You want to become an owner-operator, huh? Well, there’s some very good info in this article so I recommend you read it through and leave me a comment at the bottom – I want to know what you think.
First things first. Have you lost your mind? Well, maybe not. Maybe you’re just pondering it because you don’t understand the trucking industry, or you’re looking for a new challenge. Maybe owning your own business sounds perfect to you. Maybe the romantic idea of cruisin the American highways in your own big, beautiful, shiny rig just sounds so damn cool you can’t take it anymore! Well then do it! But wait…wait…wait…..come back here a second. Get out your wallet. Give me all your money. No I’m not robbing you! You’re a giver! You’ve decided that having money isn’t important to you anymore so you’re going to buy a truck so that you can throw it all away! Well, I need it! So if you’re gonna lose it all anyhow you outta just give it to someone who needs it – like me!
You say you don’t understand what on Earth I’m talking about? Well then you better keep reading. There must be a lot you don’t understand.
I get questions quite a bit from people about becoming owner-operators, especially (ironically enough) since the economy has slowed and fuel prices have dropped. I figured since this guy sounds rather intelligent, opportunistic, and ambitious, I thought I’d share this with you guys.
Email I received:
Brett,
After reading through your website I see that your primary focus is on new drivers. However, due to your experience and exposure (e.g. website) and your obvious communication skills, I’m betting you can give me some insight – and perhaps some contacts – that will allow me to take “the next step” into the owner/operator world.
I’ve been trucking over-the-road (this time) since 1998, have nearly 2 million miles behind me as a company driver (3 companies), and I want to get into my own truck. As you rightfully point out on your website, most of a trucker’s world is an isolated one, and that includes even from other drivers. I got real tired of the filth on the CB very early-on and I spend maximum time in my truck taking college classes, reading and blogging politics. Thus, I actually know little about the entirety of the trucking industry.
Right now the loads are far and few between, but I’m figuring that with the low fuel prices, as well as the relatively low truck prices, this might be a good time to buy a truck. What do you think?
Secondly, how do I find a quality broker? Should I at first stick with a large company to dispatch me? I am currently with (note from Brett Aquila: company name witheld – not applicable). What do you think about buying a truck through a trucking company? What pitfalls should I look out for?
Bruce “Barracuda”
Brett Aquila’s response:
Note to readers – you did see that he explicitly asked “what do you think?”…right? I mean, hey, if you’re askin my opinion, then I’m tellin it like it is! So here goes…..
Hey Bruce!
My friend, I’ve gotta be honest with you – as I always am with everyone on the site – I know one thing very well about becoming an owner operator – the chances of ever making a nickel doing it are one in a million. I’ve never tried it, and I never will. Here’s why:
Trucking is a commodity business – the only thing that matters to anyone is price. So the trucking company that can offer the lowest price gets the load. Everyone else loses. Correct? Not necessarily. Sometimes everyone loses. Nothing in business is ever simple. Read on…..
I once took a small business course that was offered by the Small Business Administration and the speaker was a retired gentleman that spent 26 years in upper management at General Electric (not General Motors! LOL!). He said something that he was dead serious about and wanted it to stay with us throughout our business careers, and it has always stayed with me. He said “If you’re going to go into a commodity-type business, remember that there is only one winner – the one who offers the lowest price. Even that person barely wins because their profit margins are always razor-thin and on the edge of breaking even or losing money. So if you’re going to do it, you better be the low-cost provider, because the second lowest cost provider and everyone else behind him goes out of business.”
Listen, Bruce – you’re taking college courses and reading all the time. You sound like me – I taught myself computer programming during my years on the road. Besides truck driving school, I have also graduated from Motorcycle Mechanics Institute as a Harley mechanic, I’m a certified welder, and I’ve owned a tree service ( I was the crazy climber!). I love to learn and challenge myself. That’s why I’ve had so many careers! It sounds to me like you want to push forward in life – challenge yourself, make your life better. There are very, very few people out there like that anymore. Life has been too easy for an entire generation of us now. I’m 37 years old – and the only suffering I have done is self-inflicted. Sports, physical training, bad decisions, and working injuries. To this point there has been no World War in my lifetime. There has been no economic depressions. I’ve never gone hungry. And believe me, I was not raised by rich parents. A bookkeeper and a factory worker. Blue-collar all the way baby! Just your ordinary, perfectly wonderful small town upbringing. A dream life for sure. So for my generation and those that have followed, toughness, ambition, and hard work is something we were either born with or taught by our parents. It wasn’t burned into us by the hardships of world wars, economic depressions, and moral dilemmas – like the way Vietnam divided the country and spawned the hippie generation who tired of constant war and pain and suffering.
For people like us, hardships that test and forge our character and push us to our limits must be self-generated. Rock climbing, scuba diving, skydiving, running, and weight lifting in the physical realm. Spiritual reading, starting a business, or going to college in the cerebral realm. There are many ways to generate hardship for those of us who are so inclined.
You want hardship? Become an owner-operator. Obligate yours for years in the trucking business and lose all of your flexibility in life when you buy that truck. Struggle and suffer through the anxiety of making a huge investment in something that will likely never make you any money over time. Try to be a one-man-band offering the lowest price by beating out the competition from the large companies who are getting volume discounts on fuel, tires, parts, and mechanical work. Large companies who have services to provide that you can’t – like dropped trailers, flexible scheduling when loads suddenly increase or decrease from a shipper, and team runs coast to coast in 48 hours. Large companies who have gigantic pools of financing behind them from bond issuance, private equity, public equity (stock offerings), and collateral-based financing from the equipment and real estate they own that allow them to operate at a loss for years if need be.
And maybe down the line if trucking doesn’t work for you anymore then you could open up your own little department store right between a Wal-Mart and a Dollar Store.
Everybody has skills and abilities that make them unique. Traits that set them apart. Strong points that help them overcome their weak points. Find your strong points and carve out a niche in life that gives you an advantage over most of the competition. Do something that you’ll love to do, but make sure that not many people will be willing to work as hard at it or become as good at it as you will. Then attack! As one website I frequent states (www.compete.com) – “Track Your Rivals. Then Eat Their Lunch”. LOL! I love that.
I love to compete. I love to push myself to my limits. I love to learn. I love to run my own business. I’m just that type. And from what I know of the trucking industry, becoming an owner-operator is a game that most people lose in a big, big way. Sure, some win. But what is winning? Breaking even? Making a few grand a year after expenses? I don’t know – I never tried it. I never will. There are lot of “next steps” you can take in the trucking industry. You can become a trainer. You can work your way up in the offices of a larger company. You can become a freight broker. You can become an advisor. You can learn computer programming and write software for the industry. You can make money blogging for TruckingTruth (I’m serious about that! We need people. If you’re interested, here’s the scoop – Make money blogging for TruckingTruth – let me know). But becoming an owner operator has been a mission of financial suicide for the vast majority that have gone that route. Look at it from the shipper’s standpoint – what advantages will you offer that they should use you instead of the companies they’ve been using for years?
“What about these companies like Landstar that are only owner-operators? Will leasing on to them give me an advantage?” you ask. Well, it will surely be better than staying independent and trying to find your own freight and discounts on products and services. But if owning a truck is so profitable, then why do so many companies allow owner-operators in their fleets? Anytime someone offers me an opportunity to get into business with them doing what they are doing – like becoming an owner-operator and leasing on with them, or raising Alpacas, or starting my own home-based business – I always ask myself the same question – if being in that business is so profitable, then why don’t you just scale it larger yourself? Why do you want me to do what you’re already making so much money doing? It doesn’t make any sense! I’ll give you an example.
Krispy Kreme used to be a bigshot. Their donuts are delicious for sure. I mean, my God! Amazing! I used to own their stock and did quite well with it for a while. Krispy Kreme was a company that offered franchise opportunities – anyone could start one. But you had to use the company’s recipies and buy your equipment from them also. Well, Krispy Kreme has since collapsed. Why? Because it turns out that owning a donut shop is not really very profitable. What was profitable was selling the licensing rights, food, and equipment to the franchisees! The vast majority of the money that the company itself made was not from selling donuts (maaaaaaaaan those glazed donuts were insane!!!), it was from selling franchises. Well, owning a franchise became more and more expensive because the company had to continue to grow their profits to satisfy Wall Street. On top of that, the market became saturated once a huge number of franchises were opened and they began selling donuts to every gas station, convenient store, grocery store, and restaurant that wanted them. Eventually, the business model collapsed.
If owning a truck was so profitable, companies wouldn’t want other people owning their own trucks. If raising Alpacas was so profitable, people raising them wouldn’t want other people raising them. They would just raise more themselves! There are a million business opportunities out there, and all of them offer fierce competition and endless challenges. But owning a truck is nearly a financial suicide mission. If you love trucking, then keep on lettin those companies pay you $55k/year to drive their big, beautiful, shiny trucks – and let them suffer through all the headaches of running a commodity business. Licensing, fuel, permits, breakdowns, insurance – blah!!!! You just kick back, enjoy the ride, and make a killer living viewing the sites across North America in your company’s dream machine. And if you get tired of trucking – quit. A company driver can always just quit and return later at anytime – I did it a thousand times over the years. Drive for 6 months, quit that job, party for two months, run out of money, go back to truckin. LOL! There are advantages to those of us who have never been married and have no children!
But if you buy a truck – maaaaaaaaan are you in it up to your eyebrows now! But if I can’t change your mind, then my best guess would be to talk to one of the larger owner-operator companies like Landstar. Actually, first talk to their drivers. Get the real scoop on life as an owner-operator. And don’t be shy about telling these guys to be straight up with you. You’re not there to hear any fairy tales, you’re there to get the truth about owning a rig. Talk to a bunch of drivers, not just one or two. See what they say.
Then, when you’ve heard a million opinions on becoming an owner operator, you’ve discussed all the strategies, and you’re certain you’ve gathered all the information that is most critical to becoming an owner-operator, don’t just walk away from the whole thing – RUN! Run for your financial life! For the love of God, man, get outta there while you can!
Hey Bruce, I sure hope I’ve made myself clear. Sometimes I’m not real good at expressing my opinions.
I sure hope this helped. Let me know if you have any other questions. That’s what I’m here for!
Best of luck to you in all your endeavors,
Brett Aquila
www.truckingtruth.com
Well, there you have it folks. So if you’re going to get into the owner-operator business, then get out your wallet. And please email me at brett@truckingtruth.com so that I can instruct you how to send me all your money – while you still have some! Do not skip this important step in your career! I need your money!
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I feel I need to weigh in on this subject as I am an retired o/o and company driver.1980 to 1983 I owned my own tractor trailer and did well, relatively speaking. Big wreck totaled truck and trailer. Decided to become a company driver, and started to do really well! Went from 14k a year to over 60k before I quit. At one point the whole romance/self determination spirit got a hold of me again in about 1998. The company I drove for was very supportive of me and helped tremendously in my decision, they gave me the actual revenue print out for my truck for the previous 6 months. After much calculation I arrived at this conclusion; for the privledge of working on the truck and responsibilty of fuel, break downs, you can name it all, I would make an additional 4 cents per mile. Let me tell you that cast that spirit right out of me. Brett you are right! also I would like to add ask the 0/0′s you encounter what their operating expense is per mile, 1 out of 100 will be able to tell you and if they can’t do not except their counsel on a decsion of this magnitude
Brett,
Good news brother! Krispy Kreme never went out of business. They have been through a few hard time over the years, but they remain a strong entity. They have concentrated more on the markets that they do well in an expanded into territories they think they can do well in.
I live in Atlanta which is the birthplace of the Krispy Kreme donut and I still love the “Hot Donuts Now” sign whenever it is lit.
I am not sure what fact finding you did in 2008, but it is inconsistencies like this that make me wonder how much truth there is in the rest of what you wrote about in this post. Is it possible the other people who write in saying they are doing well in trucking actually are enjoying a profitable O/O business?
I am an outsider and a freelance writer who is just learning abnout the business of trucking for some work I am doing. While I am not sure about the truth or inconsistencies of what you wrote, it seems to me that when you are being so scathing in your opinion about the facts, you should make sure that all of your facts are correct.
I am sure there is some truth to what you are saying, but getting it wrong about Krispy Kreme makes me wonder what else you got wrong. After all, you are someone who does not want the O/O life for himself and you tend to look down your nose at those who do want that life. You throw out any recognition of those who say they are doing well.
I wish you all the success in your blog and I hope you are able to get great writers who will contribute outsanding content to what you have here. One thing you might want to pass down to them from yoru thrown on high is to make sure that they know what they are talking about before putting it out for public consumption. Anything else is blowing out so much useless hot air.
Keep up the great work!
Brian
Just because you may think owning a big rig is cool and Krispy Kreme donuts are delicious does not make either one a good business to be in – but obviously you’re not aware of that and you’re not about to waste your time learning about something you know nothing about by listening to someone who did it for almost 20 years. So go on and buy yourself that truck and a KK franchise and let me know how you do.
The problem is that people can always sell bogus business opportunities to people by giving those people hope that they can find a simple, reliable way to make a huge amount of money with little or no extra work involved. People want to believe in such things and give their money to people who offer it to them. People don’t want to believe that there aren’t good alternative to hard work and that there aren’t easy ways to become a millionaire. Plus, somebody selling false dreams can make good money off of that (if they work hard and have a talent and a stomach for scamming people), so there is a big incentive to do that. There’s a lot less money in telling people the truth.
Hi, first of all I just happened on to this site looking to talk to other owner operators about the industry and where it’s going. This is in response to (So You’re Thinking About Becoming An Owner-Operator?) Well Brett Aquila, I have been in the trucking business since 1977 and went trough all the ups and downs, so hears here’s a question for you? Is your opinion aimed at the entire owner operator industry, or is it to the green rookie who sees him self talking on the CB and drinking coffee at the truck stop because there is a difference. Lets take myself. First I am leased to a company, I run under there authority and insurance, I make $200,000 a year, run five days a week and home almost every night. This must sound great but after fuel, bob tail insurance, maintenance, licensing and TAX’S, and I have no truck payment, I get to keep $64,000 Thats twice what a company driver takes home after TAX’S . Well to get a gig like the one I have it can’t be your first rodeo. Second. Advise to the rookie, get a company driving job and stay there for five to ten years and then if the time is right economically and you can hire on to a good company, follow your gut not opinions of people who may be bias due to there own failure. Mad Mountain
Hi Mad Mountain. My opinion is aimed at the entire lease/owner-op industry because it simply makes no sense to go into business as an owner-op or lease driver. It’s a commodity business – there’s very little profit in it.
As far as your numbers go, if you’re pocketing a profit of 64k on 200k in revenues each year, that means you have an profit margin of about 33%. Not too shabby considering the average profit margin for the trucking industry is under 3%. So somehow you’re making 11 times the profit that the average person is making in the trucking industry. So if the average company is making 3% and you’re making 33%, why isn’t anyone moving in on your gig to take it from you? Tell me – what’s your secret? How do you make so much more profit than the rest of the industry? And if you’re making that much money, why don’t you have 10 trucks, or 1000 trucks?
Why is that every owner-operator or lease driver I talk to has all of these outlandish numbers that make no sense? Either their fuel costs equate to paying $1 per gallon when fuel is actually $4 per gallon, or they have a 33% profit margin when the industry average is 3%, or something outlandish like that. It’s never anything that borders on making sense. I hear these stories from time to time about guys who are doing awesome at it, and yet I can never get one single clear answer as to how they’re actually managing to do it. What makes you different? What’s your niche? What’s your business model that sets you apart from the rest of the trucking companies in the nation? If I believed your numbers I would go out tomorrow and buy 10 trucks. I would hire 10 drivers, pay them each $45k per year, and I’d pocket 20k per truck per year and be a millionaire in a few years and disappear to my own island in the Caribbean. Why aren’t you doing that if there’s so much money in it?
Brett,
I haven’t gone into trucking yet. I haven’t even taken a class, but I am noticing a trend in trucking toward owner/lease-operator. Where companies might hire you to as company driver for a certain amount of time, and then push you toward a lease/owner-operator. Just visit the websites of any trucking company and you will see it. Also, if you are looking for a job, some companies are only hiring owner/lease-operators.
Is this a new phenominon, or has it always been around? Also, has the trend moved toward putting drivers into a lease with less and less driving time?
Dave
Hey Dave. This has actually been around for a long time. When the economy gets really tough like it’s been the past few years you’ll see an increase in how hard companies push for lease drivers. So there’s been a pretty big emphasis on this the past few years.
And almost any company that has a lease program will allow drivers to lease either straight out of school, or within 6 months or so. In my opinion, pushing someone to become a lease driver straight out of school is a blatantly dirty tactic because they know a ton of brand new drivers are not going to make it as lease drivers. It’s a blatant attempt to turn a profit off of your own employee’s misfortune. It’s frustrating to see.
Definitely stay away from leasing or buying a truck.
Brett you’re well misinformed about o/o. I agree with you that being an o/o and driving dry van or reefer is suicide. Being an o/o and hauling steel in the steel belt is a different story. I’m not talking about pulling heavy coils or plates that alot of coil haulers do around here, but just pulling a normal 5 axle will get you big bucks hauling coils, I just couldn’t help but post something because when noobs read your post they will get spooked. If you want the big bucks stay AWAY from DRY VAN OR REEFER. Here is the equation that I have learned from having my drivers pull van and reefers in the past. >>> LOTS OF MILES(bigger chance of a defect occurring)+LOW RATES= ZERO PROFIT
Ok Kure – the obvious question becomes this: Why would that particular type of hauling in that particular region pay big bucks while basically all other types of hauling in all other regions will make you go broke? It’s all based on supply and demand – so why is the demand for the type of hauling your talking about so high that you can make a fortune doing it, but not doing anything else?
Its a niche market, once you leave the rust belt the rates coming back are horrible. If you choose to stay local going from mill to local processing plant, there is good money in it, some days there might not be loads, but others will make up for it, but at the end of the day you’re not going broke being an o/o. Most dry van and reefer rates are 1.50 to 1.75 to $2 per mile, that’s chump change when you factor in all the miles, deadheading, waiting, and repairs. Being a company driver OTR and being paid per mile is a good gig for someone who wants to make $800 to $1300 per week depending on the miles they drive, but working as a local company driver hauling steel and being paid a percentage of the net is a waste, since you do all the hard work and end up with 30%, being a o/o in local steel hauling is the only way to make decent money, the same doesn’t go for being 0/0 in vans and reefers.
Well I’m an o/op an have been for three years and yes u can make a nice living at it as long as u are leased to a good company an run rite an manage your money rite! But it also depends on several factors that u have to be prepared for when it comes to making it..having your own authority will bankrupt u quick unless u have your own client to haul for…been there..but leasing on to a reputable co.an doing what your out here to do every week will pay those expenses an make u a good living as long as your not living above your means..the goal is to pay that truck off first! After thats accomplished then u can slow down a little an profit from no payments! My net per mile is. 44 cnt. After all expenses…yes u can be a profitable o/op! Its called doing your homework first an then hard work..no more harder driving work than what a co.driver does in miles every week! Not everyone is meant to succeed in business ventures..but those of us who are certainly enjoy our little slice of success! Maybe if o/ops who are actually doing well wouldn’t get the bighead an try getn more an more trucks an jus enjoy that little slice of financial gain they wouldn’t be so many op failures…jus saying..lol..I’m jus glad to be able to prove your opinions wrong that all ops fail..cos I haven’t an won’t! Thanks
It’s funny because you guys keep proving my point for me. You’re one of the rare ones that actually admits how much you’re making. So you made forty four cents per mile with a truck that’s paid for? Wow, that would be great if it wasn’t for the fact that I made between $55k-$62k as a company driver my last few years out there. So if you figure that all the money you spent getting the truck paid for in the first place was a good investment in a business where now you’re making the same as any employee would make, you have a strange idea about what success is in the business world. Why would you want to own a truck and make the same amount of money as someone who doesn’t have to own their truck? If you were working at McDonald’s making $8 per hour, and then you bought that McDonalds and as an owner you still made $8 per hour, why would that be considered successful? Now you have all of that risk, all of that extra work, and you’re tied down to owning a company when you could be a simple employee, have tons of free time, and take no financial risk, and still make the same money.
And besides, in trucking you can’t just get a truck paid for and keep it for long. With the constantly-revised emissions standards you’re going to have to put new engines in it from time to time – very expensive engines – or you’re going to have to buy a new truck and the payments start all over again and you’re making less than a company employee.
Not going bankrupt is not the same as being successful in my book. To me, you have to make way, way more than a simple company employee to consider yourself a successful business owner. You have to make enough money to make the extra work, financial risk, and the burden of being tied down to a business worth doing.