Is It Better To Be An Owner Operator

Is it better to be an owner operator? Whether you’re a disgruntled company driver or somebody who’s interested in getting into trucking as a career, this is a common question. We wish there was a simple answer, but answering this question really does depend on a lot of things.

To help you determine is it better to be an owner operator, we’ll discuss what it takes to be an owner operator. We’ll also compare being an owner operator to being a company driver, to help you decide which career path is better for you.

It’s important to remember that, whichever route you go, you can always change it later. Starting off as a company driver doesn’t mean you can’t become an owner operator later, and there’s nothing preventing an owner operator from selling their truck and becoming a company driver.

What Is An Owner Operator?

Before we go on, we should take a minute and discuss what an owner operator actually is. An owner operator is, in effect, an independent contractor who can be hired by shipping companies or freight brokers to haul loads.

In one sense, there isn’t much difference between being an owner operator and being a company driver. They spend their working hours doing pretty much the exact same thing, after all. There are, however, very big differences between the two. First, let’s talk about the different types of owner operator. We can’t answer is it better to be an owner operator without talking about the different types of owner operator.

Lease Operators

A lease operator leases their truck from a shipping company, often the same one that’s hiring them for work. They occupy an odd middle ground, as they aren’t quite company drivers but they also aren’t quite owner operators. They have many of the benefits of being an owner operator, without all of the risks.

This can be a quick and painless way to get into trucking, but it does have its drawbacks. For one thing, your employer is your lender, and that creates a complicated relationship. Plus, while you won’t own your truck, you will usually be held responsible for its maintenance and the insurance costs. In the long run, it’s not a great option, but it can be an excellent choice for beginners.

Lease-purchase

Rather than leasing your truck from the shipping company, you’ll sign a lease-to-own agreement from a third party. This type of arrangement is closer to being the best of both worlds than a lease operator. That’s because you’ll eventually own the truck yourself, and you’re not relying on your employer to be your lender.

It’s a much better arrangement all around. It has the same benefits as being a lease-operator, but with a lot more upside.

You will usually have to sign a contract with a shipping company to haul loads. The assurance or regular work is part of what helps secure your lease on the truck.

Self-employed Independent Contractors

This is what most people mean when they say “owner operator.” It refers to someone who has purchased their own truck and contracts to haul individual loads for shipping companies. They get to choose their own routes, and they can decide who they work for. This is the situation that gives the driver the most freedom to work how and when they want. It also includes the most risk to the driver since there’s no guaranteed work.

What Is A Company Driver?

A company driver is a truck driver employed directly by the shipping company. The trucks they drive are owned by the shipping company. Their schedules and routes are determined by the shipping company. They have less freedom than owner operators.

However, they have a lot more security.

They’ll get a regular paycheck, and they aren’t on the hook for the insurance payments or for the expense of operating their truck. They have a regular schedule. There’s a lot of appeal to being a company driver.

Now that we’ve explained what an owner operator is, and what a company driver is, let’s examine the pros and cons of each. Knowing the pros and cons is a big part of the answer to is it better to be an owner operator.

Pros of Being An Owner Operator

One of the biggest pros of being an owner operator is the freedom that comes along with it. You are your own boss. You decide which shipping companies you’ll haul for, and when.  Get to determine your own routes. You set your own hours, to an extent.

For a lot of people, that’s all they need to hear. There are very few jobs that offer this much freedom. And it’s actually freedom- you’re on the road. You aren’t tied down anywhere. You can pick the routes that excite you, where you’ll get to see the parts of America you’ve always wanted. It’s a big, big perk.

You can also earn more money. We need to be clear that more money is not at all a guarantee. Since you are responsible for finding work, bidding on jobs, and all of the expenses associated with the job, you determine how much you earn. A lot will depend on your skill and efficiency, as well as your ability to land work. You’ll be running a business, and your ability to run that business will determine your success.

So, if you run your business well, you can earn a lot more than a company driver.

Owned equipment

You also get to choose your own equipment. You don’t have to deal with uncomfortable seating, or other drivers changing the settings in the truck. It’s all yours, so you can set everything up exactly the way you like it.

That means you can choose the exact seat that you want, and set it at the exact height for your comfort. This, too, is a big perk.

Because you’re an independent contractor, you have a lot more freedom to take time off whenever you like. You don’t need approval from a boss to take vacation and you aren’t limited to a certain number of vacation days. Finally, you can make safety a higher priority than a company driver can. You can invest in the highest quality tires, along with other safety equipment, while company drivers are usually reliant on whatever equipment the company got the best deal on. Is it better to be an owner operator? Keep reading to find out.

Pros of Being a Company Driver

One of the best parts of being a company driver is that you don’t have to take the job home with you. Once you step out of the truck and go home, your worries are gone. You don’t have to worry about lining up the next job, or getting maintenance work done on the truck. It’s all being done for you.

That means your free time is actually free time. You don’t have to spend it working on your truck, or filling out paperwork, or handling your bookkeeping. You also don’t have to make payments on your truck, or pay for your maintenance, etc. Your paycheck is all yours to do with what you want.

You’re also not under contract (usually). Whereas owner operators are almost always contracted, company drivers are just regular employees. So, if you don’t like the routes you’re driving or the people you’re working for, you can leave and find a job with a different job.

You also have job security. Since you don’t need to find your own work, you don’t have to worry about whether or not you’ll have enough work. You have a regular paycheck and a regular paycheck. Overall, working as a company driver is far less stressful than working as an owner operator.

One thing many don’t think about is benefits. As a company driver, you’ll get benefits like health insurance and a 401k.

Cons of Being An Owner Operator

There’s no way around it- being an owner operator involves a lot of financial risk. Trucks are not cheap, and you’re on the hook for the cost of your truck. Insurance for them isn’t cheap either. And they burn through a lot of diesel.

You’re going to need a lot of cash just to get started, because the down payment on a big rig is a lot of money. All of that money is coming out of your pocket.

You’re going to have to spend a lot of your time off doing maintenance work and administrative work. You are the only one responsible for keeping your truck running well, and slacking off on the maintenance can cause huge problems for you later. Even if nothing disastrous happens, your truck won’t be operating at peak efficiency and you’ll spend more money on fuel. After you’ve seen to the truck maintenance, you’ll then have to focus on the administrative tasks of running a business.

A paper trail is important

That includes record keeping, so you can track what loads you’ve hauled, for who and to where. It includes paying your taxes and maintaining your financial records. Everything that’s handled in an office by non-drivers for other companies, you’re going to have to do on your own.

Since you’ll be self-employed, you have to handle your own taxes.That means your record-keeping has to be perfect. You’ll have to make sure you get your tax payments in on time, and your tax return is going to be a lot more complicated. You won’t have benefits, either. You’ll have to buy your own health insurance and set up your own retirement plan.

At the end of the day, you may not have a lot of time left to spend with your family. And that family time is even more necessary for you, because being an owner operator is a lot more stressful than being a company driver.

Dependent on the carrier

You’ll be heavily dependent on the carrier you contract with to assign you enough miles to actually meet your financial needs. And the carrier may not be under any obligation to provide you with more miles- they may not even be able to, since they might not have enough goods to be shipped to increase your miles.

Since you’re under contract, switching carriers is expensive and it can’t be done on a whim. You have to wait until you’re contractually allowed to leave and sign with another carrier.

While there’s the potential to earn a lot more money as an owner operator, there’s also the potential to earn a lot less. You may not be able to secure enough work to cover your needs.

Overall, you have to deal with a lot of uncertainty, stress, and risk. If you get sick, or injured, and can’t work, you’ve got no safety net except your own savings. This is, simply, a risky profession. That’s something to consider if you’re wondering is it better to be an owner operator.

Cons of Being A Company Driver

You might earn less money as a company driver. You get paid a set rate per mile, whereas owner operators get paid a percentage of the profits from each load. So, while an owner operator can earn more by hauling more valuable cargo, a company driver gets paid the same rate no matter what they’re hauling.

You’ll probably be working longer hours than an owner operator. Most companies keep their drivers on the road longer because they want to maximize their efficiency. They often don’t pay for wait time- i.e. while you’re waiting to pick up and drop off loads. They only pay by mileage.

You have to share your truck with other drivers. You might have to waste (unpaid) time cleaning up the mess they left behind in the cabin, or tending to unreported maintenance issues. Your trucks will be designed for functionality, not driver comfort. That can make the overall experience a lot less pleasant. You probably won’t be able to bring passengers with you, either. Finally, you might get less respect from the carrier. You may be required to do things like city deliveries or late night loading that most owner operators refuse to do.

Is It Better To Be An Owner Operator?

So, is it better to be an owner operator? It all depends on you. We’ve laid out the pros and cons of being a company driver and an owner operator. Overall, being a company driver is less risky, and for most people it’s less stressful. It can also pay just as much, if not more, than being an owner operator.

But, being an owner operator gives you the opportunity to earn a lot more money. That’s only true, however, if you can run your business properly. It also gives you a level of freedom that’s unmatched in almost any other career.

Should I Be An Owner Operator?

Given the risk you take on as an owner operator, it’s not for everybody. Here’s what it takes to be a successful owner operator:

Entrepreneurship

This is perhaps the biggest key to success as an owner operator. You really have to have an entrepreneurial spirit. You need to be able to market yourself. Need to be willing to take risks. You need to love the business side of things, not just driving. You need to be willing and able to learn how to run a business.

Personal Finances

Because of its high start-up costs and financial risks, being an owner operator requires that your personal finances are healthy and in good order. You need to have some solid savings set aside, and you also need to have a good knowledge of personal finance management. It’s probably a good idea to hire a financial advisor to help you out.

Experience

You can start working as an owner operator as a beginner, and never bother with a company driving job. But you’re probably going to be better off if you have a few years of experience as a company driver. Carriers looking to contract with owner operators are going to hand those contracts out to experienced drivers first, and the new drivers will get the worst contracts.

Plus, it’s a terrible idea to invest all that money into being an owner operator if you aren’t completely certain that trucking is the life for you. You might find yourself just a few months into your new career, hating everything about your life and unable to change anything because you’ve sunk your life savings into your truck. Spend a few years working as a company driver so you can see if you actually like trucking before you invest in becoming an owner operator.

In addition to all of that, here are some other things to think about before deciding is it better to be an owner operator:

Physical Health

Truck drivers spend a lot of time sitting down. There aren’t many opportunities for physical exercise, and most of the dining options available to you aren’t going to be very healthy. There are real physical risks involved in this profession. In addition, if you have a medical emergency on the road, you need to know who’s going to come and get you.

Family

Your family needs to be prepared for this. They may not get to spend as much time with you, and they’re also going to be bearing the burden of the job with you. Spend some time having this conversation with your family so that, if you decide it’s better to be an owner operator, your family will be on board.

Which is Better: Company Driver Or Owner Operator?

The real answer, in the end, is that neither is better. Both being a company driver and being an owner operator have a lot of pros and cons. The real question is, which is better for you?

Being an owner operator is what most people imagine when they think of becoming a truck driver. It has the appeal of freedom on the open road and there’s a certain amount of romanticism to that. But most people really don’t think about the incredible risk and stress that comes along with that.

Being a company driver feels a lot like the trucking equivalent of being a corporate sell-out, but that’s really not the case. Company drivers have a level of security that owner-operators will never have, and that makes it a better career choice for a lot of people.

Company drivers simply aren’t taking the same risks, but they can very easily be earning the same amount of money, if not more.

So, is it better to be an owner operator? If you can run a business, then yes. If you can run a business well, you have the potential to earn a lot more money and maintain a level of personal freedom that most people dream of. But, you have to be the kind of person who can run a business, secure enough work, and to do the work well.

That just isn’t something everybody can do. If you can’t run a business, or if you’d rather not spend your free time running the business, then you’re probably better off working as a company driver.