There are two types of professional truck drivers, company drivers and owner operators. A trucking company employs company drivers while owner operators run the business themselves.
Both career paths are a great way to earn a living, but there are some key differences. Most truck drivers everyone should want to become an owner-operator or independent contractor. You’ll need to hone your skill set and learn about financial intelligence before deciding which route is best.
1. Evaluate your personal situation
Becoming a truck driver is a lifestyle not just a career. Becoming an owner-operator is starting your own business. People don't realize the financial personal gain that owning a business can provide. Are you ready for that commitment though. Must ask yourself some hard questions.
2. Create your business
Before you apply for your USDOT Number, you need to form a legitimate business, as the Federal Motor Carrier Safety Administration (FMCSA) will ask you questions about your business operations. First, go to your state’s secretary of state website and search the database to see if your business name is available. You’ll then need to decide on a business structure. If you’re on your own, you’ll likely be creating a sole proprietorship or a limited liability company (LLC). But there are other business structures to consider. You can get more information on forming a business from the Small Business Association.
3. Use a marketing company to get leads
A lot of drivers try to create a marketing plan and strategy themselves. That may work if you are one man job that contracts with a few companies. However, if you have your eyes on creating a larger source of income and want to hire other drivers then we suggest using a marketing company. We suggest Inspired Connection Agency. They come from a background of truck drivers. Check them out in our profitable page
4. Get your trucking authority
Your motor carrier (MC) number identifies you as a carrier “for-hire” who transports goods on a contract-by-contract basis. Unlike a driver employed by a company, you’ll operate on your own and be your own boss. This is what truckers refer to when they talk about “trucking authority” or “operating authority.”
5. Decide whether to buy or lease a truck
Buying your own truck is usually the best option for owner-operators, but it can mean a hefty down payment upfront. If you can afford a down payment, get a loan for a new truck or a used truck, then pay it off over time until you have full equity.
Leasing a vehicle is cheaper, but then you don’t own it, so you won’t build up any equity and may end up paying more in the long run.
6. Outline a business plan
Before forming your business, you may need to submit a business plan. Most business plans include the following components:
Executive summary
Company overview
Marketing plan
Goals and milestones
List of staff (if any)
Financial plan
An executive summary is a short description of what your business does, where it’s located, and who the business serves.
7. Get an electronic logging device (ELD)
To comply with regulations, you’ll need to buy an FMCSA-compliant ELD. Create accounts as a driver and as a fleet manager since you technically fill both roles.
You must physically or electronically connect your ELD to your truck to record hours of service information.
8. Follow the golden profit ratio
To know if your owner-operator business is performing well, you need to know that it’s profitable. That means knowing your profit margin.
First, calculate your gross profit. This is the difference between your revenue and operating expenses.
For example: $200 revenue – $150 expenses = $50 gross profit.
Divide that by your total revenue, and you’ll have your profit margin, which you can represent as a percentage:
$50/$200 = 0.25 or 25%
So, your ratio is 25%.
There isn’t a set “golden” ratio in this equation, but most experts say you have a healthy business if it’s between 10% and 20%
9. Make your health a priority
If you are the sole proprietor of your business, you’ll need to take care of yourself to keep it operating. You won’t take sick time since you work for yourself, so any time you spend off the road is time you aren’t bringing in revenue.
Prep healthy meals for your routes and get regular exercise while you’re on the road. Take breaks when you need to, and take time off to spend with family and friends.
Read our latest tips on how to stay healthy on the road - read more here
10. Create a system for managing finances
Finally, you’ll need an easy way to track your finances, both for tax purposes and to make sure the business runs smoothly. You can manage this with a simple spreadsheet, but software programs can also help you do this.