As a trucking owner-operator, you know that running a successful business requires you to wear many hats. You’ve got to be thinking about everything from gas mileage to depreciation to cash flow.
The new year is here, and that means this is a good time to look to the year ahead and think about what you can do to make it your most successful year yet. We’ve put together a list of seven tips that can help you thrive as an owner-operator.
#1: Manage Your Fuel Costs
Regardless of what your truck is carrying, one of your biggest expenses is fuel. The mistake that many owner-operators make is confusing the lowest pump price with the lowest fuel cost. They’re not the same thing.
The reason, as you know, is that you must pay state taxes on the fuel you use as you drive through the state. When you buy gas, the pump price includes the base price per gallon plus that state’s taxes.
To save money on fuel, look for the lowest base prices and plan your fuel purchases to take advantage of them.
#2: Support Your Rates
Creating a budget as an owner-operator means estimating both your fixed and variable costs. You may need to justify your rates to potential clients. For that reason, it’s important to understand the trends both in the trucking industry in general and in your niche in particular.
One thing that can help is getting a handle on fuel prices. The US Department of Energy has a fuel price tracker that you can find here. You can also back up your prices by knowing the going rates for specific lanes and any other influencers that may impact your pricing.
You may even be using tools that already give you this information. DAT, for example, provides for its subscribers the 90-day average on loads, so you have a baseline to go off of when negotiating.
#3: Focus on Fuel-Efficient Driving
There’s a lot of debate among owner-operators about the most efficient way to run a business. One frequent topic of discussion is speed. Is it more efficient to drive fewer hours at a higher speed, or are you better off with a lower speed?
When it comes to fuel efficiency, you’ll get more miles per gallon of fuel if you drive steadily at 60 mph than you would if you took more breaks and drove at 70 mph. For example, if you paid $3.00 per gallon for gas:
- Driving 10,000 miles at 70 mph would yield an mpg of 5 miles and you’d pay $72,000 for fuel; and
- Driving 10,000 miles at 60 mph would yield an mpg of 5.5 miles and you’d pay only $65,000 for fuel.
In other words, you’d keep $7,000 in your pocket that you would have spent on fuel just by driving at a slightly slower speed.
#4: Use the Right Strategy for Buying Trucks
Buying a truck requires understanding the vehicle’s performance, mileage, and other factors. While you can certainly buy a new truck, there are some things that you should keep in mind if you do – and some compelling reasons to consider a used truck instead.
Let’s start with mileage. If you’re talking to a salesperson, remember that it’s in their best interest to paint a rosy picture of the truck’s MPG. It’s your job to have a realistic view of MPG based on:
- The load you’re carrying
- Road conditions
- Engine power
You should be buying a truck based on its efficiency, power and reliability. Don’t allow yourself to get distracted by bells and whistles that add to the price of the truck and take money out of your pocket.
Keep in mind, too, that there are some real benefits to buying used trucks instead of new ones. You already know that buying a new vehicle means taking a big depreciation hit. When you buy used, the previous owner absorbs most of the depreciation.
Matt Douthit, the founder of truck driver career site CDL 101, recommends looking for a truck with about 200,000 miles on it. You should pull the Electronic Control Module (ECM) report to see how the truck has performed in the past.
Whether you buy used or new, it’s essential to do research. Ask other owner-operators about the truck you’re considering and learn as much as you can about its likely performance before you buy it. That way you’ll have the best possible chance of ending up with a truck that’s efficient, reliable – and most importantly – profitable.
#5: Take Advantage of Downtime to Service Your Truck
Trucks require routine maintenance, and one of the biggest mistakes that owner-operators make is waiting until something is wrong before taking their rig into the shop. It’s inevitable that you’ll have some downtime in 2019. Those quiet periods are the ideal time to have your truck checked out and take care of needed repairs and maintenance.
You can also use your downtime to take care of other routine duties like creating and mailing invoices, calling on past due accounts, and tracking your company’s financial progress.
#6: Work Directly with Shippers When Possible
You probably have a list of brokers you work with, but if you’re not working with shippers directly, then you’re missing out on a money-making opportunity. If you can land a few direct clients, you can charge them a price that’s similar to what a broker would charge but keep the entire fee for yourself instead of paying a commission.
It will require a bit of strategic marketing to connect with direct shipping clients, but it can make a big difference in your net profit. It can be especially beneficial to connect with direct shippers if you specialize in a particular niche or type of load, since you’ll have less competition than you would otherwise.
#7: Set Yourself Apart from Other Owner-Operators
Our final piece of advice is to find a way to differentiate yourself from other owner-operators. For example, you might:
- Own a specialty trailer that’s only used for specific types of loads
- Have experience with handling hazardous or niche loads
- Hold special permits that allow you to do work that other owner-operators can’t
If any of these things apply to you, then you can use them to your advantage by seeking jobs that other owner-operators can’t accept. And, if they don’t apply to you, there’s an opportunity to spend part of 2019 doing what you can to buy new equipment, get some continuing education or acquire a specialty permit.
2019 Can Be Your Best Year Yet as a Trucking Owner-Operator
The seven tips we’ve outlined here can help make 2019 your most profitable and successful year to date as an owner-operator.
At Triumph Business Capital, we help thousands of owner-operators with their cash flow every single day. Our team of back office professionals helps support your trucking business by creating and mailing invoices, calling and collection on past due invoices, and giving you the tools to better track your company’s financial progress.
If you’re stuck waiting 30-plus days to get paid and looking for a team to support your business growth, contact Triumph Business Capital today.