Through my 30+ years of financing owner-operators, I have seen my fair share of owner-operators not make it, but have also seen a number not only survive but thrive to operating a successful business. Many of these have grown their fleets from 1 to over 20 trucks. From a financing or credit perspective, some of the ones that failed I would have thought would have been the most likely to succeed. And conversely, some of the most successful ones I may have bet against.
Over the years talking to hundreds of owner-operators, I learned some of their secrets to success.
1. CHOOSE THE RIGHT CARRIER
This one decision can be the difference from success to failure. There are so many times that a hard-working owner-operator had to turn the keys in because their carrier nickeled and dimed them on revenue, did not pay them on time, did not have the loads, or simply did not treat their owner-operator as a valued partner in their business.
Talking to existing owner-operators with a potential carrier can help with this. How do they treat their owner-operator partners? Do they have enough loads? What is their culture like? Do they support owner-operators or treat them as a ‘necessary evil’?
2. STICK WITH THE CARRIER
I have seen owner-operators switch carriers too easily based on a bad day or a conversation with another driver. It is easy to think the grass is greener on the other side. But as my Grandpa used to say, “if you think the grass is greener on the other side, then start watering your own lawn!” Owner-operators that change carriers with the frequency of a cheap transistor radio often do not make it.
There is a cost to changing carriers that are often not thought about, and that can put you behind with little chance of catching up. When leaving your existing carrier, there are often holdbacks and delays in getting your final pay while they settle your account. Not to mention the up to 60-day delay before your first full pay at the new carrier. This couple of months with limited revenue can really set you back in regards to truck maintenance and payments, and other personal expenses.
Sometimes a change in carriers is needed, but make sure it is for the right reasons. Do your research!!
3. GET THE RIGHT TRUCK FOR THE JOB
We all love long-nose trucks with lots of chrome! But are we here to make money or look good? The more efficient and reliable your truck is, the lower your costs and the more money that you can put in your jeans! And most successful owner-operators I have met love money in their jeans even more than chrome!
Also, make sure the truck is reliable. Repairs can be costly, and the downtime can be a double whammy. Not only are you shelling out money for repairs, but you have no revenue coming in while the truck sits in the shop.
4. KNOW YOUR COSTS
You are running a business now, and you need to focus on the bottom line as much as the top line. How much does it cost you to run per mile? Fuel, insurance, tires, oil changes and repairs and maintenance? Knowing these costs per mile will help you budget and save the money required to keep your truck on the road and making you money.
5. PROPER MONEY MANAGEMENT
Money is constantly coming in and out of business, and someone needs to keep track of it. Get a good bookkeeper or accountant. It is not enough to have money to cover your living expenses and the everyday expenses of running your business. You need to build a rainy-day fund for unexpected life events such as breakdown, illnesses, and heck, even a pandemic (who saw that coming?) The trucking industry is constantly changing, so build yourself a safety net that will keep your business afloat during tougher times.
6. SAY YES TO LOADS
I remember a story from one successful owner-operator who was running from Alberta to Texas several years ago. When he returned from Texas, there were 12 drivers in the lounge waiting for a load back to Texas, and there were no loads. The dispatcher had a load to BC that no one wanted to take, except this operator. He did a quick rounder to BC, and when he returned to the yard, the 12 drivers were still waiting. Not only did he make a few bucks while they sat, whom do you think the dispatcher gave the first load to Texas to?!?
Your dispatcher can control your loads. Do you want him working for you or against you?
7. WORK HARD
Some owner-operators believe working for themselves is easy. This is not the case. Holding ourselves accountable can often be harder. It is tempting to take more days off, say no to loads, or not put in the extra effort. I have yet to meet an owner-operator who does 10-13,000 miles per month who is not successful!
8. GET THE RIGHT FINANCING
Working with the right financing partner can help in your success. Not only is getting the right structure important; the right down payment, payment and term to match the life expectancy of the truck, but also choosing a company that will work with you during good times as well bad. Bad things happen to good people, and when they do, how will they react?
Also, do not trick yourself into a longer-term with lower payments if the truck will not make it until the end of the term. Choosing the right term can build equity in your truck that makes it easy to trade-in on a replacement truck when the time comes. There is nothing worse than the truck not being able to operate any longer, and you still have 12 payments left. No trade equity and having to make payments on two trucks can be a killer.
9. FOLLOW THE RULES
Your business will endure a lot of unnecessary hardship if you do not follow the rules or the law. Keep the speed down and save money! Do everything by the book and do not take shortcuts. It pays in the long run.
10. YOU ARE NOW THE CEO OF YOUR BUSINESS
Making the transition from a driver to an owner-operator is more than just picking out your own truck. There is a lot of money to be made as an owner-operator if you treat it as a business and adopt this mindset. Following the tips above can help you succeed.
We are always happy to learn more tips for success. If you have any to share, please do not hesitate to drop us a line at the email link below.
Ernie Holmes – VP, PowerLease