The trucking industry can have a profitable outcome, but it can also be extremely competitive, especially if you are an owner-operator. Often, excellent truck drivers turn to owning their own trucking business but are not successful because of the lack of business knowledge. Knowing and understanding the aspects of running a business successfully takes more than just knowing how to drive your truck.
Below are a few steps and tips on how to be successful as an owner-operator or fleet owner.
Choose Your Niche
As an owner-operator, it is crucial to choose the right niche in your career. This means weighing out your different options for equipment, your rates, and what freight you haul. Owner-operators typically select a niche that is in high demand, such as specialized loads or heavy haul. While these are in high demand and can be successful, many drivers fail on their own simply because they cannot find the right loads.
While these are not the only two freights in high demand, there are other areas in which an owner-operator can become successful, including dry-van and reefers that tend to be less competitive.
Having guaranteed loads available is highly important, especially when you are first starting out. You do not want a lot of downtimes. You will need to gain as much profit as possible to ensure you have emergency funds and the means for expected and unexpected expenses. Partnering up with a reputable company that can make sure you have access to loads when you need them is essential.
Finalize your Operating Costs
Calculating and knowing what it is going to cost to get your business up and running is an important detail you must work out. If you do not know what it is going to cost to run your business, you can find yourself in financial hardship resulting in a loss of profit.
Create a spreadsheet of all your fixed expenses. Fixed expenses never change, no matter how many miles you run monthly. These expenses can include:
- Truck and Trailer Payments
- Insurance – cargo, truck, collision, deadhead, workmen’s’ comp, and health insurance
- License Plates
- Parking Fees
Next, you will need to figure out your variable expenses. Variable expenses fluctuate depending on the miles you run. These expenses can include:
- Lodging and Meals
- Phone Charges
- Loading and Unloading Fees
- Maintenance Repairs
- Other Repairs
- Factoring Fees
- Broker Fees
Once you have determined both your fixed and variable expenses, you can figure out your “cost per mile.” This is extremely important to figure to determine your profit. Read more about how to calculate your cost per mile in this article: How to Determine Cost Per Mile.
Find Loads and Cost per Mile
Once you know how much it is going to cost to run your business, you can determine your rates for clients. When choosing a rate, be sure that you are giving yourself some profit, and this amount will cover all your expenses.
Before you can even contact shippers and make sales, you will need to know your rates. Shippers are highly competitive, so be sure you are offering competitive rates against other brokers.
How to keep your rates competitive:
- Preferred Freight Carrier – With Landstar, Secrest Direct ensures owner-operators are equipped with the tools to become successful.
- Look at a Load Board – Landstar offers all leased owner-operators access to the Landstar Load Board.
- Search for loads within the same area to reduce fuel costs.
- Do the above steps for loads going in the opposite direction.
Create a Fuel Buying Strategy
As an owner-operator, you will see that your most significant expense will be fuel. Many drivers believe that opting for the lowest gas price is essentially saving them money. Instead, by doing this, you could lose out on money. In the end, what costs you the most is the taxes. For four-wheel drivers, they pay fuel taxes for the state in which they purchased the gas. Instead, for over the road drivers, they face the International Fuel Tax Association (IFTA). Owner-operators pay taxes on the fuel as they drive, no matter where they bought the fuel.
Since taxes are what eats a hole in the driver’s wallet, it is important to purchase gas depending on the base price. To calculate the base price, you subtract the taxes from the fuel price.
Work with Other Shippers
Brokers play an important role in your trucking business. Brokers can be beneficial when you are hauling an empty load but can also be expensive. Typically, a broker keeps 10-20% of your load price.
To reduce the costs of brokers, establish a client list where you work directly with the client. If you do this correctly, you will begin to develop a reliable client that will keep you running a steady business.
Having someone who knows how to run behind the scenes of your business can help you succeed and grow as a business owner. It is important to understand how to handle all the administration work or hire someone who does. There are a few options to consider when hiring assistance.
Option 1: Do all the admin work yourself. You can keep track of all your records from the cab of your truck with a laptop, printer, and the internet. Also, research some accounting software. This can help you keep track of all the records in which you need.
Option 2: Outsource your administration work to a professional. Hiring a professional accountant can become expensive. However, by doing this, you can ensure they will not miss anything. Be sure to do your research before hiring anyone to keep track of your business.
Being an Owner-Operator is not for Everyone
As an owner-operator, you have more responsibility than being a company or employee driver. You will need to fully understand the roles and responsibilities it takes to be successful. While there are different options for accounting services, at the end of the day, you are in control of the success and failure of your business.
To be truly successful, one must first decide on leasing with a company or being 100% independent. Whether you lease or are independent, you can experience both advantages and disadvantages. Having your own authority, you receive 100% of your gross, but also the expenses of running a business fall upon your shoulders.
For a first-time owner-operator, you should have a strong support team. Choosing to lease on with Landstar, you are leasing on with a company that considers you to be more than just another driver. With Landstar, you are provided the tools and assistance to get your business up and running and continuing to be successful.
Some things to consider when looking into a leasing carrier includes:
- Who provides the plates and permits?
- Who pays for fuel taxes?
- Do you get paid a percentage or paid per mile?
- Is loaded and deadhead miles payable? What are the rates?
- Is fuel surcharge included? How is this amount figured?
- Who pays for tolls and scales?
- What are the truck requirements?
- Does the carrier provide trailers? Is there a rental fee?
- What benefits does the carrier provide the drivers?
Leasing with Landstar
When you choose to lease with Landstar, you are not just another driver on the road. You are family and treated as such. As an owner-operator with Landstar, you receive many benefits to help make your trucking business a success. We help you be a successful owner-operator.
100% Non-Forced Dispatch
Landstar does not force drivers to take specific loads. As an owner-operator, you are in control of your business, and you get to pick the loads you want to haul. This allows drivers to spend much-needed time at home with family and loved ones. Also, being a non-forced dispatch, this gives you the freedom to earn the highest revenue possible.
Landstar’s Load Board
Landstar owner-operators receive access to the Landstar Load Board with over 1,000 independent sales agencies. When the agency accepts a truck request, this load is then added to the Load Board. Once you have found a load that you want to haul, it is as simple as contacting the agency and booking the load. That simple!
Receive Load Alerts
Within the Landstar Load Board, you can set a specific criterion regarding loads that you want to haul. When you are out running, the Load Board is continuously searching for your saved criteria. You can filter loads depending on the weight, dates, rates, trailer type, destination, and origin. You are notified when loads are available, and you can book that load – IF you want. Think about it as your own personal assistant working behind the scenes.
Percentage Pay and Weekly Settlements
Landstar does not hold back when it comes to paying their owner-operators. Each week, owner-operators receive a percentage pay settlement for the loads taken in the prior week. Instead of having to drive more miles to earn your pay, Landstar ensures owner-operators will receive a 65-75% pay from each load they haul. Landstar also pays attention to the load rate increase, so when the rate increases, so does your revenue.
If you want to be a successful owner-operator and run your business the way YOU need but want the closeness of a reputable, financially stable partner, give our recruiting team a call today 877-441-9128!