How to become an Owner/Operator

i will almost gaurantee its a single turbo mbn motor. theyre actuall 500's but you constantly see them listed as 550's worst fuel mileage motor ever.


personally i have no use for an accert either so i wouldnbuy it anyways.

i like 18 speeds

 

If you run 35 or more trucks that software would be great for managing and squeezing every penny out that can add up to big dollars, but if you are running 1 single truck, micromanaging every cent is pure overkill that leaves you with no real profit only a bunch of numbers that are useless (but hey it looks real "professional"), lol.

Fuel, Insurance, Tires, Taxes, Repairs. I can run those numbers right in my head, the rest is chump change. If ones profit margin is so thin you need a computer program to stay above water, one should probably consider finding another line of work and stop hauling that cheap freight, you're sinking the rest of us too.

 

You are joking, right? You can keep all those costs for all of your expenses in your head? I am sure you do a great tax return. It doesn't matter if you have one or ten thousand trucks, you need to have accurate, up to date accounting numbers. It doesn't make any difference how you keep your records as long as you keep them accurately. You can write them down in a composition book if you wish. The great thing about using software is that as soon as you plug in your numbers you can see where you stand. You don't have to guess and hope that you can accurately calculate the numbers in your head. Why even bother to keep receipts since you can keep all those in your head, too? When you run by the seat of your pants you are setting yourself up for failure.

Knowing where you are is probably more critical with a small operation than with a larger company. You can't afford to make as many mistakes when you are a one man operation. It can be easier to recover when you have a larger company.

There is an old saying. "If you take care of the pennies the dollars will take care of themselves."

 

#1. As a newbie, can someone define what we mean by "authority" and "lease"? I have read between the lines on a lot of the posts but I'd like to get a clear definition. Again, I apologize for the redundancy for the experienced driver.

#2. What's the deal w/these companies advertising $100K salaries for O/O? such as sites like http://www.1099trucker.com , I've read some threads about such sites but I'd like to start the topic here, since for an a startup O/O operation this can easily trap people.

 

Well, G/MAN, BigBadBill or someone else, a lot wiser than me, will come along soon and explain better or cover what I leave out, but I'll give it a shot.

An owner/operator with their own authority applies for and gets their DOT number (free) and MC number ($300 each type). The MC number is the authority to operate as a "contract" or "common" carrier or both. Authority can be "Intrastate" or "Interstate". Intrastate authority would come from the state that you want to run in. This allows you to haul loads direct from shippers or from brokers. It also charges you with many other responsibilities and duties. Finding your loads, billing, collecting, and load planning are a few duties. Fuel taxes, compliance, recordkeeping, financial and civil liability are a few of the responsibilities. It offers a higher potential earning for the added responsibilities and duties.

As a lease operator, the company finds your loads, does billing and collection, furnishes authority and liability insurance, handles fuel tax and compliance. Often they furnish a trailer and base plates. Usually they require you to contribute to an escrow fund until it reaches a certain figure. This will cover damages or deductibles that they may encounter due to your actions. Some furnish more than others. Some charge you at a certain weekly rate, for items furnished, until paid. Some furnish these items and have them factored into what they pay to the truck. Some furnish the trailer at no charge while many collect weekly for the life of the lease. Many will allow you to contribute to a maintenance fund, that is your money, as a way to save for repairs. Most pass the fuel tax costs to you while handling the paperwork. You have less responsibilities and duties for which you pay with cash, flexibility and control. Some exercise less control than others.

So as you can see, it can be mind-boggling just to compare leases. To compare leases to authority requires even more analysis. The only way to objectively do this is to use a cost of operation that breaks out most items in detail. If you can arrive at a CPM for each item then you can mix and match your cost of operation to make an objective comparison with respect to each situation. A quick, from the hip example, a lease that furnishes trailer, authority and insurance at no cost might save me 0.13 CPM in operating costs. That would be in trailer payment/replacement (0.055), liability insurance (0.055) and trailer maintenance and tires (0.020). Remember I pay more for insurance, no recent experience, and I'm an expert at padding cost. Your results may vary.

I can't comment on your other question, I'm too old school. I've had trouble capitalizing on the use of debit/credit cards online to get good deals. Google is my friend for finding things, but I don't click on much of anything that doesn't look credible. Unfortunately, not much does. A title like that wouldn't have gotten a second look from me. An owner/operator running 110,000 miles a year should be at or above $200,000 gross, which is what a Form 1099 would represent. I don't have enough time to click on things like that, no offense. It's always been buyer beware and applies even more with our global economy. I won't even go to Craig's List. I've dealt with my younger son and the free virus laden items he's harvested. To me most stuff on the web is like going into a bad bar in a bad part of town on a bad Saturday night, with a full moon.

 

and your pants are down

 

BJ hit it pretty well.

When a company is advertising "income" to an O/O they are talking about the gross to the truck. All expenses come out of that. Some will talk about what top earners are netting based on some formula but it is meaningless. You want to talk gross because everybodies operation is different.

 

In order to haul freight you must have authority. There are two types of authority, interstate and intrastate. Interstate authority is granted by the federal government and involves those who pick up freight in one state and deliver that load in another state. Intrastate authority is granted by some states and involves loads which pick up and deliver in the same state. Not all states offer intrastate authority. When you are granted authority you are a motor carrier. Some consider those who own and drive a single truck and have their own authority as being an owner operator. While one could make a case for that point of view, in recent times an owner operator is someone who owns a truck and leases it to a carrier. If you want to legally haul freight you must either lease your equipment to a carrier or get your own authority. When you have authority you will be issued a unique motor carrier number. It takes about 4-6 weeks to get your authority after you apply.

I am not familiar with the website you noted, but I don't know of any carrier who pays owner operators a salary. Most carriers pay owner operators mileage or a percentage of the line haul or freight rate. Whether you are an owner operator leased to a carrier or run your own authority you are in business for yourself. Most owner operators will gross between $120,000-170,000/year. Your net will depend on the rate at which you run, type of freight hauled and how well you can manage your business. Most will not net $100,000/year after all expenses have been paid, but some can.

 

Something I was wondering: I have heard that brokers don't like to work with new authorities. Is it possible to get your authority and let it sit while you run for someone else? That way, if and when you do go solo, you don't have a "new" number. Like getting a new checking account and starting your checks out at 1000 instead of 1.

 

That would be very expensive. In order to keep your authority active you will need to have insurance. You pay the premiums whether the truck is moving or not. If you cancel your insurance, you will have your authority revoked. Not all brokers require a minimum amount of time in business before they will work with new carriers. It would probably be better to get your authority and start making phone calls. Some brokers will load you as long as you have authority and insurance. We all start out at the bottom. Nearly all brokers will load carriers once 6 months have passed.