In the trucking industry, you can have a profitable outcome. Still, it can be extremely competitive, especially if you are an owner-operator.
Often, excellent truck drivers turn to own their own trucking business but are not successful because of their lack of knowledge. Knowing and understanding the aspects of running a successful business takes more than just learning how to drive a truck.
Below are a few steps and tips on becoming a successful owner-operator or fleet owner.
Choose Your Niche
As an owner-operator, it is important to choose the right niche in your career path. This means weighing out your different equipment, rates, and freight options. Owner-operators typically choose a niche that is high in demand, such as specialized loads or heavy haul. While these are high in demand and successful, many drivers fail while on their own because they are unable to find the right loads.
While specialized and heavy haul are not the only two freights in high demand, there are other areas where an owner-operator can be successful. These different freights include dry-van and reefers, which are often less competitive.
Having guaranteed loads available is important. This is especially true when you are first starting out. When starting out, you do not want a lot of downtime. You will need to gain as much profit as possible to ensure emergency funds and be able to prepare for the expected and unexpected expenses.
Partnering with a reputable company that can ensure you have access to loads when you need them is important.
Finalize your Operating Costs
Calculating and knowing how much it will cost to get your business up and running is an important detail you must know. If you do not know what it will cost to run your business, you can find yourself in financial hardship, resulting in a loss of profit.
You can create a spreadsheet of all your fixed expenses. Fixed expenses never change, no matter the miles you run monthly. Fixed 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 variable expenses. Variable expenses fluctuate depending on the miles you run. Variable expenses can include:
- Lodging and Meals
- Phone Charges
- Loading and Unloading Fees
- Maintenance Repairs
- Other Repairs
- Factoring Fees
- Broker Fees
Once you have figured out both fixed and variable expenses, you can then figure out your “cost per mile.” This is important in determining your profit. You can read more about calculating 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 will cost you to run your business, you can then determine the rates for clients. When choosing rates, be sure you are giving yourself enough profit, which will help cover your expenses. Before you can contact shippers and make sales, you need to know your rates. Shippers are highly competitive, so be sure you offer competitive rates against the 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 your most significant expense will be fuel. Many drivers believe that opting for the lowest gas price saves them money. Instead, by doing this, you may lose out on money. In the end, the highest expense is taxes. Four-wheel drivers pay fuel tax for the state the gas is purchased. Over-the-road drivers face the International Fuel Tax Association (IFTA). Owner-operators pay taxes on fuel as they drive, no matter where the fuel was purchased.
Since taxes eat much of the driver’s money, it is important to purchase gas depending on the base price. To calculate the base price, 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 hauling an empty load, but also expensive. Typically, a broker keeps 10-20% of your load price. To reduce brokers’ costs, you must establish a client list where you work directly with that client. If you do this correctly, you will develop a reliable clientele to keep your business running smoothly.
Having someone who knows how to run behind the scenes of a trucking business can help you succeed and grow as an owner-operator. It is also important to understand how to handle administration work or hire someone who does. There are a few options one should consider when hiring assistance.
Option 1: You can do all the admin work yourself. You will then have to keep track of all your records from the cab of your truck with a laptop, printer, and internet. Also, you must have some sort of accounting software. This will help you keep track of all the records which you need.
Option 2: Outsource your administration work to a professional. Hiring a professional accountant can become expensive. But this will help ensure you do not miss anything. Also, 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 a company or employee driver. Owner-operators need to fully understand the roles and responsibilities it takes to become successful. While there are different options for accounting services, initially, you are in full control of the success and failure of your business.
To be successful, you must decide if you are going to lease with a company or be 100% independent. Whether you choose to lease or become independent, you can experience both advantages and disadvantages. Having your own authority, you will receive 100% of your gross. But the expenses of running your own business will fall upon your shoulders.
First-time owner-operators should have a strong support system. Choosing to lease with a reputable trucking company, you will be leasing with a company that considers you to be more than just another driver. The right trucking company will provide you with the tools and assistance to get your business up and running and to be successful. Some things to consider when looking into a leasing carrier include:
- 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 a 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 considered family and treated as such. Owner-operators with Landstar receive many benefits to help make their trucking business successful. We want to help you become a successful owner-operator.
100% Non-Forced Dispatch
Landstar does not force its drivers to take specific loads. Instead, as an owner-operator at Landstar, you are in control of your business, and you get to choose the loads you want to haul. This allows you to spend much-needed time at home with your family and loved ones. Also, being with a non-forced dispatch company, you get the freedom to earn the highest revenue possible.
Landstar’s Load Board
Owner-operators at Landstar receive access to the Landstar Load Board with thousands of independent sales agencies. When an agency accepts a truck request, the load is added to the Load Board. Once you have found the load you want to haul, it is as simple as contacting the agency and booking the load. It is that simple!
Receive Load Alerts
In the Landstar Load Board, you can set specific criteria regarding the loads you want to haul. When you are running, the Load Board is continuously searching for your saved criteria. You can also filter loads depending on weight, dates, rates, trailer type, destination, and origin. You are notified when loads are available, and you can then 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 its 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 higher pay, Landstar ensures owner-operators will receive 65-75% pay from each load hauled. Landstar also pays attention to load rate increases, so when the rate goes up, 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 at 877-441-9128!