Here’s a starter guide for people thinking of getting their start in the trucking industry, specifically for potential independent owner-operators (O/Os).
Figure out how you’re gonna get paid
Might be obvious, but start with the money. Figure out what your sources of income are going to be.
There are two ways you can get paid as an O/O:
Operate under your own authority, booking your own loads either through brokers or direct relationships with shippers.
Leasing onto a carrier and choosing the loads you want to haul.
Let’s look at these two incomes a little more closely.
Booking your own loads
If you are getting your own loads, you’ll be working through a broker, through load boards, or by developing direct relationships with customers.
Gather information about how much different kinds of loads pay and what the requirements are for hauling them. Go to these sites and look around:
Check out the rates, and try to call some of the brokers to see what they are looking for in a company and driver. This will help you figure out which loads you will be able to haul and inform your decision on what kind of truck and equipment you need to buy.
You will also need to look into becoming a carrier to book your own loads.
If you are new to trucking, starting out by getting your authority and booking your own loads is going to be hard. You have more work to do, and you have a lot more regulations, fees, and start-up costs than with leasing to a carrier.
Here are some more resources:
Leasing to a carrier
If you are considering leasing to a carrier, then make some calls and talk to people at different potential carriers. Talk to recruiters and talk to some drivers. The recruiters are going to paint a rosy picture. The drivers will be more realistic, but might be a little negative. The truth is somewhere in between.
Find out about what kind of rates to expect to be paid, how many miles you will run, and what you will haul. This will go a long way to picking the right truck. If you need to run a lot of miles, fuel mileage is a very high priority. If your fuel costs are too high, they can eat a big chunk of your profits.
Find out how long they expect you to keep your truck out. If they expect you to be on the road for long periods of time, is that going to suit your needs. (And if you are thinking of hiring drivers, you want to make sure they are a good fit for the jobs, too.)
Find out what requirements they have for drivers. These will include such things as: types of insurance, certificates or licenses for transporting certain kinds of materials, or limits on driving hours. You don’t want to go too far in the business-starting process and find out that they won’t let you start working.
Start estimating your business costs
When you know where the money will be coming from and a ballpark of what to expect per mile and per month, you can start planning how much your business will cost to operate.
Here’s an Income Estimation Calculator that helps you figure out the types of expenses to expect and how much they’ll affect profits: http://www.rigbooks.com/income-estimation-tool. Using the tool, you can see how things like fuel mileage, payment costs, and price of fuel will affect your cost structure.
If you haven’t picked a truck to buy yet, you will want to play around with the calculator a bit and see what ranges you can get away with to keep the costs significantly under your expected profits.
I highly recommend you leave yourself as much room as possible between your expected costs and the expected income. You should be estimating on the cautious side for your expected jobs. Sometimes things don’t work out, so you want to be conservative in your estimates.
If you’re thinking of hiring other drives, do research to see what they’ll cost you.
Here are some more resources:
Start looking for potential trucks
With a better idea of the costs and profits involved, you can start looking at trucks.
Once you’re looking at trucks, make a spreadsheet. Include columns for:
Where you saw the truck
Expected fuel mileage
Expected maintenance costs
The payment ranges you looked at in the previous step should give you an idea of price ranges you can afford.
You can look up information on the model of trucks you are interested in to fill in the expected fuel mileage and expected maintenance costs.
Take your list and plug each one back into the income estimation calculator. This will give you an idea for how the different numbers for each truck will impact your expected income.
Fine-tuning your cost structure
Edit your list of trucks down to 5-10 trucks. Start making calls and see if they are still available, and take more detailed notes about them. Whittle the list down to 3-5 of the best. This will save you money when you go on Rigdig.com and check on the truck’s history.
Now you can use these and call some insurance companies to get a better idea of the exact costs of the insurance. Call several, as rates can vary by a large amount.
Call some banks and see what you should expect for payments on for a truck. Call several to get the best deal. Take those bids and plug them back into the calculator to get a more accurate idea of your costs.
Come up with some ideas for what you expect preventive maintenance to cost. You can find information about the make, model and year of the trucks you are interested and see what others have experienced with them. If you don’t have much experience with this, you will basically have to guess. (It’s better to err on the side of too high costs rather than too little.) Plug those numbers back into the calculator.
Here are some more helpful threads with real-world advice on truck-buying. I recommend you read a good amount of these kinds of threads and posts, because they’re filled with real-world experience and tips you might not otherwise think bout.
If you’d done all these steps, you’ve got about as good of a plan as you can hope to have without more experience. The rest is going to be making adjustments and having enough extra money saved up to pay for unforeseen expenses.
I’ll leave you with some more good trucking threads that have a lot of great general business-starting advice:
You can search on TheTruckersReport to look up terms and phrases you want to learn more about.
To give the other side of the coin, a very negative opinion about how hard it is to make it as an owner-operator
Try talking to experienced O/Os. Not only has every O/O gone through this themselves, but they have heard a million stories from others, given advice to new drivers, and have been around the block enough times to know how things should work out.
Hopefully this article has been helpful to you. In the other articles in the Rigbooks Resource Center, we have all sorts of trucking business strategy articles and tips on succeeding.
If you have any comments or questions about this article, or want to learn more about how our software, Rigbooks, can help you with your owner-operator business, send us a message on our Contact Page.
My name is Jason Forrest, and I’m the creator of Rigbooks. Rigbooks is a cloud-based software that makes it easier for small and medium-sized trucking companies run their business while keeping organized. We’ve been around since 2010.
A little about me: I grew up in a trucking family and from an early age I learned about the day-to-day problems that truck owner/operators have to deal with. I was into computers and programming as a kid so over the years I helped write small computer programs that helped my parents run their company better. Eventually that led to the idea of putting all those tools together in one package. And Rigbooks was born.
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More resources for trucking business owners:
- What’s the difference between HVUT, Form 2290, and IFTA?
- "How long do I have to keep these?": FMCSA record retention for owner-operators and small fleet owners
- Top tax filing tips for owner-operators
- Tips for owner-operators with tax problems
- How are fuel surcharges calculated?
- Simple rules for maintaining long-term profitability in your trucking business
- Starting out with an owner-operator trucking business
- Owner-operator expenses: Fixed costs vs variable costs
- Understanding owner-operator expenses and costs
- Gaining half an MPG can put more money in your pocket than adding $90,000 in revenue
- Cutting fuel costs and improving fuel efficiency for Owner Operators
- Top truck-buying tips for owner-operators
- New versus used truck pros and cons table
- Buying a truck: Should you get a new or used rig?
- Preventative maintenance strategies to avoid major repair costs
- IFTA fuel-buying strategies: Where is the best place to buy fuel?
- Calculating your cost per mile
- Owner Operator Expenses - Fixed Costs vs Variable Costs
- How do I calculate IFTA?
- How does IFTA work?
- How did IFTA start?
- What exactly is IFTA?
- Tracking miles for IFTA
- Fitness for the road
- Acronym cheatsheet for the trucking industry