A Successful Business Starts With A Plan
How To Become An Owner Operator Chapter 1
Let’s start this article with a little quiz.
When getting started as an Owner Operator your first step should be to?
A. Buy a truck
B. Choose your type of operation
C. Form a corporation
D. Ask your brother-in law what he would do.
E. Do all of the above in the same week so you can be trucking
as soon as possible.
You might be surprised to learn the correct answer as you keep reading. We are
going to cover this important issue in a series of articles taking you step by
step through the entire process of becoming an owner operator . We will
also be referring you to some of our other articles for more details on
specific topics. So let’s get to it!
Most people who become owner operators don’t have a specific plan on
how they are going to run their business. It’s been said that by failing to
plan, you are planning to fail. This is very true when it comes to making the
transition from company driver to owner operator . The number one key to
success is treating your new venture as a business and having a plan in writing
before you ever spend your first nickel. (Or quarter due to inflation)
The very first step in becoming an owner operator should be to decide
what kind of operation you want to run. Everything else will revolve around
that decision. Some of the questions you want to ask yourself are:
1. How long do I want to be away from home? Usually, but not
always, the longer you are away from home, the higher the gross revenue will
be. Owner Operators who run 48 states and are gone 4-6 weeks at a time
tend to have a higher gross revenue than someone who runs regional and may be
home every weekend. This distinction will also become a factor when you spec
your equipment. For the 48 state operation, you will probably want a larger
sleeper with more storage space. In a regional operation, you may not need a
larger engine or certain accessories such as a jake brake depending on what
part of the country you run in. Those are just a couple considerations that
stem from just this one question.
2. What part of the job do I like doing most, or least? Do you
really like the driving part of your job? Is a great day for you one where you
put in your full 10 hours behind the wheel with only a few short breaks? Or do
you prefer multiple stops and meeting lots of different people during the week.
Do you like dealing with unusual types of freight? Is reefer your thing? Maybe
tanker or dry van? Some operations require less driving and more time loading
and unloading or setting up. The list goes on and on. Take the time to decide
what it is you really LIKE to do.
3. How much money do I have to invest in start-up costs? You
may have to start your business doing something different than your ultimate
goal because of your financial situation. Part of your business planning will
involve goal setting and deciding where you want to be one year, five years and
ten years down the road.
4. How much money do I need to take out of the business to
support my family? This important consideration is often overlooked. You have
to structure your business so that you have enough profit left over to support
your chosen lifestyle.
You may decide to lower your standard of living for the first couple of years
to get your business off the ground. These are just a few of the many questions
you need to answer as you start to set up your operation.
After you have decided on what kind of operation you are going to start, the
next step would be to find a company to lease to. The best way to get started
on this task is to go through the ads for owner operators and identify the
companies that will fit the type of work you have decided on. This magazine is
a great resource. Make a list of all the possibilities and put each company on
a separate sheet of paper. Then you can start to investigate each company and
keep notes on that sheet so you will be able to compare contracts. Next,
contact these companies and get as much information as possible over the phone.
Ask them to send you any information they have, including a copy of the
contract you would be signing.
Other questions you will want to ask are: Do they have company trucks or are
they owner operator only? How does their compensation package work?
Is it mileage? If so, what is the mileage pay, loaded and empty? Do they pay
for anything other than mileage such as detention time? What types of expense
do they pay, scales, tolls, base plate? There are no right or wrong answers to
any of these questions, but you need all of the answers to make your decision.
We have developed a checklist to help you with this process.
You will also use these numbers to do projected CPM’s or cost per mile
estimates. You can actually start keeping track of the CPM on the truck you
currently drive. This will help you become more familiar with the issues
involved in being an owner operator . Once you have as much information as
you can get, narrow your choices down to 3 or so. At this point, your best bet
is to go out and do some leg work. Find owner operators who are with
these companies. The more people you can talk to, the more informed you will
be. Ideally, you would try to find someone who has been with the company for
more than three years as well as someone who is relatively new. Also you should
look for an owner operator who is happy with the contract as well as
one who is not so happy.
Click the chapter bar to go to Chapter 2.