Should you become an owner operator?

Before taking your first step toward becoming an owner operator, it’s important to evaluate whether your circumstances will work with this type of career change. Becoming an owner operator can offer more freedom to choose the loads you want, but it also comes with significantly more responsibility. You’ll want to confirm you have the equipment, knowledge and motivation to turn your sole proprietorship into a successful business. There are several questions you need to ask yourself.

Do you own a truck or trailer?

Company truckers drive company trucks. If you want to go into business for yourself, you’re going to need your own rig to haul your loads. If you don’t own a truck, is your credit strong enough to get one and do you have the cash you need to meet down payment requirements?

Do you have a financial cushion?

Getting into owner operator trucking requires you to find and maintain your own clients. This can take some time when you’re starting out, so you need to make sure you have the assets to keep your bills paid. Referral services can get you started, but there’s no guarantee they’re going to be high-dollar opportunities.

How much do you need to clear to afford additional expenses?

Like any sole proprietorship, you will have new business costs in addition to your current living expenses. You will be responsible for insurance premiums, maintenance of your truck and loan payments if you don’t already own the truck you will be using. If your current company provides benefits, such as life or health insurance, you will also be on the hook for obtaining and maintaining those policies.

How much driving experience do you have?

As an owner operator, you’ll no longer have the benefit of company guidance when you find yourself in difficult or complicated situations. Established experience as a truck driver provides real-world knowledge that can help you navigate these issues effectively. If you are new to truck driving, do you have a mentor or resources you can fall back on when you encounter something outside your skill set?

What are your family obligations?

One of the attractions to owner operator trucking is the option to decide when you want to drive and who you want to drive for. However, you could find yourself without load options that fit your needs. Do you currently work for an in-state trucking company because you have small kids at home and want to come home to them at night? You may have to be willing to take longer routes sometimes if no local contracts are available.

Are you motivated to build your business?

Are you the type of person who works better under established expectations, or do you prefer to forge your own path? Just like any new business, owner operator trucking requires effort to grow into something successful, and you need to determine whether you want to put in that time.

Once you’ve assessed your situation and weighed your needs against the commitments required to transition into owner operator trucking, you should have a good idea of whether this is the right career path for you. If you feel you’re ready to start establishing your business, there are a series of steps you will need to take before you make your first solo delivery.

How to become an owner operator

Many of the actions you’ll need to take to establish your company are required for any new business venture, but a few requirements are exclusive to truckers. Work through each step as it applies to you, and you’ll have the foundation you need to give yourself the best chance for success.

1. Start crafting your business plan

A business plan is the road map for your company and should be the first step you take. Don’t worry if you don’t have all the information you need at this stage. It’s likely you won’t yet have a full financial picture to handle this portion of your plan, so you can fill in any missing information as you get it. Business plans are supposed to be living documents that are adjusted regularly to account for new information and evolving goals. The earlier you start the process of putting your business plan together, the more organized your business-building efforts will be. A completed business plan should include most, if not all, of the following:

• Title page
• Table of contents
• Overview (a concise statement of why the business will be successful)
• Market analysis (identify your target clients and any competition you’ll need to consider)
• Company description (cover any business assets that set it apart, such as skills or unique benefits to customers, along with an explanation of why they will positively impact the business)
• Organization (how the business will be structured and description of anyone holding a management position)
• Marketing (your plans for finding and keeping new clients)
• Service description (a summary of what you offer your customers, what need you satisfy and how they benefit from choosing your company)
• Funding (estimate of the money needed to start and grow your business, with set time periods for growth and values assigned to each period)
• Financials (projection of your expected earnings over the next year)
• Appendix (where you keep copies of relevant licensing, insurance, resumes for yourself and any partners, contacts for professional services and so on)

Along with helping you stay on track, your business plan will come in handy if you need commercial financing to purchase or upgrade equipment or any other business investments you wish to make to grow your company.

2. Assess your professional equipment

If you don’t already own a truck, now is the time to consider your purchasing or leasing options. You’ll need to know your credit score, the amount you can afford for a down payment and how much you’re comfortable spending overall. Make sure to shop around before settling on a lender. Many offer financing deals that could help you save some money.

If you already own a truck, it’s time to give it a full checkup. The last thing you want to deal with when working for new clients and trying to get your business off the ground is a delayed delivery due to mechanical failure. Address any current and eminent issues required to keep your truck running smoothly and do a once-over of your rig’s safety equipment. All lights should be working, your emergency kit should be stocked and accessible and your registration and insurance must be current.

Aside from the truck, the most important piece of business equipment you have is you. You can pull all the clients in the world and have the best truck and best service, but none of that will matter if you’re out sick and unable to drive. Get a checkup with your doctor and make sure you’re handling any health concerns appropriately to keep you fit for travel.

3. Get any necessary licensing and insurance

If you don’t have your CDL, start the process to get it. If you already have it, check the expiration date and make sure it’s current. Depending on your state, you may be required to get special endorsements to haul hazardous materials or pull multiple trailers, so decide if these are relevant to your business.

Check your truck insurance and make sure you have the appropriate coverage. Remember that you will no longer be covered by the company you work for, so you want to make sure your deductibles are affordable and there are no gaps in coverage that leave you vulnerable to losing your business.

Also, take the time to shop around for life and health insurance. You will be responsible for opening and maintaining any policies at this point, and you may need some time to find the best price for the coverage you need.

4. Register your business

Now it’s time to establish your new business. Start by choosing its structure:

• Limited Liability Corporation (LLC). More complicated and expensive filing but offers some liability protection if you follow specific rules.
• Sole proprietorship. Creates business under your name by default, so you must file a DBA for a different company name.

Once you decide your structure, file paperwork to register your new business with the appropriate state agency. If you choose not to list your business under your own name, search the state’s database to make sure the name you choose is available.

5. Obtain your USDOT and MC numbers

Once you receive confirmation that your business is registered, you can file for your USDOT number and your motor carrier (MC) number online on the FMCSA website. The USDOT number lets you transport your loads across state lines. The MC number gives you operating authority, allowing you to work for yourself and create contracts to haul goods for your clients.

6. Build your business

Now that you’ve handled most of the basics, it’s time to tie up any loose ends and start building your brand. If you choose to operate as an LLC, you’ll need to open a business account with your bank so you can keep your personal money separate from business funds. Do another scan of your business plan and make sure it’s complete, adjusting things as needed so it’s based on the most current information you have.

Once you’re satisfied that your business is ready to launch, it’s time to start building your client roster. If you worked for a trucking company, you may be considering taking over delivery for your previous clients. Be sure to check on any noncompete agreements with your former employer before approaching anyone. If you’re starting fresh, start marketing yourself online and in print and ask your friends and family to help you promote yourself. There are also services that can help connect owner operators with open contracts that need fulfillment. Then, all that’s left is to satisfy your customers and watch your business grow.