15 Steps To Become A Successful Owner-operator: A Guide By Matrack
Do you want more freedom while working as a truck driver? Well, you can do so by starting your career as an owner-operator. An owner-operator is a truck driver who owns their truck. They do not work under someone else and can work according to their choice. They earn more than the company driver and enjoy more flexibility & freedom over their work and shift.
Sounds exciting? But stop! Before you start planning your business, there are things that you should know about it.
The owner-operator faces several difficulties that a company truck driver does not. They are responsible for running their own business and managing everything from finding the load to driving the vehicle. Additionally, they must look for lucrative loads and reduce expenses to increase their profit margin. They are also responsible for following several rules and regulations to avoid violations and fines.
But don’t panic. We know you have all that is necessary to become a successful owner–operator. All you need is a guide that can act as a checklist while you start your career as an owner–operator. Check out this article by Matrack. Here we have discussed 15 easy steps to help you to become a successful owner-operator.
- What Is An Owner-operator?
- 15 Steps To Becoming Successful On An Owner-operator
- Understand Your Situation
- Apply For A Commercial Driver’s Licence
- Start Your Career As A Company Driver
- Get Your Equipment
- Form A Business
- Sole Proprietorship
- Limited Liability Company
- Outline Your Business Plan
- Company Overview
- Marketing Plan
- Goals And Milestone
- List Of Staff
- Financial Plan
- USDOT Number
- Apply For Motor Carrier Number
- Purchase A Truck Insurance
- Hire Drivers
- Get An Electronic Logging Device
- Understand The Expenses
- Get The Right Telematics Solution
- Explore Invoice Factoring
- Look For Work On Job Boards
- Benefits Of Becoming An Owner-operator
- Final Words
What Is An Owner-operator?
An owner-operator is a truck driver who owns and operates commercial trucks. They are their boss and work according to their wishes and desires. They deliver the cargo of their customers on time. They are responsible for route planning, scheduling maintenance, complying with the rules and regulations, and carrying the records.
You can find different options when you enter the industry as an owner-operator. Firstly you can own your own tracking company and find lots for yourself through load votes or tracking apps. Here you will be responsible for all operations from driving to administration.
The second option is to lease the equipment to a larger truck company that will do all of the work, and you will gain profits.
What Do You Need To Become An Owner-operator?
The first question that comes to your mind is what you need to become an owner-operator. You do not need fancy things, just a commercial driver’s license, USDOT number, motor carrier number, insurance, and, of course, a truck.
After that, you will have to decide whether- you want to buy or lease a truck.
You will have both options ready, so if you are worried about the initial cost of purchasing a new vehicle, you can lease it. Another thing you have to do is build your customer base. It is a tedious process, but once you are savvy in finding loads, you will soon be able to expand your business with more trucks, employees, and other drivers.
What Is The Average Income Of The Owner-operator?
The average income of the owner-operator driver in the USA is $144,000. It depends on your experience, the type of loads, and how much time you spend on the road.
There are two ways an operator can maximize their income:
- Percentage of the loads
The first thing you can do to maximize your income is to find high-paying and valuable loads.
The other thing you can do to increase your income is to increase the miles on the road.
By consistent hard work and customer satisfaction, you will initially start gaining more customer attention and keep finding better loads. You have to maintain the reputation of your business and reduce accidents or load mismanagement.
Highest Paying Types Of Owner-operator Job
If you are wondering what you should do to earn more as an owner-operator, here is the answer.
The highest-paid owner-operator job is an operator and truck driver. They are responsible for the safe and efficient transport of the cargo. They should be skilled and have credentials for gaining the trust of their customers. They need to have a CDL license, be aware of the prevailing rules and regulations, abide by traffic rules, and pay equal attention to vehicle maintenance. They must be available to the clients and coordinate with other workers to ensure smooth and on-time delivery.
On average, an owner-operator and driver can earn up to $250,847.
15 Steps To Becoming Successful On An Owner-operator
Understand Your Situation
Before you enter the industry as an owner-operator, you need to understand your current situation. You have to ask yourself why you want to become an owner or a writer and how much you know about this industry.
If you have worked as a truck driver, starting as an owner-operator will be a great advantage. You also have to consider whether you are physically & mentally ready to change your lifestyle and manage your business and if you have enough finance to run the business.
Apply For A Commercial Driver’s Licence
As mentioned above, the first step you should take to become an owner-operator is getting your commercial driver’s license. If you have one, you can skip this type, but if you do not, make sure to get one.
To get your commercial driver’s license, you must determine your license type, pass a physical examination, take a knowledge test, obtain a CDL permit, and then a skill test. It is a long process, so you should start early.
Start Your Career As A Company Driver
It may seem weird to you, especially if you wish to work independently according to your rules. But before you enter the industry as an independent owner–operator, you should take a step back and apply for a company driver job. This step may take time, but it is significant. You have to understand the industry where you will be working.
By working as a company driver, you will get to know the ups and lows of the trucking industry. You will also get to know different clients and can try to work for them in the future as an owner-operator.
Get Your Equipment
It is the most crucial step. You cannot start your business without proper equipment. You have to get a truck or trailer to operate.
You have to decide whether to buy or lease a truck. There are three different types of options available for choosing any one of them according to your financial situation and need:
- Lease: If you choose to lease, you will have to work for the company you are leasing from as a part of your contract.
- Lease to own: You can also get at least one option where you will have to pay a certain amount regularly till you have enough money to pay outright to own it or pay it off.
- Buy: Lastly, you can purchase your truck. To do that, you can look for a bank with a low-interest loan or gather your finances to buy it all together.
Form A Business
Before you apply for your USDOT number, you need to form a business. First of all, you have to choose a name for your company. Then, go to the State’s secretary of state website and search the database to see if the name is available. qqqqqqq
Secondly, you have to decide on the business ownership options.
There are four different types of ownership options for you:
- Sole Proprietorship
- Limited Liability Company
As the name suggests, sole proprietorship means you own the business alone.
It is the default type of company safe if you are not taking steps to register your company in any other entity, then the government will choose this one as default.
If you and your partner are planning to start a business together, you should register your company under a partnership entity.
Limited Liability Company
The third option is a limited liability company. It means that you will not have to take the liability risk, and at difficult times your business will only be held responsible and not you.
Your assets will remain protected from the lawsuit on the business. Also, your debt will not affect your business.
You can choose the last option only for planning to add more employees to your business as it grows. Remember, you will go through more complex tax requirements than other options.
Outline Your Business Plan
Before you apply for the USDOT number, you will have to submit a business plan.
A business plan includes the following components:
- Executive summary
- Company Overview
- Marketing Plan
- Goals and milestone
- List of staff
- Financial plan
The executive summary will help you understand where you stand in the industry and your customers. It is a crucial step as it will always remind you where you are and where you aspire to be.
The company overview includes different kinds of information related to your trucking business. It includes numbers, such as revenue per mile, cost per mile, revenue per load, fuel purchases loaded miles, etc.
These numbers help you to understand how your business runs and how you can improve to maximize your profits.
As the name suggests, a marketing plan includes your marketing strategies for the present & the upcoming future.
An ideal marketing plan also includes statistics that can help you discover more opportunities in the transportation field.
Goals And Milestone
So why do you want to become an owner–operator? What is your motivation? If you can answer these questions, you can set your goals in milestones in your business plan.
This section of the business plan includes your ultimate goals and expectations. It will help you build an effective guideline to fulfill these goals and act as a milestone to measure your progress.
List Of Staff
Are you planning to work alone, or do you want to hire people for your second truck?
In this section, you will have to answer this question. It will help you to hire employees in the future. As time passes, your business will grow, and you will have more loads. More loads mean more work, and more work means you will need more people to fulfill those work.
In this section, you will have to include various details, such as profit and loss statements, sales projections, personal expenses cash flow statements, business balance sheets, exit strategies, etc.
Now you will have to obtain your US department of transportation number. The FMCSA will ask questions about your company and plans, so be prepared beforehand.
A USDOT number is a number that identifies you as a truck carrier operating in interstate commerce.
Apply For Motor Carrier Number
The motor carrier number identifies you as a carrier who transports goods on a contract-by-contract basis. The operator will have to be your boss, and that’s why the tracking or operating authority comes.
And therefore, you need both USDOT and MC numbers to operate as an owner–operator.
To apply for the motor carrier number, you will have to visit the FMCSA website.
Purchase A Truck Insurance
The other crucial step to becoming an owner–operator is obtaining trucking insurance. No matter which truck or semi-truck you own, you will have to get owner–operator insurance to cover all your bases.
Generally, you will need general and primary liability coverage to operate your truck.
You can hire more employees if you have more than one truck and don’t want to manage the finance and documentation.
If you have another talk, you can hire an experienced driver. And you can also hire someone to manage the back office. But remember, before you hire anyone. You have to check their experience and ensure that they have relevant experience in the field you are or will be in the future. You can also do a background check to assess their driving skills.
Get An Electronic Logging Device
An electronic logging device helps drivers to comply with the HoS rules. You will bear consequences if you do not have an ELD during a roadside inspection.
Additionally, it directly connects with the engine and derives data like working hours, diagnostics reports, miles driven, etc.
You can use this data to understand your business operations and boost efficiency. It will also help you to stay on time with vehicle maintenance and reduce downtime or an unexpected breakdown.
Matrack offers an affordable ELD solution that can help you to comply with the HoS rules and avoid violations. You can get a free device by paying the lowest monthly subscription starting from $14.95.
- Free Device
- No contract
- Lowest monthly subscription fee from $14.95
- No additional cost of co-driver
- Easy installation
Understand The Expenses
Running your own business is not an easy job. You will have to face severe challenges throughout the journey, and one of the significant ones is managing the expenses.
So before you start your own business, do good research on the daily expenses you would incur. It may include fuel, vehicle maintenance, asset depreciation, etc.
Fuel constitutes one-third part of any fleet’s budget. And if you want to maximize your profit, you must adopt several measures to reduce fuel costs. There are several ways to do so:-
- Proper route management
- Better fuel management
- Regular vehicle maintenance
- Restrict reckless driving activity
- Reduce vehicle idling
- Restrict vehicles used for personal use
- And many more.
There is one more way to reduce your fuel expenses and have better control over your fuel consumption- the Matrack Fuel card.
Matrack offers a fuel card that provides flexibility and better control over fuel consumption. It not only provides you with fuel discounts but also has many other added benefits.
- 1.5% early-pay discount
- 60-days no-interest payback
- Valid at over 230,000 places
- Easy integration with Matrack Fleet Management Solution
- IFTA calculation
- Discounts on additional expenses, like lodging and boarding, maintenance costs, etc.
If you want to know more about owner-operator expenses then read here !
Get The Right Telematics Solution
Managing a trucking business is a difficult job, but you can reduce your workload by having a proper telematics solution at your end. You can find several options in the market, but if you want an affordable one, you should check out Matrack.
Matrack offers a powerful and cost-effective solution that will help to streamline operations and boost productivity. It allows you to increase visibility, access real-time location information, manage loads, maximize asset security, stay on time with vehicle maintenance, and many more.
Explore Invoice Factoring
To run a business, you need constant cash flow. But it is highly possible in the trucking business that your customer does not pace you immediately but hands you a bill of invoice. It can cause trouble, especially when you have one or two trucks. You need a constant cash flow supply to meet daily expenses such as fuel. To resolve this problem, you have to explore invoice factoring services.
Invoice factoring is a way to cash your invoice immediately at some charge. Many companies offer different types of factoring services, recourse, and nonrecourse factoring.
The recourse factoring option holds you responsible for paying if your customer goes bankrupt and cannot pay the company at the decided time.
On the other hand, nonrecourse factoring is the exact opposite. In this type, the company absorbs the financial shock and doesn’t hold you responsible.
Look For Work On Job Boards
Searching for customers for new business is always a difficult job. But thanks to modern technology, you don’t have to wander here and there to find your first load. You can log in to the job boards and search for an ideal job.
Benefits Of Becoming An Owner-operator
- Owner-operators are self-employed and therefore are their boss. They can choose their job and change them according to their needs and desires.
- An owner–operator benefits from flexible working hours, and hands can spend more time with their family.
- Generally, owner-operators are more than the company drivers. They can maximize their profit margins by controlling the fuel cost, driving more, and engaging with profitable loads.
- Another benefit of being an owner-operator is owning your truck. It means you can choose anyone according to your preference, paint or style it and take your pet with you.
- And owner-operators can also enjoy tax savings that a company driver does not.
- Another significant benefit of being an owner-operator is that you will have the choice either- to scale your business and earn more or live a simple life by earning what you need and spending more time with your family.
These are the significant steps that you need to follow to become a successful owner–operator. Start now and get ready to earn more. Also, to simplify your trucking journey, check out the Matrack website and explore our extensive solutions.