The trucking industry can be exciting and lucrative if you decide to become an owner-operator. However, like anything else that’s truly worthwhile, it’s never really that cut and dry. Making the transition from employee to owner-operator is an exciting stage in your trucking career. The possibility to be your own boss, earn more money, choose your own loads, and decide when you want to take time off are all things many people strive for. This type of profession, on the other hand, is not for everyone. Several factors must be taken into consideration before making the transition from driver to owner-operator status or considering a trucking business of your own.
What about logistics? How about operations? Payroll? Insurance? Fuel costs? These are some of the things you need to consider when starting your own trucking company.
Cost Of Starting a Trucking Business
The cost of starting a trucking business is not cheap. A significant amount of money will be required upfront before you will be able to begin driving your own vehicle. Let alone expand or build a fleet of trucks. For example, you may have to have funds to pay for a down payment on a vehicle as well as for a driver’s license, plates, insurance, and permit fees. Following these initial charges, you will incur additional expenses on a month-to-month basis. These include things like fuel, insurance, maintenance, food, and so forth. It’s important to keep several thousand dollars in reserve.
It is critical that you understand how you intend to fund these expenses prior to actually legitimizing a business entity. The first six to twelve months will be difficult as you strive to recoup the money that you invested on the original investments. However, after that, following the rules and regulations, things will become easier.
Creating a profit plan might be beneficial to consider prior to the inception of your business. Both your business and personal spending will be easier to keep track of as you grow and evolve. By doing so, you’ll be able to estimate how much money you’ll require each month in order to break even and turn a profit in the long run.
Did you know that insufficient cash flow is the number one factor that contributes to failing trucking businesses? Before you start your trucking business, make sure you’re prepared to make the financial commitment required.
Understand How Taxation Works In The Trucking Industry
When it comes to taxation, one of the most significant distinctions between corporate drivers and owner-operators is the way they are treated. It is often the case that first-time owner-operators are unaware that they should begin paying taxes on a quarterly basis rather than having taxes automatically deducted from each paycheck by their employer.
Setting aside between 25% – 30% of weekly earnings for quarterly taxes is something you should consider doing from the start. Keeping all of your company records and documentation will allow you to track your revenue more accurately as well.
Failure to pay your quarterly taxes on time can result in a late payment penalty being assessed. Consider the possibility that if you also failed to file this will result in an additional penalty being added to the amount you must pay to the government.
Interest is now being charged at a rate of three percent per year, which will be applied to the amount you owe after all fines and fees have been deducted from it.
Getting To Know Your Customers
Before you establish your own trucking company, there is a good likelihood that you will lease space from a trucking carrier. Rather than forcing you to go out and find new customers, they will provide you with leads. This does not negate the need of identifying who your ideal consumer will be in the future though.
First and foremost, the type of business you operate will decide who your customers are. It is likely that a flatbed trucker will have a different type of customer than a dry van driver when delivering their goods on the road. When you are familiar with your operation, you will be able to predict who your average customer will be.
You’ll also want to think about how you might add value to your customer’s purchase experience. Recognize your own personal strengths and utilize them to your advantage.
When you are leased to a carrier, you may have limited control over the rates that are charged. You are, on the other hand, in a position to determine other aspects of your operation that distinguish you from the competition. When you have determined how you will distinguish yourself from the competition, you will be able to attract and retain clients that appreciate the way you conduct business.
Rules and Regulations You Must Comprehend
As an owner-operator, you’ll need to be aware of the rules and regulations that you’ll be required to follow before you can begin operating your business. In order to avoid having your business shut down, your truck must meet all applicable CSA safety regulations.
Each truck driver is expected to have an Electronic Logging Device (ELD) that is operational in their vehicle. This will assist you in keeping track of your Hours of Service throughout the week. Finally, the CSA maintains a list of physical requirements that must be met in order to qualify as a fit driver in the United States. Before getting behind the wheel, each owner-operator must be fully conversant with all of the applicable rules and regulations.
It’s Hard Work…Like Anything Else That Is Worthwhile
It takes a lot of effort to run a trucking company. That isn’t exactly a well-kept secret. You spend the majority of your time behind the wheel, and when the workday is over, all you want to do is unwind and relax. However, as an owner-operator, you are also considered a small business owner in your own right. That means that no matter how exhausted you are, you must continue to run your business.
It is possible to lessen your workload by outsourcing some of your day-to-day activities, allowing you to devote more time to what you enjoy doing the most. As you grow and expand outsourcing or perhaps hiring in-house staff will become an even more essential part of your business.
Are you interested in getting into the trucking space? Have any questions? Reach out to us at (909) 746-0370 or by email at: firstname.lastname@example.org. You can also follow us on LinkedIn, Instagram, Facebook, and Twitter.