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How To Be A Successful Truck Owner Operator
May 8, 2022
How to be a successful truck owner operator is a common question. Being an owner operator carries a lot more risk than working as a company driver. You own your own truck, you’re responsible for finding your own work, and you’re on the hook for all of your own expenses.
Starting off as an owner operator also requires a sizable investment right off the bat. You’ll have a downpayment on your truck, plus a very expensive insurance policy. You’ll also need to fuel that truck up before you get your first payout.
So, by the time you’ve picked up your first load, you’re already going to have thousands of dollars invested in your new small trucking business- and that’s what this is, a small business. That makes a lot of people nervous.
It’s understandable, too. Especially if you’re used to more traditional employment with a regular paycheck and a benefits package, venturing out on your own as an independent contractor can be nerve-wracking.
Owner Operators Need Accountability
What’s worse, when you’re an owner operator, your success or failure is entirely dependent on…you. And nobody else. It’s a lot of responsibility, and it’s a big leap from how most people live.
However, while it’s a risky move, it’s also a very appealing move. Owner operators have a level of freedom in their work life that most people will never experience. It’s not just that they set their own hours, they also pick their own routes. They spend their days on the open road and they get to decide which roads they drive on.
They also have the potential to earn more money than other truck drivers. It’s not a guarantee, but they are able to earn a lot more money if they run their business well.
Of course, the key is running their business well. Not everyone who decides to become an owner operator will succeed, and not everyone has what it takes to be a successful owner operator. We’ll discuss how to be a successful truck owner operator, so that you know exactly what you need to do to make the risks you’re about to take pay off.
What Is An Owner Operator?
The Owner Operator Independent Drivers Association defines an owner operator as “a business owner who owns a tractor and on other occasions, a trailer or fleet of trailers.”
There are a couple of things to unpack in that definition. First, note that many owner operators own just the tractor, and not a trailer. This allows them to engage in quick, efficient hook and drop shipping, as long as the carrier they work for owns trailers which can be used for this.
Owning a trailer is an additional expense and will require you to wait for the trailer to be loaded and unloaded, but as an owner operator you’re paid by the load, not by the hour, so wait time isn’t as much of a concern.
Second, the owner operator is defined as a business owner, not a driver. This is an important distinction that you really have to understand.
An owner operator is a business owner first, and a driver second. This is not the same kind of thing as being a company driver. Company drivers can just drive. They don’t have to worry about anything else.
Owner operators have to handle the whole deal. They line up the jobs. They schedule pick ups and drop offs. Owner operators negotiate contracts, pay for/perform the maintenance on their trucks, make tax payments, purchase their own benefits, and handle all their own bookkeeping.
They have to do all the things every other small business owner does, while also handling the driving. And that’s the first point in the answer to how to be a successful truck owner operator- you’ve got to be a good business owner.
In fact, if you do well enough, you might stop driving altogether and hire drivers so you can focus more of your attention on the business side of things. If you love driving, but hate administrative tasks, you might want to reconsider becoming an owner operator. Handling those tasks well is how to be a successful truck owner operator.
Owner Operator vs Independent Contractor
If you’re reading this thinking that an owner operator sounds like an independent contractor, you’re right. Owner operators are independent contractors. But, not all independent contractors are owner operators. If you want to know how to be a successful truck owner operator, you need to know the difference.
A lot of independent contractors are drivers who enter into a contractual agreement with a carrier company. They’re guaranteed payment and loans for the duration of the contract, and they lease their truck from the carrier company. Often these drivers are termed lease-operators.
An owner operator owns their own truck and, while they might enter into a contract with a carrier, it’s also common for them to secure work one load at a time. Being an independent contractor, a lease operator, is less risky. It’s sort of a halfway point between being a company driver and being an owner operator. It has benefits from both, and drawbacks from both. If you decide that being an owner operator is just too risky for you right now, this is probably a good path for you to explore.
The Benefits Of Being An Owner Operator
We’ve mentioned the risks of being an owner operator a lot, and we’ll talk about them again. But first we’ll take a minute to highlight the incredible benefits of being an owner operator. After all, there are a lot of them. It’s a very appealing career path. Once you learn how to be a successful truck owner operator, you can expect to reap these benefits.
More Control Over Your Income
While you do risk a lot, you also stand to gain a lot. Because you choose not only when you drive, but also the cargo you haul, you have a lot of control over your income. Owner operators typically get paid a percentage of what their load sells for.
That means that the more valuable your cargo, the bigger the payout. This is a big advantage over being a company driver, where your pay is based only on mileage.
You can choose to focus on high-value cargo loads to maximize your earnings.
You’ll still need to work hard, negotiate well, and find your own work. But if you can do it well you can easily earn over $200k per year.
You Own Your Own Truck
Owning your own truck is a huge benefit of being an owner operator. Now, the money you’re paying for the truck is an investment, not just a lease payment. Plus, you’ll probably pay less each month if you own your truck vs leasing it. But the biggest benefit to owning your truck is that you can customize it however you like.
You can set up the cabin to match your preferences. And since you aren’t sharing the cabin with anybody else, you don’t have to worry about some other driver coming in and messing up your settings.
You Are Your Own Boss
Being your own boss is great. You decide when to work. You decide when to stop working. Can take a vacation whenever you want. You don’t report to anybody.
It’s the sort of thing that, once you experience it, you can never go back to the old way of doing things. This is why a lot of people want to learn how to be a successful truck owner operator.
Nobody who’s had a taste of being their own boss can go back to having a boss. For a lot of people, it’s this, more than anything else, that makes being an owner operator so appealing. In fact, many people are perfectly happy to be an owner operator, even if they aren’t actually earning more than they would as a company driver. The freedom that comes from being your own boss is intoxicating.
How To Be A Successful Truck Owner Operator
If you’re sold on the incredible benefits of being an owner operator, the next question is how are you going to do it. There are some specific steps you need to take if you’re going to make the leap to being an owner operator.
Pause, and Think About It For A Bit
Look, becoming an owner operator is a big step. Once you start, you’re going to be so heavily invested in it that you’ll be stuck doing it for a while. So, before you put a downpayment on a truck, you want to be absolutely sure that this is what you want.
So, first, you need to think about some things. First, take a look at your finances. Do you have the money to make the needed down payment?
Can you make a couple of months of truck payments and insurance payments with what you have on hand? You don’t know how long it’s going to take you to land a job and get paid, so you really don’t want to take the leap unless you can afford to live off your savings for a little while.
Next you should think about your network. You need business contacts. You need to have a clear plan for how you’ll line up work consistently. The best and most reliable way to get work is to have a network of business contacts you trust. These people will not only offer you work directly, they’ll also recommend you to their contacts when they need a truck.
While you can certainly start cold calling businesses and offering your services, you’re going to have to make a lot of cold calls to land even one paying job. It’s far better to rely on your existing network. You probably have one, even if you don’t realize it. If you’ve been driving already, you already know people who need your services. Call up the people you’ve worked for already. Drivers you know who’ve left the trucking business and set up their own shipping carriers. Call the warehouse managers who you’ve been chatting with while your truck was loaded and unloaded.
If you haven’t been driving, you still know people in the business world. Coworkers, friends, business partners, they’re all part of your network. They all either have shipping needs or know somebody who does. Call them up and let them know what you’re doing. You’re a lot more likely to land regular work this way than with cold calling.
How do you like sitting?
Now, for the personal stuff. How’s your physical health? Being a successful truck owner operator is going to require you to spend a lot of time on the road. That’s a lot of time sitting still, doing no real physical activity. The food that’s going to be available to you won’t be particularly healthy.
Can your health handle that? If you’re already in poor health, you may want to reconsider. If you’re in good health, you might want to think about what you’ll do to maintain your health while you’re engaged in this work. It can be a challenge.
Next, think about your home life. With all those long hours on the road, it’s going to be tough to spend time with your family. If you’re already a truck driver you’re familiar with this. But as an owner operator, you’ll have an added challenge. Once you’re home, work isn’t over. You now have to handle all the administrative stuff. Record keeping, bookkeeping, tax payments, and truck maintenance are going to eat into your free time. Can your home and family life handle that?
Handle The Paperwork
Once you’ve decided you’re going to go through with this, it’s time to deal with the necessary paperwork. First, you’re going to need a USDOT number. This is a number assigned to you by the US Department of Transportation which allows you to legally operate as a truck driver.
But that’s not all. You also need a Motor Carrier number, which authorizes you to haul cargo. These numbers are the first step you need to take in the process of becoming an owner operator.
Next, you need insurance. First you’re going to need your own health insurance, and you’ll also need truck insurance. These are absolutely necessary- not having them means that you can’t legally operate. This is one of the key things which separates owner operators from company drivers- you are now solely responsible for ensuring that your business is in compliance with federal and state regulations. And trucking is a heavily regulated industry.
Figure Out How To Manage Expenditures
One key to being successful in any kind of business is to minimize your expenditures. That’s doubly true for owner operators, because your expenditures can be huge. You’ve got truck payments, insurance payments, maintenance costs on a vehicle that’s driving hundreds of miles each day. You have fuel consumption, too. These costs can all add up, quickly. You’ll need to know how to reduce costs in transportation.
You can reduce your fuel consumption by nearly 30% just by keeping your cruising speed at 65mph instead of 75mph. In fact, your driving habits alone make a huge contribution to minimizing your expenditures by reducing your fuel costs and your maintenance costs.
This, by the way, is why company drivers have to follow all of those annoying company regulations when they drive. It’s also why their trucks sometimes have obnoxious equipment on it that reports bad driving habits as the company tries to enforce those annoying regulations.
Now that you’re the business owner and you are financially on the hook for the cost of bad driving habits, you’ll probably see some of the wisdom of those regulations that used to annoy you.
Buy A Truck
One of the most important parts of how to be a successful truck owner operator is buying the truck. You can also lease a truck. While leasing is less expensive up front, buying the truck is almost always the better deal in the long run.
Leasing means that someone else owns the truck. No matter how many payments you make, it’s someone else’s property. And once the terms of the lease are up, you have to sign a new lease.
Instead, if you own the truck, it’s yours once you’ve paid it off. As long as you keep up with the maintenance, eventually you will be saving a ton of money because you won’t be making a monthly payment on it.
Still, you’re going to need a loan in order to pay for the truck. To help you get the best terms on your loan, you’ll want to make sure that your credit history and credit score are good, and that you can make a large down payment.
It’s tempting to buy the very best truck with the most features and customize it as much as possible. But for your first truck as an owner operator, you’re much better off just finding the best deal you can. Get a truck you can afford without too much trouble, with a loan that has the best terms you can find. Wait to get your dream truck until your business is stable and your revenue stream is reliable. It might not take as long as you think.
Learn To Think Using The Golden Equation
Revenue per mile- Cost per mile= Gross revenue-Taxes=Net profit
That’s your formula for determining how much money you’ll make from each run. Memorize it, internalize it, and let it guid all your decision making. When you’re trying to decide if you’re going to take a job, first think of this equation.
Once you’ve taken a job, you need to focus on finding the shortest route possible to get the load delivered. That reduces your cost per mile, which increases your gross revenue and therefore your net profit. Keep up with your vehicle’s maintenance, because that also minimizes your cost per mile. Reducing idling, driving at fuel efficient speeds, and following the quickest, most efficient route will all lower your cost per mile.
You can also maximize your revenue per mile by hauling high paying loads for shorter distances.
Save Up A Lot Of Cash
There’s no way around it- you need a lot of cash if you want to get started as an owner operator. Some experts like to say that you should try to avoid making a downpayment on your equipment. That way if the truck is totaled or something else unexpected happens you haven’t lost your down payment.
But the reality is that taking out a loan with no down payment is going to lead to much bigger monthly payments and a higher interest rate. You’re better off making the biggest down payment on your truck that you possibly can. That lowers your monthly payment and leads to better terms for your loan, all of which increase your odds of being a successful truck owner operator.
You also need cash on hand for all of the regular expenses you’ll face as an owner operator. Insurance is a big one. That’s both your health insurance and the insurance on the truck, which is not cheap. You’ll have out of pocket expenses like meals and coffee on the road. You’ll probably have to pay for parking spots when it’s time to stop for the night.
Then there are the expenses like oil changes and unexpected maintenance. Plus, there’s unexpected down time. Trucks break down. Sometimes that unexpected maintenance takes a few weeks or even months to fix. That’s time when you can’t work, and therefore can’t earn income. Ideally, it won’t happen until you’ve been working long enough to have some money saved up from your trucking jobs, but it might well happen just a few weeks after you’ve purchased your truck. You need money to live on when your truck is down for repairs, and you need it as soon as you start.
How To Find Jobs As An Owner Operator
One of the keys to how to be a successful truck owner operator is actually finding jobs. You’ll be responsible for lining up your own jobs now, so your success in the long run depends entirely on your ability to find work.
Be Consistent and Reliable
The harsh reality is that you’re unlikely to land lucrative, high-paying loads right away. And it might take some time before you’re able to get consistent work. That’s because clients want somebody they know is dependable and offers good service.
You’re going to have to work hard to build up a reputation as a reliable driver, and it’s going to take some time. The key is that with every job you get, make sure to get the load delivered on time, with no complications. Offer excellent customer service, even for jobs that aren’t paying as much as you like.
Once you start to build a reputation as a reliable, efficient, and trustworthy driver you’ll find it easier to land consistent work and find higher-paying jobs. Word of mouth is a big thing in this industry, and clients will talk about you when you do good work. That alone will make it easier for you to find jobs that pay more, consistently. Before you know it you’ll have clients coming to you and offering you work instead of the other way around.
Load Boards Are Your Best Friend
Load boards are online marketplaces where shippers, brokers, and owner operators can post and find freights for hauling. These are especially great for new owner operators because they let you find work quickly.
Load boards aren’t great for developing long-term relationships with clients, but they’re ideal for short-term transactions to get some experience under your belt. In other words, they’re the best place to start if you’re new to this. Load boards also make it easy to find loads that are near you, and allow you to dictate your route.
Find Long-Term Clients
A key trick in how to be a successful truck owner operator is developing long-term relationships with clients. It’s not just that you’ll find more consistent work this way, it’s that you’ll also find higher-paying work this way.
Not only are these clients typically willing to pay more for your services, they’ll also entrust their more valuable loads to you since they trust you.
These client relationships can begin on the load boards. You might find that you keep picking up work from the same client, and that you enjoy working with them. In that case, it’s worth it to reach out and let them know that you’re available if they’d like to avoid posting on the boards and simply work directly with you.
You can also seek out regular shippers with routes that work well for you. Check out local industries like grocery stores, car dealerships and pharmaceutical companies. These all have regular shipping needs that pay well, so you can find regular work that’s convenient for you.
Once you’ve done all this, you’re well on your way to being a successful owner operator. Learning how to be a successful truck owner operator can be a life changing education. You now have the knowledge you need to start one of the most exciting and liberating careers anyone could pick.
About Booker Transportation
Booker Trans is 100% Owner Operator. It is our belief that an Independent Owner is the best way to get a customers freight delivered timely and safely. Booker is a leading Refrigerated Carrier providing the best lease options in the industry for today’s Owner Operators. Monthly and Yearly Awards, Longevity Bonuses, and the Free tires for Life of Lease Program, are just a few examples of what Booker Trans offers the Owner Operator. Booker Trans has built it’s success upon working partnerships with Customers, as well as Agency Relationships built over the last 20 years. Those same relationships are what makes consistent year round freight possible.
Are you interested in becoming an owner operator driver or getting into the logistics industry?Let’s connect!