After working for years as a truck driver for a company, it's natural to feel drawn to becoming an independent owner-operator. Doing so gives you the freedom to become your own boss and cut out the middle man, potentially leading to significantly increased profits. Before you give up the security of your current job, however, it's important to take care of a few practical matters. By following these five steps, you will help ensure your success once you make the leap into being an owner-operator:
Save Up Money for a Used Semi-truck
Buying a used semi-truck in good condition is a financially savvy choice because you can get a great truck that suits your purposes without the astronomical cost of a brand new truck. Ideally, you won't leap into your new business until you have carefully saved enough money to buy a used truck outright or at least put down a hefty down payment.
You may need to work overtime for a while or sell other assets to accomplish this goal, but it will be worth it to avoid going into major debt before your owner-operator business has become profitable. If you pay for your truck in cash or at least have small, manageable monthly payments, you will mitigate your risk significantly. Begin by researching commercial trucks for sale to see how much a truck with the features you want will cost.
Work on Your Family Relationships
Being a trucker already means being away from your family for long stretches of time, but when you first become an owner-operator, you may find that you have even less time with your loved ones. As a new business owner, you will need to invest significant unpaid time on the administration of your business, in addition to all of the time spent actually driving. In addition, you will no longer have paid holidays and vacation, which may translate to working more hours.
For these reasons, it's important to spend time now strengthening your relationships as much as possible. Depending on your situation, this might involve attending couples counseling, going on a family vacation now while you have the chance, or simply having open and productive conversations with your family members about how you will stay in close contact once you are an owner-operator.
Look into Your Health Insurance Options
Once you are no longer employed by a company, you will need to secure your own health insurance coverage. The national health care exchange has several options for self-employed individuals. Quitting your job to start your own business is considered a qualifying event, which means you will be able to sign up for health insurance even if the open enrollment period has passed. If you are married and your spouse is employed, another option is to sign up under their employer-provided health insurance.
Hire a Small Business Accountant
Before you start your owner operator business, you should get a consultation with a small business accountant. They will help you determine how to legally structure your business and get you set up to pay quarterly self employment taxes. An accountant will also explain which business expense deductions you may be eligible for and suggest a method for tracking these expenses.
Have an Emergency Nest Egg First
Becoming an owner-operator and being your own boss can be very rewarding, but it's also risky. If you get sick or injured, your truck needs repairs, or you have a family emergency, you will need to have cash set aside to get you through. Experts recommend saving three-six months' worth of expenses as an emergency nest egg. Waiting to start your business until you have that much set aside may delay the start of your business, but it will also help ensure success since your business won't fail if you have a short-term financial emergency.
By following these tips, you will set the groundwork for a successful owner-operator trucking business.