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Truckin’ Ed – Knowing Your Business – key for Owner Operators

map-reading.jpgBig trucking companies cater to their customers and have their own business profiles. As an owner operator, you need to identify your target market. If you think you can’t make money owning a truck, then you don’t know anything about trucking. A large trucking company needs to keep as many trucks moving as they can or they will suffer great loss. They have as many things working for them as they do against them.

First of all, large carriers have large overhead and debt. They leverage their debt with income as any good company would do, but the more debt they incur, the more income they need. It is of utmost importance that they secure dedicated contracts with large customers to assure the bank they’ll be able to pay off all the equipment they’re borrowing.

They’re able to secure the new truck orders with customers and a fleet of drivers who are willing to work for them. Their advantage is, if they agree to haul a load for a customer, a driver is sent to go pick up that load, no questions asked. Because the large company wields such power in regards to its capacity, it can demand a higher rate than a small operation can. The large company has hundreds or even thousands of trucks, so when a customer calls and agrees to a rate, the wheels are literally in motion and the job gets done.

Large trucking companies weigh their capacity with their obligations, so they don’t want too many drivers with no freight or too few drivers with too much freight. Many trucking companies also have brokerages which can handle the overflow. That’s something a reader of this post might be interested in because that overflow goes to the owner-operator.

Owner-operators who set up their businesses successfully, can sit and wait for good paying loads, and pass on the ones that won’t benefit them. After all, if the owner-operator isn’t making money on the load, they’ll wind up going out of business, and will be of no use to anyone.
It can take years to build the momentum needed to be able to sit waiting for extended periods of time. In the meantime, the new owner-operator with little momentum behind them, will have to take what they can get. This is a situation the new owner-operator will want to work their way out of as fast as they can.

As an owner of one truck, you will have little to no overhead compared to a large trucking company. You are small, light, and very maneuverable. You can adjust to what each customer wants because you are only adjusting one truck. You can float like a butterfly and sting like a bee. A large trucking company is big, heavy, and slow. They have to weigh everything they do against a board of directors or a set of banks who own everything.

When a large trucking company gets a call to move 20 loads and they only have 15 trucks available, they have to figure out how to get the remaining loads moved. They’ll call you, or post the load with an online load board, where anyone can haul it. Many times I’ve talked to drivers who hauled the load for the large trucking company initially, but after making contact with the customer and explaining to them directly that he could better fit their needs – perhaps he already has a few trucks and with securing a contract, can haul exclusively for them – and thus creates a brand new small trucking company on the spot.

An owner-operator often has access to more freight and more options. They’re free to do as much or as little as they choose. They can choose to grow or stay small. It’s their choice. With one truck, you’re able to greatly reduce your expenses and keep them there. Keeping your expenses low will help you put money into retirement, grow a small business, take more vacations, or all of these combined. You can knock on doors to acquire new business or strictly stick to hauling off the load boards. You’re the boss.

Know your strengths and weaknesses. If you identify what works and what needs work, you’ll thrive and succeed. Limit your liabilities to minimize your exposure to loss and maximize your income to pad your pockets. It really is as simple as that.

For some more information about the path to compliance and how owner-operators can prepare download our eBook – EOBR Path to Compliance.