Being an owner-operator turned out to be a lucrative business for me, which is why I’m grateful for sites like ClassADrivers.com that give new drivers all the tools they need to become a successful truck driver. But when I got started, things weren’t that easy.
I spent more than 25 years as a professional driver, eventually landing a million-dollar-a-year contract with a company. When that company’s regional VP told me how much the contract was worth, I sat stunned for a moment. “You’re a major player,” he said. “I’ve got dedicated runs from the East Coast to the West Coast. Even after all your expenses, there’ll be a significant amount left over for you.”
Before getting to that point, I had to learn a few things the hard way. I thought I’d share them here so you won’t have to.
How I Started Out
Before I was offered such a great contract, I was asleep in my truck on location at the company terminal, never suspecting that anyone was taking notice of my efforts. I’d worked every holiday, and ran 70 hours a week for years.
I learned that out of 500 drivers in the region, I was one of the top three runners. Although the focus was on my driving stats, I believe I was handed this kind of offer because I’d overcome a string of setbacks on my way to becoming a successful owner-operator.
Take the Risk
Through the years, I had become an expert driver in handling expedited loads. As a company driver, I gained valuable business operating experience working for several contractors. Of course, knowledge alone wouldn’t be enough. Becoming an owner-operator takes some courage, and getting that million-dollar contract never would have been possible if I had not been willing to take the risk.
As a result of being a risk-taker, I was able to pay off a $50,000 truck within eighteen months! I reaped many other benefits…but it wasn’t always like that.
Beware of Bad Lease-Purchase Agreements
When I first began my journey as an owner-operator, I signed up for a bad lease-purchase deal. The lease-purchase company was offering a brand-new Freightliner with a sleeper and a dedicated run, which was to go to JFK airport in New York, then to Louisville, KY – but none of this was in writing.
If the carrier had held up their part of the bargain, everything would have worked out fine. I would have earned enough after expenses to make a living. After the third week, however, dispatch had other plans and didn’t give me the promised run.
Also, the company didn’t offer EZ Pass or toll cards. I didn’t understand that all tolls, including New York City bridges, would be out-of-pocket expenses. I found myself running six days each week on a forced NYC turn. The company’s reimbursement process was turtle-slow, and I eventually wound up using my entire weekly paycheck on tolls.
Once I’d had enough, I turned the truck in. I thought I would at least get back the $3,000 I had paid into escrow. I later discovered a non-refundable escrow clause in the leasing agreement and never got the money back. At least I didn’t owe the company anything after I returned the truck.
Looking back, I would advise myself to consult a tax accountant and an attorney to determine legalities, profit margins, and tax liabilities before signing any contract. All details such as runs, tolls, and escrow provisions should be spelled out in the contract. If a company won’t allow you to preview their contract, look elsewhere.
Beware Junk Trucks
My next experience as an owner-operator was when I purchased a fixer-upper truck from a backyard dealer. I was on a dedicated run heading down the road when I heard a loud BANG, followed by a POW, then THUMP!
Only one week earlier, I had spent thousands of dollars on repair work. I looked in my driver’s side mirror, and I saw the silver and gold parts of my truck’s engine litter the ground like remnants of an un-swept accident. It was like looking at the contents of my bank account scattered across the pavement.
As my truck’s engine locked up and sputtered out its last bit of life, the sky was suddenly filled with black smoke, and the air with a stench of motor oil and diesel fuel. I sat there in a cold sweat and wondered, “Why me?” With no warranty help, the repair estimate was a price I was unable to pay. So I junked the truck.
Looking back, I should’ve honed my mechanical skills, possibly taking a course in diesel mechanics. If I had understood my vehicle better, I might have been able to fix some problems myself, potentially saving thousands of dollars.
I would also advise myself to set aside a larger base of funds for any repairs that wouldn’t be covered by insurance or warranty. Of course, I would also recommend being careful when buying a fixer-upper.
More Tips and Advice Before Becoming an Owner-Operator
– Before you purchase a truck, be sure that the truck you purchase will match all the specifications for the type of freight you will haul. If a financial institution won’t disclose interest rates, walk away. Some smaller (boutique) lenders are not governed by the TILA (Truth in Lending Act.)
– Investigate forming an LLC or Corporation. You can form an LLC on your own for less than $150. Forming a corporation will cost more. Some carriers will require you to form an LLC or be incorporated to lease on with them. Either choice will help if you decide to operate under your own authority in the future.
– Learn how to manage Excel spreadsheets. Excel is not difficult to learn, and it will help you manage your own finances. It will quickly give you a bird’s-eye view of how well your company is doing and what you may need to do to improve profits. You don’t have to pay someone else to do this.
– Purchase an APU. If you decide to run over the road, it’s best to have an Auxiliary Power Unit installed on your truck. The unit will pay for itself because it allows you to run any electrical devices and control the truck’s environment without using the engine. It will reduce engine wear and tear, and save thousands of dollars in fuel costs.
– If you’re running 48 states, investigate legal plans. During your career as a driver, you may on occasion find yourself in the hands of an enforcement officer on a power trip. The individual may attempt to force you to pay unrealistic fines based on untruths. An unscrupulous DOT officer can potentially destroy your record, reputation, and career. You’ll need to have strong legal protection through an attorney on retainer to dispute these issues if any should arise.
– Prepare for interstate travel. Be aware that if you plan to travel outside of your resident state, you will need apportioned plates vs regular plates. Apportioned plates are more costly.
– Learn optimal shifting techniques or purchase a truck with an auto transmission. Optimal shifting techniques will help you save fuel and increase the life of your truck. You may find truck driving simulator courses that teach these techniques at your local community college. Newer vehicles equipped with automatic transmissions may cost more, but will potentially save thousands in fuel costs.
– Maintain an excellent safety and work record. This by far will be one of your most important assets. It can make a major difference in who will trust you as a business partner in the logistics industry. A good safety and work record isn’t established by luck. Success in your business will take patience, integrity, and prayer.
Your business will have more of a chance of being successful if you have the right attitude, do the right thing, and be in the right place at the right time. For an owner-operator, some opportunities only come around once. Take advantage of them.
Courtesy of http://www.dat.com by William Pearson