"Run smart, otherwise you can run yourself out of business before you even know"
Owner operators need special business skills. Lets take you to a tour of some important things that matters, which will help you help your buiness.
Get the right company: First thing you have to decide upon is the right company to do business. You might look for a trucking company based on equipment types. Click here to find the list of trucking companies. These companies are mainly categorized as:
- Auto-hauler owner operator companies
- Flat-bed trucking owner operator companies
- Tanker owner operator companies
- House goods trucking owner operator jobs
- Dry Van owner operator companies
The best lease program: Due to changes in the trucking industry, owner operator jobs are plenty and of high demand. To become a owner operator you need a lease purchase program available through the best trucking companies. Some companies provide specific help on these.
Insure your equipment: You have to insure your equipments. It will minimize your risks. Some sites will help you to choose a special no money down, low-monthly leasing plan on late-model used trucks. Lease plans are available for equipments in different conditions, suitable for your buisness needs.
Type of work: You will have to choose the type of work you want to do based on your home life style and other challenges. You can choose among the following type of work.
- Individual work: Provides truckload service on a regional and transcontinental basis.
- Expedited / Team work: You can team up with friends or relatives. This way you can save loading/unloading time and spend more time on driving.
- Dedicated service: Offers owner-operators predictable freight, routes and time-at-home. You provide service to one single customer.
- Inter-modal work: A mixed bag opportunity with consistent work involving numerous terminals.
- Tank-Trailer division: This involves carrying non-hazardous cargo.
Track and Control the cost of doing business: This is the most important thing you need to keep an eye on to succeed in this business. This requires some bookkeeping, but these are the figures you are already tracking for the IRS. Why not make them work for you at the same time? Once you know what your costs are, you can start taking steps to control those costs and that has a direct effect on your bottom line. Cost of operating a truck fall under 2 general categories; Fixed and Variable costs.
Fixed cost expenses are the costs that are imposed for just having your truck parked out in your driveway. You have daily exposure to them, rolling or not. There are some days of the year you may decide to make up later, like Christmas, Thanksgiving, etc. What about the days that you sit idle waiting for a better paying load? You might be better off with a less productive load and not have to eat 2 or 3 days of fixed costs that just keep on adding up.
For example is the annual fixed costs of $ 25,000 represent a $68 a day of fixed expenses. A load would have to pay out at $476 more to justify waiting a week for it. Once you know your fixed costs, then this is no longer a guessing game. You can decide how long you can afford to wait for a specific load based on the known cost of the wait. The items that are included in this categories are your mortgage installment on the truck and insurance coverages, licenses, permits and bookkeeping services.
Variable costs are expenses that are directly related to operating the truck. More you run the truck higher these will go. There are some economies of scale, however and some of these expenses will become less per mile as you increase your number of miles. Fuel, tires, maintenane, meals and lodging are examples of variable costs.
As the miles a truck operates increases, the cost per mile will decrease. Ofcourse your driver income should also increase as you drive those miles.
Accounts Receivable Ledger:
In today's business climate you are more likely to get paid when you threaten to sue than on the date the money is due. Shippers and brokers that owe you money are using your money as interest free when they go over their due date. Having large accounts receivable can strangle your operation. Keep your terms in writing, but if the customer has a history of paying late, then you have a couple of options. One is to charge him a higher rate to make up the difference, the other is to quote a higher rate for their "normal" payment and then a discount for payment within 15 days (you can change this period). Try to keep a diversified list of customers.
Fuel Ledger: Fuel is your largest variable cost, even a small change can have significant results. Making a change in your driving or equipment that adds as little as two-tenths of a mile more travel per gallon of fuel.
Keep the following reports to analyse your costs
- Daily or Weekly cost of Operation reports
- Round-Trip Profit Report
DOT number application, Operating authority application, broker, etc.
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