Are you now working as a company driver and thinking about developing your position in an owner-operator position? Is being an Owner Operator worth It?
Continue reading to know about it.
Table of Contents
- 1 Who is the Owner Operator?
- 2 How Much Does an Owner-Operator Make?
- 3 Things You Need to Know Before Being an Owner-Operator:
- 4 Owner Operator Financing
- 5 Owner-Operator Start-up Loans and Permits
- 6 The Financial Expectation
Who is the Owner Operator?
According to the name which consists of two parts, an owner-operator both owns and operates the truck which he drives.
When being owner-operators, you will be responsible for all expenses needed for your truck including insurance, fuel, maintenance, and repair.
Owning your truck can be a lot of work and responsibilities, but being your own boss certainly has its advantages.
Driving skill is the thing that a company driver and an owner-operator have in common.
But there are several differences between both of them.
One of the most important differences seems to be the pay difference, which you will find in this article.
How Much Does an Owner-Operator Make?
Is being an Owner-Operator worth It? Do all the responsibilities and all this work worth?
How much does an owner operator make? Owner-operators make an average salary of $188,628 per year.
Entry-level positions of owner-operators make may $24,800 per year while most experienced workers make up to $248,625 per year.
After you know the owner operator salary you may get, is being an Owner-Operator worth It?
Things You Need to Know Before Being an Owner-Operator:
1. Your Trucking Business Plan
Before having your own business, you need to come up with a good business plan to get a successful business.
When creating a business in the trucking industry, you need to make a good plan including financing and operational specifics of the business.
Besides, don’t forget the needs of the trucking industry and the goals for the company you will establish.
First, describe your trucking business in details by writing down a description of the company that you are going to establish.
Details include why you are establishing this business, and which type of trucking you will start, as well as, your capital and the financial costs and gains expected from your company.
Then you need to outline the costs and the ways of marketing and advertising campaigns that will help you grow your trucking business by spreading it in the market to get the highest amount of clients.
Then you need to choose the drivers that will work in your company, make sure that you choose professional, experienced drivers familiar with transporting cargo on the road.
Similarly, you need to detect the way of hiring the employees.
2. Owner-Operator Expenses
Being an owner-operator, you need to know that there will be a lot of expenses for starting such a job.
So, prepare your capital and be ready for the following expenses for establishing your own trucking business:
- Installing a new tractor (which can cost over $100,000).
- Preventative maintenance.
- Road use taxes.
- Fuel taxes.
- Personal and/or corporate taxes.
- Breakdown costs.
- Personal insurance.
Paying for all these expenses, is being an Owner-Operator worth It?
3. Owner-Operator Contracts
As an owner-operator, the choice is yours either to offer your service for leasing companies or to work independently.
To be able to have independent work you need to get permission from the Federal Motor Carrier Safety Administration to be able to transport goods for profit.
According to that type of job – work independently – you can deliver goods for the clients directly, or make a contract with a firm to haul fright under its name.
4. Before Buying a Tractor-Trailer
Before you buy the truck, it is important to decide whether you want to lease your truck to a company, or you are looking for an independent business.
Similarly, do you want to buy a new truck or a used one?
Be certain it is suited to the type of work you’ll be doing with it.
Before buying the truck, there are some factors you need to be aware of.
These factors include the age of the truck (mileage, warranty, and amenities), your area of operation, fuel economy, and the type of equipment you choose to run and for how long you will be on the road.
Owner Operator Financing
When you talk about truck financing, there are a lot of things you need to put in your consideration.
1. Credit Ratings
Trucking industry seems to be a high-risk enterprise, the thing that makes banks and other lenders put some retractions in their offers that seem to be conservative.
Having such a risk, is being an Owner-Operator worth it?
If it was your first deal with banks or lenders, to let them accept your application, you may have to pay between 10% -20% for them.
So before dealing with banks and lenders, be certain to have a strong credit rating score, to have your application accepted.
Such as other vehicles, before you drive your truck on the road you need to have purchased insurance.
Talking about the insurance premiums the value depends on your driving record and your years of experience.
You need to search for the best choice for you as insurance can be expensive.
As an owner-operator, you will need to search for the best insurance options, because owner-operators insurance will not be offered by everyone.
Finally, you need to decide how much insurance you need and make a cost-benefit analysis.
You don’t want to buy more insurance than you need, at the same time, you don’t need to be underinsured.
3. Fuel Economy
The much good your truck’s fuel efficiency is, the more money you save in your pocket.
New trucks are fuel-efficient compared with used ones; at the same time seem to be more expensive.
However, used trucks when being well maintained also seem to be quite fuel-efficient as well as cost less than new trucks.
Are you just starting up recently? Then go ahead with the second choice which might be the most cost-effective option for you.
4. Other Drivers Experiments
Before purchasing for a truck, you can ask other drivers and listen to their experiment in this investment, listen to what they say about their trucks.
Owner-Operator Start-up Loans and Permits
Before you can legally start your business, and after buying your truck, you still need to get some permits.
You need to consider that each one of these permits has its amount of costs.
As a result, you still need some extra start-up money to pay for these additional expenses after making the financial plan required to get your truck.
According to Owner-Operators Independent Drivers Association (OOIDA), it is recommended setting aside a minimum of 60 days of operating capital, while if you’re able to make it more it would be wise to do so.
When starting the business, you may first need to pay for things including:
- International Fuel Tax Agreement (IFTA).
- Unified Carrier Registration (UCR) permit.
- Heavy Vehicle Excise Tax or (HVUT) and also called Heavy Highway Use Tax.
Another thing you need to know is which states in the United States require truckers to purchase special permits.
For example, states include New York, Kentucky, Oregon, and New Mexico requires you to purchase both an additional permit and a bond.
Similarly, several states demand additional clearance if you’re going to pick up and deliver loads within their borders.
All of the previously mentioned cost money, so you need to prepare yourself well to pay for these expenses.
The Financial Expectation
As an owner-operator, your pocket will come up with more money at the end of the year than it would as a company driver.
But you need to do it as the right way it should be done, then owner-operator business will be rewarding for you.
It is not easy for everyone to be an owner-operator.
Driving truck is already a big responsibility but being the one who owns the business, and then the responsibility is much bigger.
Being an owner-operator you will work under a set of responsibilities and stress these include: finances and budget, vehicle maintenance and repair, vehicle insurances, fees, or licenses, finding loads as well as the responsibility of loads you are carrying, fueling of the vehicle.
It is worth noting that starting up an owner-operator business does involve financial risk.
The Financial expectation is whether the extra stress and responsibilities that you have done as being an owner-operator are worth the potential of earning more money, and builds up a successful job.
Now after you know all these topics, is being an Owner-Operator worth It?