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Starting out as an owner operator is daunting. Despite the freedom of being your own boss, you carry all the risk and responsibility of running your business, including paying for and maintaining your truck. Of the 3.5 million truckers in the U.S., almost 10% are owner operators. That includes many new drivers who have started out in the past 12 months, taking advantage of the favorable spot market.
Relay Payments turned to trucking Facebook groups SHE trucking and Rate Per Mile Masters to seek the best advice for newbies to trucking. With more than 70 responses, veterans of the industry had a ton of sound advice to share.
The top 5 things to consider when starting out include:
“Trucking is a penny business,” said Dima R. For each load’s payment you pocket, you have to deduct operating costs such as fuel, insurance, tolls, maintenance and repairs, lumpers…the list can seem endless. Make sure you build a money reserve of at least three months to cover lean times and unexpected expenses, he said. Lauren D had similar advice, suggesting you plan for downtime and budget for the worst case scenario, knowing that there will be more of those weeks than you ever thought. She also recommended knowing how to manage your fuel, take advantage of fuel discounts, and leverage the best deals to minimize your mileage costs.
Peter B recommends saving every penny and then using your savings to pay off equipment until you clear your balance. “Pay equipment off. Pay equipment off. Pay equipment off,” he emphasized. “You get through hard times by saving money when you can and paying equipment off.”
Repairs and maintenance
While there is debate around whether you should buy a newer truck or a cheaper, older one when starting out, the general feedback was to make sure you know how to make basic repairs and then find a good, trusted mechanic. Lauren D emphasized that you need a BIG maintenance budget. Some group members shared stories of driving hundreds of miles out of their way to get their truck fixed by their trusted mechanic, knowing that a quality repair will save time and money in the long run.
Your truck will break down! Not only do you need good insurance but make sure it includes unlimited towing. Know what you are insured for and what is covered. Read the fine print and ask questions – whether you are working with a broker or not. The basic liability coverages should be similar across all insurance providers however depending on what you haul or what routes you drive. It’s important that your insurer understands your day-to-day duties.
“Be fastidious about your paperwork,” says Jill C. Staying on top of your paperwork, keeping organized and knowing how to budget is incredibly important and if it’s not your strong suit, outsource it to someone else. Trucking is plagued by paperwork; it’s one of the reasons Relay Payments exists! Customers of Relay eliminate paper receipts and instead easily manage over-the-road payments using our mobile app. Chopper B advised keeping your house and personal bills separate from your trucking company as it’s a leading reason he has seen owner operators fail. He advises owner operators to “give your house a paycheck so you have consistent money coming in.”
Trucking is an industry built on negotiation. If it’s not one of your top skills, then find a mentor or training courses to help you. The better you become, the more money you will make. “Try not to be the first one to mention a number when negotiating – you never want to make the first offer,” says Steve L. Know your Rate Per Mile and don’t accept a load you can’t profit from. Many online members said that some days it financially makes better sense to park your truck for the day than to take a low-paying load.
Relay Payments enables owner operators to make fast and easy over-the-road payments. Our solution is purpose built for the transportation industry, allowing you to make digital payments instead of using cash and checks, and provides you with a digital receipt. Download the Relay App for free and join our growing network of 250,000 drivers, owner operators and carriers.
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