owner-operator of your own truck can fulfill the dream you had when you began your CDL training in New Brunswick. But it will take awhile before you’re ready for this big step in the adventure that is your trucking career.
Think through these 11 factors — and other ideas that come to you — carefully before you take the plunge. When you’re ready to run your own business, you will know — but don’t rush it.