If you’re considering expedited trucking, perhaps you’re looking to find an interesting 'post-retirement' career, start a venture that you can do with your spouse, or travel the country while getting paid to do it. Whatever your goal, you’re likely asking the question – should I become an owner-operator or start as a driver employed by a fleet owner?
ExpediteNow recently spoke with John Elliott, chief executive officer for Load One LLC (www.load1.com), an expedited trucking carrier headquartered in Taylor, Mich. Here are four points he shared from his decades of experience in the industry to help you arrive at the best answer for your unique situation.
1. Try Before You Buy (a Truck)
“I always think it’s wise for someone to start in the industry as a fleet driver versus jumping in as an owner without having experienced the business or industry,” says Elliott. “Being a fleet driver is a good way to get your feet wet and make sure you like the business and lifestyle. This will give you the chance to review the (financial) numbers in real-world situations to determine whether you can succeed in the business before make a long-term financial commitment.”
How long should you work as a fleet driver before becoming an owner operator? Elliott recommends giving it at least six months to a year.
Why that timeframe?
“By six months, you will have run through several cycles and seen the ups and downs. This should give you enough time to really get to know the industry, understand the freight, determine what type carrier you’d like to lease onto, and get a real-world feel for the lifestyle,” explains Elliott.
2. Determine Whether You Want the Responsibility of Ownership
As a fleet driver, all you really have to focus on is driving; your fleet owner manages the rest of the business. So, are you ready to take on the responsibilities of running your own business?
Take, for example, truck maintenance. “When you become an owner operator one of the key differences [from being a fleet driver] is that the maintenance of the vehicle now falls on you,” says Elliott. “ Are you willing to do some of the work on that vehicle yourself to reduce maintenance costs? Do you have cash reserves built up to pay for unexpected repairs?”
As a driver, your employer handles all that. But as an owner, you’re now responsible for ensuring your truck is in top working condition because any extended downtime could put you out of business.
You also need to manage your finances as a business.
“I think one of the keys to success as an owner-operator is to be able to say, ‘The truck and the business get paid first. And the extra is what I make.’ You have to run it like a business, not like a personal checking account. I think too many people jump into becoming an owner operator just because they like the idea of being an owner. They like the idea of being independent, but there’s a lot of responsibility that comes with that,” says Elliott.
3. Weigh the Risks with the Rewards of Ownership
The first two points above address the risks of becoming an owner-operator. But the rewards are compelling, if you’re comfortable with the risks and have put yourself in the best position to succeed.
“If you do it right, you’ll make more money as an owner-operator and gain a greater sense of independence,” says Elliott. “You’re the captain of your own destiny. A driver for a fleet owner may not have much say in the loads they take on, how long they’re on the road, and how long they’re home. As an owner operator, you’re going to make those choices for yourself.”
The key to success as an owner is to know yourself — and the business. “If you’ve taken your time, learned the numbers, built up some savings so you’re financially prepared to do it, if you have a great work ethic, then I believe it’s a business that an owner-operator can definitely make a good living from to provide a secure financial future for their family.”
4. Prepare Your Finances for Ownership
If you’ve decided that ownership is right for you, how can you strengthen your finances so that you can stay in business, especially during the startup phase?
Elliott says that before becoming an owner-operator, make sure you have the financial resources and reserves in place.
“I think you need to have at least a couple months in reserve,” Elliott advises. “I’ve seen cases where a driver becomes an owner operator, buys a truck, and two or three weeks later a medical or family emergency takes them off the road for weeks, and sometimes they’re just never been able to recover from it financially.”
Elliott also recommends saving enough of a down payment to put on a truck to bring the monthly payments in line with what you’d be comfortable paying.
What about for truck emergencies? How much should owner-operators set aside for maintenance and repairs?
“It depends on the age of the vehicle,” says Elliott. “A lot of times a driver will go out, and they’ll buy an older vehicle because they can get it really cheap. But what often happens is that a ‘low cost’ truck generally comes with very expensive maintenance. With a new truck or even a one or two-year-old vehicle, your maintenance costs are relatively low. But if you go with an older truck, you may need to have over ten thousand dollars sitting in the maintenance reserve ready on Day One in case there are issues.”
The Bottom Line
So, which is right for you — owner operator or fleet driver? That depends on your personal and professional goals, risk tolerance, and finances. If you follow Elliott’s advice, the answer might be both … start as a fleet driver to “test-drive” the business, and if you like it, strive to become a successful owner-operator.