Are you planning to become an owner-operator and start your trucking business? If yes, then this article is for you.

For the benefit of the doubt, an owner-operator is an independent contractor that owns and operates their own trucking business. That means that they have full control of their business and can set their own working hours. Normally, they gain experience by working as truck drivers for self-dispatch trucking companies.

As business owners, owner-operators are responsible for all its aspects, therefore if you’re planning to be one, you need to know its ins and outs to help you run the business more efficiently.

So without further ado, let’s get started.

5 Questions To Ask Yourself Before Becoming An Owner-Operator

How long can your company operate without being paid?

When it comes to working with brokers and clients, the largest issue that new carriers confront is that they are utterly unprepared for the reality of payment and payment conditions. 

You must recognize as a carrier that you are at the mercy of the customer/broker you are working with in terms of when and how quickly you will receive payment. In an ideal world, everyone would be compensated immediately after finishing a task. The transaction would be completed right away. 

This is not the case for transportation companies, whose payment terms might reach NET 30. NET 30 signifies that you must wait 30 business days to be compensated. 6 weeks is equal to 30 business days. That’s a long time to wait for payment for a job that’s already been done. 

At Advanced Trucking, we encourage keeping a realistic perspective on how long you could go without receiving cash. In our honest view, you should have enough money saved to last at least one month without receiving a single payment while still operating your truck full-time. As absurd as it may sound to work for one month without being paid, this is the hard reality of running a trucking company. 

Working with a factoring company is one way around this problem. Factoring businesses will essentially “buy” your invoice from you for a small fraction of its overall value. The carrier will receive the money the next day after delivering a shipment, but the factoring company will deduct that percentage. The factoring company will then await payment until the payment requirements are met. 

Many carriers utilize factoring companies because they require cash flow to keep their operations running. Before hauling a shipment, we recommend conducting research and locating a reputable factoring provider. 

Now that we’ve dealt with that, let’s move on to the next question.

Do you have experience dispatching trucks?

Like other businesses, it’s important that you, the business owner, know what you’re getting into and how it works. That being said, you must have experience not just in driving but with dispatching your own trucks. 

At Advanced Trucking, we don’t just want to know if you know how to drive; we want to know if you have what it takes to be an efficient driver in full control.

We require that our owner-operators have at least 2 years of verifiable Over-the-Road (OTR) experience in the past 5 years.

Any business owner who wants to get into trucking should be able to dispatch, book loads, talk with brokers, and sign packets/rate confirmations. If you want to be an owner-operator but don’t know what “generate a COI” is about, then you might want to reconsider investing in trucking. You might be working with a dispatcher but if that person is not around, then you might end up not knowing what to do.

That being said, you should not just know what dispatching is about; you need to have first-hand experience with it. Again, driving is one thing but getting your feet wet in the trucking industry is another.

If that’s not enough to convince you, then maybe this will: having experience with dispatching will help you know what a good dispatcher is, therefore you already have an idea of who to hire when you need one.

Do you have a problem being away from home?

If you want to be an owner-operator but want to be home every night, then this might not be for you.

Being home every night will be exceedingly challenging, especially if your MC number is spanking new. It is conceivable, but you may not be able to make enough money to keep afloat. 

You should be prepared to go OTR, or over the road, as a brand-new trucking company. That is where you will make money. An owner-operator must mold to the market rather than expecting the market to mold to their demands and needs. If you are not prepared to be away from home for at least one week, do not get into trucking or start your own trucking business. You either play the game or the game plays you, as the adage goes. 

However, if you want to be home every evening, working for a major trucking company may be your best bet. Local runs, in our experience, are done by organizations that can provide their clients with a larger fleet of trucks. Large manufacturers do not collaborate with one-man enterprises since they are not as dependable as a large-scale trucking company. 

Do you believe you can make money using low-cost equipment?

One of the most common causes of failure in a new trucking firm is equipment that breaks down and requires regular repairs. Many enterprises have failed as a result of this rationale. It costs them not just their business, but also their reputation. Breaking down your truck and delaying a delivery has serious consequences for your company’s reputation. 

As truck dispatchers, we’ve seen several businesses fail due to subpar tractor and trailer equipment. Before accepting a new client, we look at their experience as well as the quality of their equipment. The year is more essential than the tractor or trailer’s make or model. It’s also crucial to know if their equipment is covered by a warranty.

Nothing is more frustrating for a dispatcher than booking high-paying loads, and putting your name on the line with a broker or customer, only to have a driver ring to inform you that his truck has broken down. Owner-operators who skimp on their equipment frequently don’t have enough money to repair it when it breaks. This is a total risk. It’s like going to the casino and betting your entire bankroll on red. Working with any organization that has subpar equipment is also extremely dangerous for a dispatcher. If the equipment fails, you will be the last to be compensated. 

If you’re considering beginning a trucking company or becoming an owner-operator, keep in mind that it’s highly expensive to go cheap. When you acquire a cheap truck and trailer, you will undoubtedly spend money at the service garage in the coming days, weeks, and months. You will also ruin your reputation and will most likely be blacklisted by consumers and brokers. 

Can you handle the challenges that come with your trucking business?

Last but not least, consider whether you can take the stress that comes with having your own trucking company.

Dispatchers are frequently singled out for criticism by self-dispatch trucking companies, even though the vast majority of these situations are outside our control. However, an owner-operator must point the finger somewhere, and who better to point the finger at than the dispatcher who is scheduling loads?  

Payment terms are frequently misunderstood by drivers. They expect to be paid immediately and are unprepared to wait tens of thousands of dollars. They don’t know how to dispatch their own trucks and hence have no idea what a dispatcher’s job requires. They’ll go through dispatchers, believing that the dispatcher is the problem. Some drivers believe that after they have purchased their truck, they are the CEO of Trucking Incorporated and ought to be home every night and make the most profit possible. This couldn’t be further from the truth. Some owner-operators prefer to take a chance on cheap equipment, thinking they’ll upgrade when they make money, only to find themselves facing a towing fee that’s more expensive than their entire rig. 

All of the questions listed above are true. If you can honestly answer all of the questions and want to get into trucking, then give us a call so we can set up a consultation. 

Trucking enterprises may be incredibly profitable and have made many individuals wealthy. These people knew what they were getting themselves into and were willing to make the necessary sacrifices. 

Whether you want to start your career as an owner-operator or you already are and you want to turn it into a profitable business, you may reach us at [email protected] to learn how you can get started today!