9) What You Actually Need to Get Started

 

1973 White Road Commander

 Becoming An Owner Operator

9) What You Actually Need to Get Started

View my Other Posts:

Blogs, Forums and Other Resources
Texting Ban
The Way it Was - A Short History of Trucking
Pro and Cons of Being an Owner Operator
FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
 
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
10) Truck Driving Schools

OK. You have done all of your research, and decided you really do want to become an owner operator.

Hopefully, you have:

• Read this entire blog
• Talked with other owner operators, especially at the company you want to lease on to.
• Run a "What If" with the Interactive Cost Per Mile Calculator and found you really could make a profit.  Not just a profit, but enough income to pay all of your expenses and to have enough to live on, too.  (Don't forget, you also need to save enough to cover repairs or a major breakdown and enough to live on while you are getting the work done.)
• Made a business plan.
• Gotten your family to support you.  You would be surprised how many people quit driving a truck because their family doesn't like for them to be away from home.
• Decided what kind of entity you want to have.
• Decided what you will be hauling so you can spec your equipment properly?
  Have you found a truck?  Do you need a trailer too?  If you are leasing to a company, many of them have requirements as to how old of truck they will lease.  Be sure to check it out before you buy.
• Made sure your equipment will pass a DOT, state and company inspection.
• Talked with a loan officer at the bank, credit union, or loan company that will financing your equipment to see what information they require, and to see if you can even get financing for your equipment?
• Figured out how you are going to get your Commercial Driver's License (CDL).  Will you be going to a truck driving school?  If not, do you know how you are going to take a road test?
• Found an accountant or tax professional and got a list of what you need to keep track of before you start buying equipment.
• Check out Owner-Operator Independent Drivers Association (OOIDA) for vast amounts of information.  As before, I recommend that if you do become an owner operator, that you join OOIDA (non owner operators can join, too).

I would advise you to get your CDL first.  If you can't pass your tests, it would be a shame if you had already bought a truck and/or trailer.  Then you would be stuck with having to try to sell them.

You do not have to go to a school to get a CDL.


You do have to take both a written test and a (skills) road test. If you can pass both, then you will be issued a license.


You may be able to rent a truck (tractor only) in which to take your road test.

Also, we tried to loan our truck to a friend to take his test in, and examiner giving the test wouldn't let him use our truck because he wasn't listed on our insurance. Don't forget, you have to take your road test in the "type of vehicle" you will be operating. In other words, you have to have a "Class A" type vehicle to get a Class A license.


In my state you must 'supply your own vehicle" and pay the road test examiner $75.00.


Also (any state) before you can even apply for a permit, you must have a long form DOT physical.  Cost depends on the doctor.


Don't forget, if you are applying for your own authority, you have to have a drug and alcohol program in place.  You will be required to have pre-employment  drug testing before you begin to operate your truck.  If you are leasing your truck to a company, they will probably handle the drug and alcohol testing.

After you decide what type of entity you will become (sole proprietor, partnership, LLC, corporation, etc.) you may have to get an Employer's Identification Number (EIN), also called a Federal Employer's Identification Number (FEIN).  It's FREE! and will be issued immediately if you apply online. If you will be a sole proprietor, your EIN will be your social security number, unless you will be hiring employees (including family members), then you will need an EIN.  All others will have to file a IRS Form SS4, or file online at Employer ID Number (EIN).  See: 6) How to Do Bookkeeping and Other Necessary Paperwork Permits and Taxes for more information about sole proprietorships, partnerships, spousal partnerships, employees,and more.

After you get your federal EIN, you will have to apply for a business license with your home state.  (If you are going to be a sole proprietor, you will apply using your social security number, unless you will have employees - then you need an EIN.)  You may also have to apply for a business license with your county (parish), and/or city.  If you are going to be a LLC (limited liability company or LLP (limited liability partnership) then you will also need to have liability insurance.

Are you going to be leasing to a company or getting your own authority?  If you are applying for your own authority, you have to have a USDOT number.

Will you be operating intrastate or interstate? (intrastate is within one state only, interstate is operating in more than one state).

Will you be hauling hazardous materials (hazmat)?  Then you need a hazmat endorsement (any state).  You will also need to have a background check and be fingerprinted and get a Hazmat Endorsement Threat Assessment.  Go to Transportation Security Administration for details.  Cost is $86.50.  It is valid for 5 years, unless you transfer (to another state), upgrade (add endorsements), or renew a license, then you need to go through (and pay) all of this again.  You also need to be fingerprinted.

If you will be loading or unloading at ports, you will need a Transportation Worker Identification Credential (TWIC).  You can get information about this at Transportation Security Administration - TWIC.  The cost is $132.50 and is valid for 5 years.


If you plan to operate in Canada or Mexico, you will also need a passport.  Passport Forms. If you travel internationally often, you may be eligible for a FAST: (Free and Secure Trade) card for commercial vehicles.

The answer to each of these questions determines what you need to apply for.  Go to Federal Motor Carrier Safety Administration (FMCSA) Getting Started with Registration for a matrix (list) of the required forms, and to apply online.

You will, of course, need license plates for your tractor and your trailer (if you are purchasing both).  Contact your state Department of Motor Vehicles to find out how to apply.  Unless you are applying for license plates within 30 days of your purchase of your tractor, you will need a copy of IRS Form 2290, Heavy Highway Vehicle Use Tax Return, showing you paid your road use taxes. This is an annual fee.  It is  $550.00 a year for an 80,000 pound vehicle (except logging.) This is prorated if you buy a truck during the course of the tax year, which is 01 July to 30 June.

The type of trucking insurance you need will depend on whether you are leased to a company or have your own operating authority, what type of goods you will be hauling, and whether your equipment is financed or paid for.  Be sure to read all of the pages at the FMCSA website.  Join OOIDA ($45 a year) and they will give you all the help you need to decide what kind of insurance you need.  You can even purchase it from them.  Just as with your personal vehicle insurance, your driving record, type of vehicle and the company you buy from will determine the cost

If you are leasing your truck to a company, you may also be required to be fingerprinted, buy Occupational Accident Insurance, and/or Worker's Compensation Insurance.

I know that everyone reading this wanted a nice, neat little list of what you need and how to get it, and how much it would cost.  As you can see, however, there are so many variables, it is impossible for me to tell you exactly what you need.  In addition to the federal requirements, each state has their own rules.

The costs are also impossible to calculate without knowing exactly who, what, where, why and how, but here is a rough list:

• Money to pay for a truck driving school, if you are going to go to one
• Down payment(s) for your equipment.
• Licenses
• Permits
• Insurance
• Enough money to operate until you get your first settlement check
• Enough money to live on until you get your first settlement check.  I would recommend having enough for at least 2-6 months 
• Money put up for breakdowns (it could happen on your first trip)

If you need to buy products (training manuals or safety and compliance tools), J. J. Keller is a good source for safety and regulatory compliance products and services that help you increase safety awareness, reduce risk, follow best practices, and stay current with changing regulations.  They are used by most of the large trucking companies.

I hope this has helped you.  I would be interested in your comments.  Let me know if you think this has been useful.  If you need information about something I didn't cover, let me know, and I will update this.

Read my other posts for details and resources for of some of the information in this post.
 

Be sure to subscribe to this blog to get the latest information, as I keep updating this site.

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.

5) What the Owner Operator Needs to Know About Equipment

2001 Kenworth T600

Information About How to Become an Owner Operator

5) Equipment

See my other posts:

Blogs, Forums and Other Resources
Texting Ban
The Way it Was - A Short History of Trucking
Pro and Cons of Being an Owner Operator
FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy PolicyOwner 
 
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
4) Operating Authority or Leasing?
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

There is one more thing you need to decide before you apply for a loan (assuming you have read my previous posts): what kind of freight do you want to haul?

This will determine what company you can lease to (all companies don't haul all types of freight) and what kind of equipment you will need. If you are buying your own trailer, then you need to know what kind to buy based on what you will be hauling. For example, do you need a refrigerated trailer (reefer) to haul food, a dry van for general freight, a flatbed to haul steel, or a drop deck or goose neck to haul equipment?

Even if you don't buy your own trailer, knowing what you will be hauling will determine how to spec your tractor. If you are going to be hauling heavy loads, you need to spec a tractor with heavy duty suspension and a big motor. If you are going to be hauling mostly light loads, you might be able to get by with a tractor with a smaller engine or lighter suspension. Also, the type and length of trailer might determine the length of the wheelbase of your tractor. What you are planning to haul will definitely decide how much your tractor can weigh.

Deciding what you will be hauling will also tell you what other equipment you need to buy. If you are going to pull a drop deck or goose neck, you will need chains, tarps and binders. If you are planning on pulling a flat bed, you will need all of those things plus a side kit. If you pull a dry van, you most likely will need load jacks.

When you are deciding what you are going to haul, don't forget to think about the physical side of what you choose. If you are going to be pulling a flatbed, you will have to be outside in all types of weather chaining and tarping your load. If you want to pull a reefer, you may be required to unload it, which means you will be working in very low temperatures, regardless of what the outside temperature is.

When you spec your tractor, there are several factors you need to need to consider. Will you be making long or short hauls? If you make long hauls, you will probably want to spec a sleeper. You don't want to spend all of your money on motels, and besides, there are a lot of times when you have to spend a night on the road and can't get to a motel.

What kind of engine do you want and how much horsepower do you want? The three major engines are Cummins, Paccar, and Detroit. Caterpillar no longer makes engines for semis, but can still be found in older tractors.

You need to decide what size tires you want, and what kind of a transmission and how many gears. Today, you can get a semi with an automatic transmission! Definitely a far cry from the old days when many trucks had two sticks (two gearshifts).

Modern trucks have power steering, ABS brakes, heat and air conditioning. They have big comfortable seats and privacy curtains. The beds are large and comfortable and some have a couch, and some have two beds. Most have closets and storage space. You have to decide what you need, then decide how much of what you want you can afford.

Other equipment you will need is gloves, coveralls, fuses, flares, a fire extinguisher (mandatory), tools, oil, fuel, and water filters, and maybe a CB. You should also carry oil, grease, and anti-freeze.  A smart phone is practically a must-have.

Optional equipment you may want, a satellite radio, and a TV. If you are planning on being gone from home a lot, you might want to consider buying an inverter. Then you can buy a coffee pot, a toaster and a microwave, and save yourself a lot of money on meals. 

A note about meals: When you file your taxes, the IRS lets people who are in the transportation industry and those who are regulated by hours-of-service rules (see "Income and Expenses") deduct meals differently and at different rates than everyone else. See an accountant or tax preparer for details. To simplify a very complicated rule, basically you can flat-rate your meals for every day you are on the road long enough that you are required to take a sleep break, even if you don't eat a thing, or spend a dime. Of course with the IRS, there are 40,000 ifs, ands, ors, and buts, so be sure to check it out with a tax professional or preparer.

An auxiliary power unit (APU) is becoming a must have. These range from about $6,000.00 to $10,000.00. What is an APU and what does it do? Basically, it is a generator. It is used when you are not driving to eliminate idling. Why is idling necessary? If you have to sleep in the truck in the winter or summer, you will probably run your truck so you can have heat or air conditioning. It is hard to sleep when it 25 degrees or 118 degrees in the sleeper.

With an APU, you can heat or cool your cab without running you truck. This is very important, as an APU can reduce your fuel consumption by about 75 %. Yes, I said 75%. Instead of using a gallon of diesel an hour idling, you use a quart with an APU. Not only is this important for your bottom line, but more and more cities and states are making anti-idling laws with fines ranging from $50.00 to $25,000.00 and/or up to 1 year in prison, for idling your truck.

Sometimes the idle time allowed is as few as three minutes. These anti-idling laws were written to reduce noise and air pollution. 

Click here to go to an: Anti-idling Regulations Chart

To view this chart you need Adobe Acrobat Reader

The cost and age of your equipment can affect the costs of your license plates and insurance.

As you can see, it is very important to decide on your equipment before you make a commitment. Once you have bought that $40,000.00 used truck, it is very hard to change to another truck if you find you don't like what you bought.

Although you will never know exactly what it is like until you actually do it, you need to ask questions of other drivers about their equipment, and what they like and don't like about it. If at all possible, go out on a load with someone. Volunteer to help them load/unload to get a feel of what it is like. The more you know before you buy, the better off you will be.

What make of a truck should you buy? That is up to you. Just a some people wouldn't own anything but a Chevy, some people won't own anything but a Volvo.

Any make of truck, if spec'd correctly, will do the job, it is a matter of personal preference and how much you can afford to pay.

The most popular trucks are Peterbilt, Kenworth, and Volvo. Other popular truck makes are: Freightliner, International, Ford, Mack, Sterling, and Western Star.

Anything with a Gross Vehicle Weight Rating above 33,000 lbs. is a "Class 8" truck.

Good places to look for a truck (new or used) are "The Truck Paper" and "Truck Trader". If you have cash and are very familiar with trucks, good deals can sometimes be found on eBay.

Next post: How To Do Bookkeeping and Other Necessary Paperwor

Be sure to subscribe to this blog to 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.

4) Operating Authority or Leasing as it Applies to the Owner Operator

2001 Kenworth T600 

Becoming An Owner Operator

4) Operating Authority or Leasing?

See my other posts:

Blogs, Forums and Other Resources  
Texting Ban  
The Way it Was - A Short History of Trucking  
Pro and Cons of Being an Owner Operator   
FAQ for the Owner Operator  
Pictures    
Anti-Idling Regulations    
Definitions and Industry Terms 
Interactive Cost per Mile (CPM) Calculator Spreadsheet  
Privacy Policy   
 
1) Owner Operator 411 – Welcome  
2) Income and Expenses  
3) Financing and Credit 
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  

I hope you got here by reading my previous posts (numbered 1 - 10) first. If not, I advise you to go back and do so. This post won't help you if you can't get the financing for a truck. If you don't understand how you will be making money (net), then I you are not ready for this step.

If, on the other hand, you understand that you will not get rich by owning your own big rig, have checked your credit report and Fico score, cleaned up all of your debt problems, and are sure you can secure a loan, then read on!

There are two types of owner operators. The one with their own authority, and the leased owner operator. For the purposes of this post, I am assuming you will be driving your own truck. If you are planning on hiring a driver you would be an owner, not an owner operator, but most of this information would still apply.

Your own AUTHORITY: This means that you are a “trucking company”, technically a carrier. You will probably have to buy a trailer. You will have to get your own permits, and pay your own taxes. You will have to find your own freight. 

The three different types authority are: Common Carrier, Contract Carrier, and Broker Authority.

COMMON CARRIERS provide for-hire truck transportation to the general public. Common carriers must file both liability (bodily injury & physical damage) insurance and cargo insurance. The definition of an "authorized for-hire” carrier is a person or company that provides transportation of cargo or passengers for compensation. If you are a for-hire carrier, in addition to the USDOT Number you will also need to obtain an Operating Authority (MC Number).     

CONTRACT CARRIERS provide for-hire truck transportation to specific, individual shippers, based on contracts. Contract carriers must file only liability (bodily injury and physical damage) insurance.

A contract carrier cannot broker loads without first applying for and receiving a license to operate as a broker of freight.

BROKERS (brokers are not owner operators) arrange for the truck transportation of cargo belonging to others, for compensation, utilizing for-hire carriers to provide the actual truck transportation. Brokers must file either a surety bond or trust fund agreement.

If you want to get your own authority, there are lots of companies that can help you, such as (OOIDA). We are members of OOIDA and have been since just after they started, about 40 years ago. They are one of the best things I have ever spent my money on. Membership dues are only $45.00 a year, but sometimes they run a special. Includes a subscription to “Land Line” magazine, in print, digital, or both.  (If you have a CDL, you can get their magazine without being a member.)  In addition to helping you get your own authority, they offer discounts and rebates on equipment, they have truck, health, and life insurance, a drug and alcohol consortium, retirement plans, fuel cards, load boards, business information services, and much more!

Most owner operators are leased to a trucking company – a common carrier or a contract carrier. Actually, you are not leased, your truck is. When you lease your truck to a trucking company, they provide you with services and charge you for them (see "Income and Expenses" post). What services they provide and how much they charge you varies from company to company, so ask a lot of questions before you lease on your truck and find out exactly what they do and what you would have to do. Some of the common services provided: 
1. they buy your license plates (and usually you have to reimburse them,

2. they pay fuel taxes,

3. they buy the permits,

4. they do all the record keeping and reporting for fuel taxes and permits, and/or

5. they provide you with a trailer (charging you rent) 6. they find and dispatch loads.   These are all things you would have to do and pay for yourself if you had your own authority.   You need to check with trucking companies and see if they have enough freight and if they are leasing on more trucks. Ask other drivers of the company you think you might like to lease to if they are happy (they will probably say no), how much they gross, and how much they net (they will probably lie), and if they are planning to stay with the same company they are leased to. Why did I say they will probably tell you they are unhappy? Because truckers are notorious for complaining. They complain about the dispatchers, the loads, the dispatchers, the truck, the dispatchers, the pay, and, oh, did I mention the dispatchers? So, when they tell you how unhappy they are, ask them how long they have been with that company.  If it is more than a year or two, they are probably happy.  I also called them liars, but in reality, they just like to stretch the truth.  Most people will tell you they are doing a lot better than they really are, but then you also get those who just like to exaggerate in the other direction. Ask to see their revenue statements. A lot of them will be glad to show you.  After you have asked all of your questions, DON'T sign your lease until you have read it completely and understand what it says.   You are the lessor (the party who is giving the right for the use of the equipment).  The company is the lessee (the party getting the use of the equipment).   The lease is a legal contract.  It spells out what what percentage or mileage rate they pay, what expenses you are responsible for, and what expenses they are responsible for.  It should tell you when you will be paid and how (percentage or mileage).  It will tell you who is responsible for fines, damages, and losses. It will tell you if you have to have an escrow account.

"Escrow fund – Money deposited by the lessor with either a third party or the lessee to guarantee performance, to repay advances, to cover repair expenses, to handle claims, to handle license and State permit costs, and for any other purposes mutually agreed upon by the lessor and lessee"

Although you can be required to carry insurance on your equipment, you can not be required to buy your insurance through the company you are leased to.  They can not require you to have work done in their shop, rent or buy equipment (covers anything from load locks to trucks) from them, or buy their fuel.  You are an independent, and as such have the right and option of obtaining your own services or equipment from where ever you want.  This does not mean that you can't use their equipment or services, it just means you can't be required to.   If you are being paid a percentage, you have a right to see the freight bills, showing the amount the load pays.   If you have your own authority, none of the leasing information applies to you unless 1) you lease a truck from someone else (you are the lessee) or 2) you lease your equipment to someone (you are the lessor), which you can do.  

 
Alphabet soup definitions:

USDOT: United States Department of Transportation

MC: Motor Carrier

FMSCA: Federal Motor Carriers Safety Administration

OOIDA: Owner Operators Independent Drivers Association

ICC: Interstate Commerce Commission. An agency which used to regulate the trucking (and railroad) industry, but is no longer in existence. It was disbanded in 1995.

IRP: International Registration Plan is a registration reciprocity agreement among jurisdictions in the United States and Canada which provides for payment of (truck) license fee on the basis of fleet miles (even if it is only one truck) operated in various jurisdictions

HUT or HVUT: Heavy (Vehicle) Use Tax - A federal tax imposed annually

CDL: Commercial Drivers License

IFTA: The International Registration Plan (IRP) is a reciprocal agreement that authorizes the proportional registration among the jurisdictions (states) of commercial motor vehicles. This means if a truck is operated in multiple jurisdictions, the owner must annually report mileage driven in each state and taxes are paid proportionately based on the mileage driven. The good news is the owner may pay those taxes in one jurisdiction—referred to as the base jurisdiction or base state. Vehicle owners are required to register under IRP, if:

• their vehicle is over 26,000 pounds gross vehicle weight (GVW); or
• has three or more axles, regardless of weight; or
• is a power unit and trailer whose combined GVW is in excess of 26,000 pounds, and
• your truck operates in at least two IRP jurisdictions

Resources:

FMSCA frequently asked questions – registration and licensing: "FMCSA"

Next post: What You Need to Know About Equipment

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FAQ for the Owner Operator - Top 10

Top 10 FAQ

(Frequently Asked Questions) 

See my other posts:

Blogs, Forums and Other Resources
Texting Ban
The Way it Was - A Short History of Trucking
Pro and Cons of Being an Owner Operator
Anti-Idling Regulations
Definitions and Industry Terms
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
 
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?

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?

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 $2.50 to $3.50 or more per gallon, as of December 2018).

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 wouldn't run for less than that, but you need to make more per mile than your expenses per mile). Ideally, you shouldn't have to run for less than $2.00 a 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 can't 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 don't 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?

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?

A:  Unless you really know what you are doing, probably not, but the economy is improving.

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 month's 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.

My eBook details all of this information, and can be purchased

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