6 Steps to Become an Owner/Operator Driver
The entrepreneurial aspects of an owner operator entice those both new and old to the life of truck driving in Australia. Whether it's only been a year or 10 years as a seasoned veteran, you probably have fantasised about giving up the life of living paycheck to paycheck to sitting back and enjoying your time as your own boss. While the dream can be achieved, there are some things to consider before you replace your employer with your own truck. By setting yourself up for a successful run as an operator/owner, you will be able to survive in this highly competitive atmosphere.
While some of these steps may already known to you, it's important that you carefully consider each one so that you ensure the success of your business. This guide can dramatically increase your chance of doing just that. If you want to create the ultimate self-sustaining business, these are the steps to get you started and maintain your new venture on the road to financial freedom.
1. Take a Personal Inventory
You have to understand all of the things about yourself that may cause issues with owning your own business. For example, ethics and habits that can either build you up or tear you down should be considered. If you prefer to take those breaks at the truckstops that can last entire weekends, then you may not be ready for the rigorous lifestyle of a truck owner driver. These are some more specific personal habits and preferences that may change your mind towards or against becoming an owner operator.
• Driving Goals – Ask yourself if you like to run hard and maximise your hours so that you can go as long as possible on the road. If it's more important to get a choice parking spot or stop at a popular buffet at a certain time when the meat pies are still fresh, then you won't be able to put in the time at first to meet your goals as an owner driver who have to run longer trips and prove their time is better than other drivers.
• Hometime – The company payroll may actually be the better working ideal for you if you prefer weekends and holidays at home. While it's a tough life at first as an owner driver, eventually it becomes easier to take time off. However, if you truly can't handle life without being at home on the weekends, then you may have a tough time as your own boss.
• Family Restrictions – If you have a lot of obligations to your family such as shared child custody or a spouse with a heavy work schedule, you have some serious familial considerations to think about before becoming an owner operator.
• Good Health – Some truck drivers are only able to work short periods of time because of their health. If you have an illness that will progressively get worse or you need time off for frequent medical visits, owner lifestyle probably won't work for your situation. You should be in considerable good health before taking on this business.
• Insurance Benefits – If you and your family depend on private insurance benefits provided by your company, then you have to consider what type of insurance you will be able to provide as your own boss.
• Career Goals – Some drivers got into the business because they felt it was their only option. They don't plan to be a driver forever. If you feel like you may move on from this career choice or it truly isn't something that you are passionate about, then it's not a good idea to become an owner who must dedicate a lot of time, energy and passion to being successful
These are just a few of the things that drivers must consider before even thinking of going into business for themselves.
2. Budget Your Finances
Financial restrictions play a large role in what you can accomplish as an owner/operator. By budgeting and looking at your earnings, you can get a better idea of whether this is a good decision for your future.
• Personal Spending – You should be able to equally divide up your money so that you have savings leftover and all of your essential bills are paid. You should be in total control of your income and regularly able to put away some money with each paycheck in order to have the dedication to start your own business.
• Impact of Debt – Everyone has a little debt, but if you have a lot of debt, then it may be particularly challenging to become an operator. A lot Australian drivers to carry credit card debt because it's easier to finance road expenses. However, you have to eliminate most of your credit card debt so that you can improve your financial results.
• Emergency Finances – What would happen if you were to get sick? Would you have money to live on? Emergency savings are key to surviving, so it's important to save for 3 to 6 months of living expenses should something happen to you.
• Types of Insurance – While there are some public health insurance benefits, it may be important to you have a private insurance plan. Life insurance may also be important since you are on the road all the time. Accidents do happen, and you have to take care of your family in the event that something does go wrong.
• Credit Outlook – The option for owner driver finance is incredibly important when starting out. If you don't have the right credit score, then you will have a hard time getting a lender to trust that you'll pay back a loan.
3. Choose Between Independence or Leasing to a Company
There are two options when becoming an operator. The first is becoming a totally independent operation. The second is to lease on to a carrier. All truckers have their own preferences, so you must weigh the options for your personal situation. There are some advantages and disadvantages to each.
Benefits and disadvantages of becoming an independent driver include:
• You select the loads and lanes that are better for you.
• You won't have to deal with company bureaucracy, favouritism and policies that dictate your life.
• You decide what trips you're going on and for how long. This can be a blessing and a curse.
• It's your responsibility to understand load selection and accept dispatcher retaliation if you refuse certain loads.
Benefits and disadvantages of leasing onto another carrier include:
• Most companies have fuel cards, money transfers and payment advance systems.
• Companies may provide trailers for you.
• Drivers frequently have more loaded miles.
• Most carriers provide access to fleet rates on private insurance in order to operate a rig.
• Company may reimburse for tolls, permits and plates.
• You won't have to obtain your own operating authority.
• You give up some freedoms in order to have consistent work.
• You earn less per mile.
By considering these factors, you should be able to decide what option is better for your personal style and driving preference. If you want total control, owner/operator is the way to go. However, it may be easier to give up some control and take advantage of some free fuel and other pros of leasing onto a carrier.
4. Pick Your Equipment
Your profits will also be determined by what kind of equipment you chose and what type of operation you want to run. It also depends on the owner driver finance that you select. The way you drive will also be a considerable factor in the success or failure of your business. Most drivers must consider whether it is important to have the ultra-sleek, brand new rig or go with what works for their business. These are some factors to consider when picking equipment:
• What age is the truck?
• How many miles does it have?
• Does it come with any amenities?
• What is your area of operation?
• Can the truck handle your preferred loads?
• How long do you plan to be out? If you plan to be out longer, you may want a more comfortable truck.
• How good is it on gas?
Horsepower, transmission, torque, engines and style of driving also play a certain factor as well. You have to decide what is better for your business in the end.
5. Consider Business Structure
There are also legal and accounting considerations to understand before going into business for yourself. You will have to write your own business plan and plan for taxes. You may have to seek out professional guidance on legal and accounting matters in regards to your business.
Many truckers believe that it's the best time to go into business for yourself in Australia. With sound planning, common sense and financial independence, it's possible to succeed and live your life as your own boss.
Phillip Gruppelaar worked as a Sales Tax Inspector and Administration Manager before entering the finance industry in 1988. While working in motor vehicle finance he earned the “AIM Insurance, NSW Business Manager of Year 2000” award. He then moved to home loans and general asset finance including sourcing machinery finance. In 2007, he became General Manager of an online asset financing company, building it to be one of Australia’s largest and most successful. In December 2011, he returned to his own management consultant business and focused on improving client relationships and staff training for another of Australia’s large online finance brokerage firms.