9 Tips To Become A Successful Owner-Operator

Are you interested in becoming a truck owner-operator? If the answer is yes, then congratulations! You have taken the first step towards becoming your own boss and keeping all the profits in your pocket. However, just like any other business venture, there are a series of steps that need to be followed to become a successful owner-operator.

So, continue reading to find out what they are and the responsibilities that come along with them when you own a trucking company.

What is an Owner-Operator?

There are two kinds of professional drivers in the trucking industry. One who works for a company and the other who is self-employed, also known as the owner operator. In simple words, the owner operator either owns or leases the truck or fleet of trucks and runs the company by themselves.

However, as easy as it seems, it takes a wealth of knowledge of all the federal and state laws and regulations and a lot of consistent efforts to put trucks on the road. From finding clients to deciding cargo freight that needs to be hauled to transport it to the doorstep of the receivers to maintaining trucks, all this requires a basic understanding of business management.

But we can guarantee you that all the efforts are worth rewarding if you are willing to take that chance.

Owner-Operator Requirements

Before you take the first step on the entrepreneurial journey of your trucking venture, there are some requirements that need to be fulfilled. Here is a list of them:

Obtain a commercial driver license (CDL). Additionally, a minimum general driver qualification is required, which includes at least 21 years of age, a high school diploma, and a 10-year driving record.

Obtain the USDOT and MC numbers if you are operating as a carrier in interstate commerce.

Assessing and securing finances for your business includes buying or leasing trucks, operational costs, initial registration, and coverage costs.

Having an adequate minimum commercial owner operator truck insurance coverage required by FMCSA.

Get all the safety and training certifications.

Follow all the FMCSA compliances, including hours of service, electronic logging, drug testing, and truck inspection.

Once you have fulfilled all the owner-operator requirements, it’s time to move ahead towards the 9 must-follow steps to becoming a successful truck owner-operator.

Steps to Become a Successful Truck Owner-OperatorUnderstand the business foundation

To become a successful owner-operator in the trucking industry, it is imperative for you to have a detailed knowledge of the business foundation. It's true that there are plenty of online resources; however, the real wisdom comes from the ones that are already established as owner-operators in the market.

Try to locate them with the help of your connections, and if possible, meet them in person to share your ideas and absorb their knowledge. This will give you a good start and an edge over your competitors.

Decide whether to operate under your own authority or lease from MC

This is a very crucial decision for your business. Both models work in entirely different ways, and choosing one over the other can significantly change the landscape of your business. When working under your own authority, you are solely responsible for every decision taken. This includes finding clients, marketing your services, deciding how much freight to haul and via which route, risk assessment, and a lot more.

On the other hand, while leasing with a motor carrier (MC), you are free from all these responsibilities, and the only thing you need to do is focus on how you get more business to your door. However, this comes with a profit-sharing agreement with the agent who will take care of all this additional work.

Know the operating costs associated with it

It would be unwise to start a business venture without knowing the operational costs that come along with it. Moreover, it is equally important to know what you are expecting from this hefty upfront investment. Both of these questions help you make the business more attainable.

For instance, to successfully run a trucking company, an owner-operator must have sufficient funds for purchasing equipment (which includes trucks and advanced technology systems such as dashcams or telematics systems), fuel, adequate coverage, an initial business registration fee, licenses and permits, and ongoing expenses.

Create a business plan

Now that you know the ins and outs of the trucking business, it's time to draft the business plan. And for this, you need to brainstorm the following questions:

Who will be your target market?

What will the location of your company be?

What are the pillars of financial planning for entrepreneurs?

What kind of transportation services are you planning to provide?

What equipment will be needed?

How will you promote your services? What will your sales and marketing strategy be?

What will be the criteria for hiring new commercial drivers?

How much startup capital will you need, and how many returns are you expecting?

How will you generate the revenue?

All these questions will help you build a robust business plan for your company.

Form a business entity

The next thing is to register your business. This will give you, as an owner-operator, all the legal benefits and shielding. For this, take a consultation from your trusted financial advisor and ask which business structure will be more suitable for your company: LLC, proprietorship, partnership, or corporation. Once you have made up your mind, register your business on the U.S. Small Business Administration website.

Use a financial accounting system

As an owner-operator working under your own authority, you already have a lot on your plate. Why add more? Investing in an automated financial system would help you manage a greater number of invoices per month plus the detailed statements of cash flows. All this would limit your manual input and save some additional time. You might not find a great deal in the early days, but when your business grows, you will have a reliable and efficient system by your side.

Know the golden profit ratio rule

To know whether, as an owner-operator, you are running the trucking business successfully, it is important to be aware of the profit margin rule. According to the leading experts, a business is healthy if the percentage falls between 10 and 20. Following are the steps for calculating the golden ratio.

Find the gross profit, which is equal to the net left after deducting expenses from revenue. For example, $300 (revenue) minus $100 (expenses) = $200 (gross profit).

Divide gross profit by revenue and multiply by 100. This will be equal to $200/$300 * 100 = 66%, which is great.

Take good care of your health

Last but not least, your health should be the utmost priority for you and your business. If you are working in partnership, then you would still have time to take a break, but while working as a sole proprietorship, you won't be able to afford to take even a single sick leave. So,consider your physical and mental health a priority and start investing time in regular exercise and proper meals.

Final Words

Building a trucking company as an owner-operator demands blood, sweat, and tears, but it will all be worth it when you see your dreams come true. All the aforementioned steps and stated requirements will help you take cautious steps toward your goals.

Upma is the Seo Executive at JoomDev. She loves to convert her ideas into reality by developing products to make your online business success with her WordPress plugins and Android app development company.