Becoming an Owner-Operator
An owner-operator is a small business or microbusiness owner who also runs the day-to-day operations of the company. Owner-operators are found in many business models and franchising companies in many different industries like restaurant chains, health care, logistics, maintenance, repair, and operations.
In the United States and Canada, the term typically refers to independent contractors who hire out and drive their own semi-trailer trucks. In trucking, an owner-operator is a self-employed commercial truck driver or a small business that operates trucks for transporting goods over highways for its customers. Most owner-operators become drivers for trucking companies first to gain experience and determine whether the career is for them.
- An owner-operator is free to either haul free-lance (non-committal to any one firm or product) or enter into a lease agreement to dedicate their equipment to one customer or product.
- The owner-operator typically has to pay higher rates on insurance due to smaller size than most larger companies, meaning they have to charge more to balance the cost.
- There are many things to consider before becoming an owner-operator, including business setup, accounting, type of vehicle, and licenses.
How much revenue does an owner-operator generate?
A unique thing about being an owner-operator is that you get to decide how much or how little revenue your business is going to earn. The harder you run, the higher quality loads you haul and the more you cut down on operating expenses, the more money you are going to bring home.
What influences how much an owner-operator makes:
1. How they select their loads.
How owner-operators select their loads can have a big impact on how much they bring home because many of the methods have costs associated with them. For example, using a broker or dispatcher could mean losing 5-25% of the revenue on the load you haul in order to pay them for their services. Whereas using a public load board or leasing-on with a carrier and using their private load board, would most-likely not cost your business anything.
2. How they get paid.
There are three major ways owner-operators earn revenue from the loads they haul:
- All-in or flat rate: Often, when owner-operators lease-on with a carrier that has its own load board, they earn revenue through an all-in or flat rate for each load they haul. This method is similar for owner-operators who utilize brokers for their loads.
- Percent revenue of the load: Earning a percentage of the load is another way owner-operators who do business with a carrier are paid. For example, owner-operators can receive 65% of line haul revenue and 100 percent of fuel surcharge and accessorials on the loads they haul.
- Mileage: Usually when owner-operators obtain their loads from a load board, loads are shown as a rate per mile. These rates vary between what load board they use, what type of freight they haul, etc.
3. What their operating expenses are.
Expenses have a huge impact on how much an owner-operator brings home because there are so many expenses associated with operating a semi-truck and running a business (i.e. fuel, insurance, truck payments, maintenance, etc.)
A great way to determine how much you make after expenses is to calculate your cost per mile. By adding up your fixed costs and your variable costs and dividing them by how many miles you drive, you can determine what your rate per mile needs to be in order to make a profit.