Before you dive into independence as an owner-operator, take time to assess your experience, finances, dedication and skills. Look in the mirror. You’ve been thinking about going into business for yourself as an owner operator, but are you ready? You crave the independence, but do you have what it takes to be successful?
Now may not be the right time to go on your own. Today’s freight environment is a minefield for even experienced owner-operators, so you need to do your homework before you jump into your own truck and business. “Right now, there’s not huge demand because freight is down,” says Sheri Aaberg, general manager of ATBS Leasco, a Denver-based company that works with budding owner-operators. But, she adds, “the want-to is still there.”
Aaberg says the primary reasons a driver wants to be an owner-operator is to call his own shots and make more money. Many imagine being their own boss and having control over their career without thinking about accountability. The reality is that when you’re in business, “you have more accountability than you did when you were an employee,” she says.
When you own your truck and drive for others, you are a small-business owner. Before you commit to buying your own rig, take inventory of your finances, your earning potential and whether your business will support your expenses.
“It’s all about money,” says John Nail, an owner-operator for about 10 years who’s leased to Greatwide and dedicated to a Tyson Foods base at Union City, Tenn. “You figure out your bills and what your base is. I look at what the shipper pays, how many miles I have to run to pay my mortgage, truck payments and everything else.”
In checking out possible income, Aaberg says you need to understand the “entire compensation structure of a potential carrier, because it goes well beyond the pay per mile.”
In sizing up a carrier, you should learn about its terminal operation, how it dispatches and how much time you’ll have to be on the road, Aaberg says. Decide what hauling specialty you want and if you have experience in that segment.
How do you know if you’re ready? Nail and Aaberg both recommend a minimum of one year of experience in your specialty, preferably much more. “Get a sense of what you’re doing before you stick your neck out so far you get it chopped off,” Nail says. Nail, of Arbyrd, Mo., says he talked with both successful owner-operators and some who failed before he ventured out on his own. He even talked with his former landlord, who was an owner operator.
“This business is real easy to fail in,” he says.
Sheri Aaberg of ATBS Leasco says you should consider several things in mulling over whether you’re owner-operator material:
1) Consider your personality, experience and knowledge to decide if you really want all the responsibilities of being your own boss – something to consider when you hit the road and your office goes with you. 2) Make a personal assessment. Do you have the qualities that being an owner-operator requires? Are you dedicated and reliable? Do you have the ability to set goals? Do you have financial planning, management and bookkeeping skills? Do you like to work with people? 3) Can you and your family accept the away-from-home time necessary to succeed? 4) Determine what kind of trucking -refrigerated, flatbed, dry van – you know and like. 5) Do you understand what customer service the carrier and shipper expect from you? 6) Have you investigated carriers that meet your experience and skills, and have you determined where you will be the best fit with the operations personnel? 7) Understand the “total” compensation structure above and beyond the rate per mile and the freight cycles of your prospective carrier. 8) Have you created a budget of both business and personal expenses, and are you disciplined enough to live within that budget? 9) Identify the equipment best suited to meet the need of your potential carrier and how much it will cost to maintain and repair it. You’ll have to budget those costs. 10) Consider professional help and education to assist with budgeting and planning.
So You’re Thinking of Becoming an Owner/Operator (Download PDF)
Starting a Trucking Business: A Guide from The U.S. Small Business Administration
Used Truck Buyer’s Guide: (Download PDF)