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Is it a good time to become an owner operator
July 5, 2022
Is it a good time to become an owner operator? That depends on who you ask. Some people will say it’s always a good time to be an owner operator, others will say there’s never a good time to be an owner operator. And then there are plenty of answers in between.
We’ll explain all of those answers, and more. We’ll also help you learn for yourself how to determine if you’re ready for the responsibility of becoming an owner operator. Let’s dive in!
Is it a good time to become an owner operator? Definitely not!
We’ll deal with the negative answer first, because it will help address a lot of the fears and concerns you may have if you’re considering this career path. There are plenty of people who will say that there’s never a good time to become an owner operator.
For these people the answer to “is it a good time to become an owner operator” is never. And before you dismiss them out of hand, you should know that they have very good reasons for thinking this.
Why Some People Never Want To Be Owner Operators
Profit margins in trucking are razor thin. Even the huge, publicly traded trucking companies only have something like a 3% profit margin. That means for every dollar they make, they keep three pennies.
Your margin will be smaller. You won’t have the efficiency that comes with such a large operation, and you won’t have a business department managing your finances to maximize your profit. You’ll just have you, and maybe one CPA to help out.
As you think about is it a good time to become an owner operator, you need to consider whether or not you’re up for that kind of stress. With such thin profit margins, any interruption in work can be financially disastrous. It might be a very long time before you can afford to take a vacation, not to mention dealing with mechanical issues on your truck, or what happens when you struggle to find a load.
Competition is Fierce
The competition for loads is cutthroat. If you’ve never had to bid on loads yourself, you’ll be shocked at how hard it can be for new drivers to actually find work. The standard advice is to find an underserved niche and focus there, but that’s what everyone does now and so it’s still difficult to actually land a job that way.
The cheapest bid is always going to get the load, and owner operators will always have a hard time bidding lower than the big companies who can afford to charge lower rates. They get huge discounts on fuel, repairs, and parts that lower their operating costs. They don’t have to charge as much as you do in order to make a profit.
Being A Company Driver is Easier
Even the most die-hard owner operators will probably tell you that being a company driver is simply easier. There are several reasons for that. As a company driver you aren’t responsible for finding loads, you just get in the truck and drive. If you’re wondering is it a good time to become an owner operator, think about how much stress you want to deal with right now.
You also aren’t responsible for paying for fuel or maintenance. If your truck needs repairs, they’ll just put you in a different truck instead of having to wait until the truck is ready to drive again. You won’t have to worry about tracking down clients and brokers and making sure they pay for your services.
You’ll probably have more consistent income, and there’s a good chance you’ll actually get paid more as a company driver than as an owner operator. Trucking companies often pay their drivers well, and they also provide benefits like health insurance and a 401k. Owner operators have to do those things on their own.
Overall, there’s a lot less stress for company drivers. They just show up to work, get in the truck and drive. When they’re done, they’re done. They drop the truck off at the company lot and they go home. An owner operator has to line up his next job and check his truck for any maintenance needs. Then he’ll need to get started on all the paperwork he needs to complete in order to get paid.
An owner operator is always going to be putting in a lot more work than a company driver. There’s just now way around it.
Is It A Good Time To Become An Owner Operator? Yes, If You’re Ready!
If nothing you’ve read so far makes you want to run back to being a company driver, you might be ready! But you want to be sure before you take such a big risk. So, let’s go over the signs that it really is time for you to become an owner operator.
Part of the answer to is it a good time to become an owner operator has to do with your experience. Most people advise against becoming an owner operator if you have no experience in trucking at all. It’s definitely a good idea to drive as a company driver first and learn the industry first before you try to start your own business.
It’s not just about years of experience, either. You may want to consider driving for more than one carrier before you buy your own truck. You might find that you actually like the new carrier enough to be fine working with them. Or you might just learn new ways of doing things that will help you out as an owner operator.
Gaining experience isn’t just about learning the industry, either. While you’re exploring is it a good time to become an owner operator, you need to be learning about the lifestyle of a truck driver. This life is not for everyone. It’s hours and hours on the road, and you’ll be spending days or weeks at a time away from home.
If you get a job as a company driver and realize after a few months that it’s just not for you, you can leave and get a different job. But if you decide to start out as an owner operator, you’re locked in. You’ll have a massive truck loan to pay off, and you’ll pretty much be stuck driving at least until you’ve paid the truck off. And then when you sell it, it won’t sell for as much as you paid for it.
Your Finances Are In Order
Some of the best advice you can get as you decide is it a good time to become an owner operator is to make sure you’re financially prepared to do it. Buying the truck is just the beginning, but it’s also the single biggest expense.
New semi trucks typically cost over $100k, but even the cheapest used truck will be somewhere around $40k. You’ll need at least a 20% downpayment in order to secure a loan. You might also consider leasing a truck so you don’t need to worry about a downpayment, but then you won’t be building any equity in your truck.
You’re going to need substantial cash reserves to deal with maintenance problems and fuel costs. This will also help you when you need money to live on at first. It can take a while before you find steady work when you’re just starting out.
Oh, and you’ll need money for meals and insurance. It’s best to have a backup financial plan in case you struggle more than you expect at first, and you should definitely talk to a financial advisor before you buy a truck. You want to be sure that you’re in a strong enough financial position to really pull this off.
Successful owner operators can earn six figures, but most of them don’t start out that way. It’s far more likely you’ll struggle in the beginning, so being in a strong financial position is a sign that it’s a good time for you to become an owner operator.
Family and Health
There are some deeply personal aspects to look at when you’re asking is it a good time to become an owner operator. First, you need to consider your home life. If you’re an experienced truck driver your family may be used to you spending days or weeks on the road already.
But even if that’s true, you won’t be available to them at home like you were as a company driver. You will have to spend much of your time at home running your business. You’ll have to complete paperwork, find loads, and perform maintenance work on your truck. So, even if your family is used to you being a trucker, they aren’t used to you being an owner operator.
And if you’re new to trucking, you really need to consider the effect that your new job would have on your family. You’ll be gone a lot. Your family needs to be ok with this.
You also need to consider your physical health. Trucking is not easy on the body. You’re going to be sitting immobile for all of your working hours, with no time to get up and walk around. Your dining options will be limited. Trucking can take a toll on your health if you’re not careful.
If you already have serious health issues, you may want to reconsider. Owner operators do not have the luxury of missing work due to chronic health problems. You won’t have any kind of paid sick leave. As an owner operating, you’re a business, not an employee. If you aren’t working, your business isn’t operating. That means you aren’t generating any income.
If your health is good and your family is strong, it could be a good time to become an owner operator. Otherwise, it might be too much of a risk for you to take right now.
You Have a Business Plan
Is it a good time to become an owner operator? It can be, if you have a solid business plan in place. That’s something a lot of people neglect in their preparations. Becoming an owner operator does not mean that you’re just working as an independent driver.
You’re a business owner, and you have to work like one. You need a clear plan for how you’ll generate a profit, how you’ll find loads, and how you’ll pay for your expenses. It’s probably a good idea to have a successful owner operator look over your business plan, and maybe even ask them to help you write it.
That way you can be confident that your plan is realistic and has a good chance of success. Otherwise, you might find that your plan was too ambitious or you forgot to take an important expense into account.
You’ll probably need to learn a bit about accounting and finance, too. These are vital aspects of running a business and if you don’t understand them well you’ll have a very hard time turning a profit. Learning to manage the business side of things is one of the keys to succeeding as an owner operator.
If you have a solid business plan in place, that’s a good sign that you might be ready to become an owner operator. It means you’ve really put a lot of thought into this and you probably have a good idea of what to expect.
You Have a Good Networking
Networking is key to good business, and owner operators are no exception to that. A good network is often the difference between success and failure, especially when you’re just starting out. So, we can’t answer is it a good time to become an owner operator without talking about the strength of your network.
Having a great network in place will help you find loads faster. You may even have shippers contacting you to offer you loads if they’ve worked with you before, and that’s a huge deal. Not having to search for loads from a broker can save you a lot of time and money.
But you don’t just need a good network of clients. You also need a good network of other drivers. They can give you tips on where to find lots of work, help you find good mechanics, and provide info on the best places to fuel up.
Without a good network, you’re going to have a much harder time getting work as a beginner. By contrast, a solid network can make it so easy to find work that you’ll be able to turn a profit almost immediately. The only way to build up that network is to work in the trucking industry and meet people that way.
So, if you’ve built up a solid network that can help you be successful quickly, it’s probably a good time to become an owner operator. If you don’t have a network, you might want to wait until you do.
Conclusion: Is it a good time to become an owner operator?
Becoming an owner operator is risky. And there’s no question that working as a company driver is safer and easier. But if you want the independence and earning potential that comes with being an owner operator, there are a few signs that it’s a good time.
If you have the trucking experience, business savvy, strong finances, a happy and healthy family life, and a good business network, you can feel comfortable becoming an owner operator. These are the things it takes to succeed.
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!