Going into business for yourself is a big step and requires a lot of planning, learning, discipline, and commitment. Becoming a successful truck owner-operator requires the same and even more. With over 36 years involved in the trucking industry, we’ve seen thousands of people go from being truck drivers to owning their own trucking businesses. We’d like to share our observations on what road map successful owner-operators have followed to start their own trucking company.
1.) Trucking Experience
Every successful owner-operator should have at least five years’ experience in the specific category of trucking that he/she would like to pursue. Some of the most common trucking categories include Dry van long-distance trucking, Chemical tank, Flatbed, Hazardous Materials, Heavy Equipment Hauling, Regional Hauling, Container Hauling, Dump Truck hauling, Dump Trailer trucking, Refrigeration hauling, just to name a few.
Each segment of truck hauling categories has its own specific knowledge required to be successful. Knowing how to operate the type of trailer utilized by each category is a skill that must be mastered before going out on your own.
2.) Trucking Equipment Required
Truck specifications vary greatly with the particular trucking category in which you choose to start a business. Owner-operators should be certain of the trucking category in which you specialize because the truck you purchase may be limited to that industry only. Once committed to a certain truck, switching industries could prove to be very costly should your truck not have the necessary specifications for another trucking category. For example, a heavy haul truck may require higher horsepower and rear ratios for the job but would not be economically suitable for standard dry-van long-distance hauling.
If you’re not in love with any particular industry, you may want to purchase a truck that is adaptable to several industries. A truck with a broad range of uses is typically an 80,000 GVWR truck with an 18-speed manual transmission (covering all the gear ranges) and a 3.70 rear gear ratio. You may also want to choose a good, solid engine to deliver reliability and good fuel economy. Do your homework. Talk to fellow owner-operators and listen to their experiences with various truck engines, transmissions, and rear ratios. It is always smart in any business to talk to as many people as possible and learn from their mistakes rather than your own.
3.) Buying & Truck Financing Choices
Out of all the choices you will need to make when starting your trucking business, the most important is your choice of a truck and how you finance it. Always buy the newest, lowest mileage truck you can afford and finance it for the shortest term you are able to obtain. Successful truckers know that reliability and equity assure longevity and success.
If you purchase a seven-year-old truck with 600,000 miles and finance it for three years, somewhere around the 800,000-mile mark, the chances of your engine needing an overhaul increase dramatically. If this happens and you still owe two years of payments on your truck, you don’t have many options, unless you’ve to an extra $25,000 laying around.
If you purchased a four-year-old truck with 300,000 miles and financed it for three years, the payments would be higher but your truck will likely be much more reliable. By the time your truck reaches 800,000 miles, it will be paid off. You have many more options and will most likely have had the opportunity to build some money in savings. At that point, you can simply trade the truck in for a newer model, or get engine overhaul financing and drive away with a fresh, reliable engine and nationwide warranty while keeping the truck you know and love.
Choosing the right truck financing company is absolutely critical. In the more than 36 years that CAG has been financing trucks, we’ve seen horror stories that you simply wouldn’t believe. Make sure to check out our full list of Truck Financing Tips for some great pointers to help select the right finance company for your truck loan.
“Buy the newest, lowest mileage truck you can afford and finance it for the shortest term possible.”
4.) Choosing The Right Trucking Company
If you are going to lease on to a trucking company, you want to do your homework. As previously mentioned, it is smart to talk to other owner-operators as they will always be your most reliable source of information. Ask questions about the turnover rate of drivers. High driver turnover is a huge red flag indicating that their owner-operators are not happy. This may be a result of high wait time for loads, poor paying backloads, poorly managed logistics, or many other factors. Choosing the right trucking company can be the difference between success, mediocrity, or failure.
5.) Managing Your Trucking Business Finances
Once you own your own trucking business, you are no longer an employee that receives a weekly paycheck and can just go home and forget about work. If you want the rewards that come with being in business for yourself, you will need to fully understand your finances and have the discipline to establish and follow a budget.
Know your personal living expenses and keep them to the absolute minimum for the first few years of starting your business. Anything you earn above that, put into your savings.
Have at least $10,000 in the bank in case of emergencies. This is above the working capital required to operate your truck for items such as fuel, insurance, and maintenance.
Record keeping is critical. Set time aside daily to update your records. Select a software system that is easy to use. Choose a reputable accounting firm that has experience with owner-operator truckers. Again, ask successful owner-operators for recommendations on a good trucking industry accountant.
AVOID FACTORING COMPANIES. If you budget your money accordingly, you don’t need them. They are a huge and unnecessary expense
6.) Proper Truck Maintenance
Take great care of your truck and it will take great care of you. Keep your maintenance account fat and the rest will be easy. Service your truck regularly and don’t cut corners. Taking shortcuts with truck maintenance can be a recipe for disaster, especially for trucks with modern emission systems. Have a good relationship with a local, reliable truck repair facility or dealer who can quickly take care of you when you return home. You don’t want to lose days waiting for your truck to be serviced, a great shop can make a huge difference to your bottom line. Plan ahead and make your truck service appointments to ensure minimal downtime.
7.) Spend Time With Your Family
With all the factors resulting in a rewarding trucking business career, none are more important than having the full support of your family. Make sure that all members of your family understand what will be involved and the temporary sacrifices that everyone will need to share. Starting your trucking business will mean investing more hours than a typical job but with determination, commitment and discipline, your family will benefit for years to come.