The key to success as an owner-operator is your ability to use good sense as you operate your own business. This Q & A column will answer some of your questions about the responsibilities that come with being your own boss.
Question: I am currently a company driver who is seriously thinking about becoming an owner-operator. What are some factors that I should consider as I'm making this decision?
Answer: Having some experience as a company driver should give you an advantage as you make your decision. As a company driver, you are already familiar with the lifestyle of a professional driver. Now, can you picture yourself as the boss? You’ll have to set some realistic financial goals and have the motivation to do whatever it takes to attain those goals, even though it may mean lowering your standard of living until your business takes off.
You’ll need organizational skills for budget planning and recordkeeping, along with a business plan that maps your road to success. Planning is crucial to a successful business, so be prepared to spend some time in this stage before beginning your operation. You should talk to owner-operators who are willing to share both good and bad experiences with you. Doing so can help you to find out what they are doing to achieve success, as well as how to avoid making costly mistakes.
Purchasing your equipment will be your major expense, so you’ll need start-up cash for a down payment on the truck and any required accessories. Insurance, licenses and permits, and a cash reserve for any unexpected expenses also will be necessities in order to get off on the right foot. Since the amount of money you’ll need will vary with your circumstances, you should plan on beginning with enough cash to allow for a possible slow start as your business gets rolling.
Although space does not allow me to cover everything you’ll need to know in order to get started in your own trucking business, the best advice I could give would be to do some meticulous researching and then carefully plan your course of action before you take any major steps. And, oh yes … joining OOIDA is a must, especially for someone who is starting a new trucking business.
Question: My settlements are hard to understand. I usually just glance at the bottom line and then forget it, but I don’t want to be cheated. How can I tell if all the deductions are legitimate?
Answer: Even if your company does not try to cheat you, they may still make an error. You should always check your settlements carefully and become familiar with any items the company charges back to you. Once you have been with a company for a while, you’ll come to expect certain deductions, such as insurance premiums or licenses and permits, to appear consistently on your settlements. Still, you should examine your settlement in order to make sure each deduction is one that is justified and agreed upon within your contract.
If you don’t understand your settlements, ask someone at the company to go through them with you and if you have any questions, or if discrepancies are discovered, get them resolved immediately.
Always forward your settlements to your accountant in order to ensure you have no problems at tax time, and don’t forget to make a copy for your own files.
If you have questions that you’d like answered, please e-mail them to email@example.com. Although we won’t be able to publish all questions in Land Line, you will receive a response.