In the expansive world of transportation, the decision to venture into trucking can be both promising and challenging. The distinction between an owner and an operator in a trucking company is significant among the various paths available within this sector.
If you have been thinking about starting your own trucking company, you have landed at the right place. This article details the benefits of owning your own trucking company and helps you compare the roles of owners and operators in the trucking industry.
Owner vs Operator: Outlining The Benefits Of Ownership
When considering the trucking industry, there are distinct advantages to being an owner rather than an operator.
Here are some key benefits of being an owner.
Control and Autonomy
As an owner, you have complete control over your business operations. You can make strategic decisions regarding routes, schedules, hiring practices, etc. This autonomy allows for greater flexibility in adapting to market changes and customer demands.
Sadly, many operators do not enjoy this luxury as their job is limited to ensuring safe and efficient deliveries. However, operators are free from the burden of making crucial decisions that may be critical to a trucking business’ survival.
Increased Profits
According to data from ZipRecruiter, owners generally earn more than company drivers. The data indicates that, on average, owners make about $220,000 yearly, while operators earn around $66,000 annually.
The average annual earning range also tilts in favor of owners who may fall between $55,000 and $400,000 annually compared to $43,400 and $102,000 earned by company drivers.
By owning the business, you retain the profits after expenses, whereas operators typically earn a fixed percentage or salary. Additionally, owners can directly take their cut from high-value deals with premium clients.
Asset Ownership
Owning your trucks and equipment means you’re building assets for your business. Over time, these assets can appreciate, providing long-term stability and potential collateral for expansion or loans.
The owners enjoy all of these perks, and operators generally miss out.
Business Growth Opportunities
Owners can scale their operations by adding more trucks, hiring drivers, or expanding services. This scalability opens doors for increased revenue and market presence. By contrast, operators are often limited to a base salary with bumps up in tiny increments and small or non-existent bonuses.
Tax Benefits
Business ownership often comes with tax advantages. Deductions can be claimed for expenses such as fuel, maintenance, insurance, and even depreciation on equipment, reducing the overall tax burden for owners. Operators, however, do not enjoy such benefits and generally have to pay their taxes in full.
Entrepreneurial Satisfaction
For many, the satisfaction and fulfillment derived from building and managing a successful business is a significant benefit of ownership. This enhanced feeling of fulfillment ultimately results in more “drive” in owners as they work harder to achieve more success.
Additionally, satisfied owners work on developing their businesses even further by introducing new and innovative features. While this may or may not benefit the operators working for such owners, it definitely adds more value to being a trucking business owner.
Owning Your Own Trucking Company: Here’s How To Get Started
Starting your own trucking company involves several key steps and requirements. Remember that these requirements may vary based on which state of the United States you plan to establish your home base.
Here are some general prerequisites for a trucking business.
Business Plan
Like any other business, a trucking company must exist on paper before it can start dispatching trucks and generating income. A comprehensive business plan outlining your objectives, target market, services offered, financial projections, and growth strategy will be the first step to creating a successful business.
Legal Structure
Once you have a comprehensive business plan, choose a suitable legal structure for your business, such as a sole proprietorship, partnership, LLC, or corporation. Register your business and obtain all necessary licenses and permits.
Finances
Business can only run with some form of investment. Based on your business plan, you should have a sound idea of how much financing you need to start your trucking business.
Secure funding for your venture. This might involve personal savings, business loans, investors, or grants. Calculate the initial costs for trucks, insurance, permits, fuel, maintenance, and employee salaries.
Registration With The Trucking Authority
Once you are through with the legal and financial prospects, apply for operating authority from the Federal Motor Carrier Safety Administration (FMCSA). This includes obtaining USDOT and Motor Carrier (MC) numbers.
Insurance
Accidents happen; if underestimated, they can and will shut down any business. Ensuring you are covered from accidental losses, insurance is your best way to battle them.
Acquire commercial truck insurance, including liability, cargo, and physical damage coverage. Insurance is crucial for protecting your assets and complying with legal requirements.
Equipment Purchase or Lease
Acquire trucks and necessary equipment. Decide whether to purchase new or used vehicles or consider leasing options based on your financial capabilities. This might be a troublesome decision for some, but it is always better to make the right choice based on your financial standpoint.
Furthermore, you should not cut corners on other aspects of your business just because a new truck seems more attractive.
Hiring and Training
Recruit qualified drivers and staff. Ensure they meet licensing and certification requirements. Provide thorough training on safety protocols, regulations, and company policies. An HR department might not be needed initially, but dedicate some budgeting for active HR personnel as you grow.
Establish Relationships
Lastly, build relationships with clients, shippers, and suppliers. Networking and establishing reliable partnerships are crucial for business growth and sustainability.
Is Owning A Trucking Company Worth It?
Starting a trucking company demands careful planning, compliance with regulations, and a dedication to ongoing management and growth. Success often hinges on thorough preparation, industry knowledge, and a commitment to delivering quality service.
However, if everything is done right, a trucking company can offer tax benefits, autonomy, and the pride of ownership that comes with building your own business.