Top 10 FAQ
(Frequently Asked Questions)
See my other posts:
A Holiday Wish
The Way it Was - A Short History of TruckingPro and Cons of Being an Owner Operator
PicturesAnti-Idling Regulations
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
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1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
4) Operating Authority or Leasing?
5) Equipment
6) How To Do Bookkeeping and Other Necessary Paperwork
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools
Here are the "short and sweet" answers to some of the most popular questions. For details to these answers and a lot more information, read the appropriate post.
1. Q: Can being an owner operator make you a millionaire?
1. Q: Can being an owner operator make you a millionaire?
A: No. Probably not, although there is always an exception. If you operate your business correctly, you can make enough for it to support you.
2 : How much does it cost to start an owner operator business?
2 : How much does it cost to start an owner operator business?
A: There is no set answer to this. It depends on the equipment you buy (new or used?), what states you run in, and whether you lease on to a company, or have your own authority. If you lease to a company, it depends on what they pay for (permits, fuel taxes, etc.). It depends on whether you (or your spouse) does your own bookkeeping, or if you need to hire an accountant.
You need approximately 10% to 20% down payment for your tractor and trailer. If you are buying your own permits, you have to pay for them upfront. Insurance companies want from 1 month to 3 months worth of payments in advance.
If you buy used equipment, what does it need before you can put it on the road? Does it need tires? brakes? other repairs? If you are leasing your truck to a carrier, you may be able to charge your fuel, but if you have to buy you own, you will need to pay for that before you can haul a load (200 - 300 gallons of fuel times $4.00 or more per gallon (as of August 2013).
If you are getting your own authority, you need to pay for that. Whether you are getting your own authority or not, you will have to pay for business licenses, and equipment licenses.
3. Q: How much does an owner operator make?
You need approximately 10% to 20% down payment for your tractor and trailer. If you are buying your own permits, you have to pay for them upfront. Insurance companies want from 1 month to 3 months worth of payments in advance.
If you buy used equipment, what does it need before you can put it on the road? Does it need tires? brakes? other repairs? If you are leasing your truck to a carrier, you may be able to charge your fuel, but if you have to buy you own, you will need to pay for that before you can haul a load (200 - 300 gallons of fuel times $4.00 or more per gallon (as of August 2013).
If you are getting your own authority, you need to pay for that. Whether you are getting your own authority or not, you will have to pay for business licenses, and equipment licenses.
3. Q: How much does an owner operator make?
4. Q: How much does a company pay an owner operator?
5. Q: What is the average net income of an owner operator?
6. Q: How much per mile should an owner operator get?
A: What do you mean by "make"? Do you mean gross or net? Are you talking about being paid by the mile, or percentage?
Loads can pay anywhere from $1.00 to over $3.00 per mile gross, to the truck, but a good average figure to use is $1.50 per mile (I wouldnt run for less than that, but you need to make more per mile than your expenses per mile).
If you are leased to a company that pays a percentage, the average ranges from 65% to 75% of the freight bill. (You still need to figure how much that translates to per mile.) It also depends on what you haul. The average net income is about ¼ of your gross (fuel will cost you about 40-50% of your gross).
You need to know if the carrier you will be leasing your equipment to will pay for deadhead miles (empty miles: running without a load - such as going from a delivery point to a pick up point).
7. Q: What is a good business plan?
Loads can pay anywhere from $1.00 to over $3.00 per mile gross, to the truck, but a good average figure to use is $1.50 per mile (I wouldnt run for less than that, but you need to make more per mile than your expenses per mile).
If you are leased to a company that pays a percentage, the average ranges from 65% to 75% of the freight bill. (You still need to figure how much that translates to per mile.) It also depends on what you haul. The average net income is about ¼ of your gross (fuel will cost you about 40-50% of your gross).
You need to know if the carrier you will be leasing your equipment to will pay for deadhead miles (empty miles: running without a load - such as going from a delivery point to a pick up point).
7. Q: What is a good business plan?
A: There is no set rule for a business plan. A business plan is really a blueprint for what you expect your business to be financially. What it needs to do is show a realistic income, and expenses. This needs to be based on research. You cant just go to a bank and say, "I can make $2.00 a mile, run 175,000 miles a year, and I will have $20,000 in expenses. You need to show where these figures came from. You need to break down your expenses (start up costs: down payments, licenses, permits), and ongoing expenses (insurance, fuel, maintenance). This needs to laid out in a logical, easy-to-read and -understand manner. Keep in mind that most bankers dont know anything about the trucking industry, so add supporting documents to show what you are talking about. You might even want to add a "glossary" page, as some of the terms you will use will be unfamiliar to the financial officer. Put everything you want them to know on paper, as you may not have the opportunity to speak to a person and explain what you mean.
8. Q: What kind of insurance do I need and how much will it cost me?
8. Q: What kind of insurance do I need and how much will it cost me?
A: It depends on whether you have your own authority or are leased to a company. If you have your own authority, you will need to buy all of your own insurance. If you are leased to a company, they will cover what is needed for a carrier, but you will probably have to buy a minimum of bobtail and liability. If your equipment is financed, you will probably need additional coverage. How much will it cost? Just like your car insurance, prices vary depending on who you insure with and what type of insurance you need. A minimum cost will be at least $1,500.00 a year, and can run to $10,000 a year if you have your own authority.
9. Q: Is now a good time to become an owner operator?
9. Q: Is now a good time to become an owner operator?
A: Unless you really know what you are doing, probably not.
10. Q: How much do I need to have in the bank before I become an owner operator?
10. Q: How much do I need to have in the bank before I become an owner operator?
A: Lots! In addition to the cost of equipment (down payment, getting it road ready before putting it in operation), insurance, permits and other expenses, you need to have enough to live on until you start turning a profit, and you need to have enough to pay for a major breakdown (and to live on while your truck is being repaired). You need at least enough for your first months equipment payment(s).
You should have at a minimum enough to operate on and live on for at least two months.
Have other questions not covered in this blog? Add a comment. I check this blog almost every day and I will try to answer quickly.
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You should have at a minimum enough to operate on and live on for at least two months.
Have other questions not covered in this blog? Add a comment. I check this blog almost every day and I will try to answer quickly.
Be sure to subscribe to this post so you will get the latest and newest information.
I am sorry I have to do this, but due to spam "comments" I feel I need to moderate comments from now on.
I am sorry for any inconvenience this may cause to my legitimate commenters.
