New entrant expenses can sink your trucking venture before the wheels start rolling. Looking to get a handle on the expenses associated with owning a trucking company? Look no further!
Any new or potential owner-operator should make very good use of their time by going to the Owner-Operator and Independent Driver Association’s (OOIDA) website and researching their hearts out.
They are the largest organization that is dedicated specifically to the wonderful men and women who face the open road more or less alone behind the big wheel each day.
Tools To Help Determine Operating Expenses
They also have a ton of free tools and information there to help their members and potential members succeed. Here is a link to their article on calculating potential expenses and revenues.
The Cost per mile work sheet for Owner Operators offers another good example of a worksheet that you could use.
For the most up to date information from the real world, you can also check out the American Transportation Research Institute’s (ATRI) most recent report about the operational costs of trucking.
Here is a link to secure their most recent report:
An Analysis of the Operational Costs of Trucking: 2015 Update
You have to give up your info to get this report and I highly suggest that you do because their research is well worth it!
As an added bonus, here is a really helpful article that you should consider reading.
5 Ways to Succeed or Fail as an Owner-Operator
Many owner-operators fail to understand that they are called owner-operators rather than operator-owners for a reason. That’s because you’re seeking to become a small business owner first who happens to employ themselves as an operator of a motor carrier.
Like any other business, you should really consider drafting a solid (but not crazy long) actual business plan for your new venture including who your target clients will be, how you plan on marketing to them and other fun details like that.
Of course you should focus on the easy “budget areas” of fuel, vehicle maintenance and actually figuring out how much you would like to eek out as a living.
Here are some other areas that I think you should invest more time and energy into:
New Entrant Expenses: Insurance Purgatory
You’re going to be stuck in insurance purgatory for a couple of years until you can prove that you’re a good boy to the insurance underwriters out there. Find time to get a good insurance agent. If you need help with that, give me a call at 1–855–211–5550 and I can recommend the best ones that I know of that could help you. There are some out there that focus solely on new ventures.
Insurance is going to be a huge and variable cost for you!
As a new venture, many folks fail to realize just how big of a bite that bill is going to be!
For a standard assortment of coverages that you will need to obtain (auto liability, auto physical damage, motor truck cargo and general liability) you are going to be well over $1,000 per month when you’re starting out.
Be sure to tack on a couple hundred extra per month for your health insurance needs as well.
New Entrant Expenses: “Other Expenses”
When discussing new entrant expenses, the little shit really adds up.
Take this from another founder of a small business.
Those pesky little costs and fees like “income tax preparation fees” and fun things like that don’t easily fit into nice and neat buckets.
So, they often get dumped into some type of “other expenses” bucket.
If you don’t keep things in check, that bucket can overfloweth quite easily and rob you of your hard earned profit if you aren’t careful.
Don’t neglect this bucket!!
Don’t think that you’ll figure out “other expenses” as they arise.
Plan for them as you would other potential outlays and go into that exercise with some imagination and your eyes wide open.
New Entrant Expenses: Safety and Compliance
I could drone on for hours on this particular topic because it’s my professional passion. In just a few words, be sure to pay attention to your DOT compliance and operating as safely as possible.
Operating safely and securely comes with a price tag as well. Sometimes, this is more in value exchange rather than dollars and cents.
You may have to trade time or effort and there is a cost there.
For example, you may be tempted to ignore understanding how to complete your log book correctly. That’s totally up to you, but do so at your peril.
Once you get pulled in for your first roadside inspection, you’ll learn the time and money value of that particular skill!
Spend some time learning about this and how to comply with the thousands of other pages of DOT regulations (I’m not shitting you) that apply to every single truck operating daily.
You can avoid costly fines (See the “other expenses” bucket discussion above) by understanding what is expected of you.
The FMCSA and You
Every new trucking venture will face a “New Entrant Safety Audit” within the first 18 months of starting their operation. While this new entrant expense isn’t measured in actual dollars and cents, it can be costly.
During this audit, you will receive the FMCSA’s equivalent of a full body cavity search whereby they will seek to determine if you are fit to continue gracing the highways and byways of this great nation.
You can view the FMCSA as “The Man” who is just trying to hold you down and make you obey their rules or you can embrace them for the role that they play in the transportation system and actively seek their help.
Most of the folks at the FMCSA are wonderful people who are very experienced and very willing to help folks, especially those who are seeking to do things the right way!
Contact your local FMCSA field office and introduce yourself to them.
Partner with them. They are there to help you. They also put out a handy guide to help folks understand the basics of compliance.
Here is a link for you to grab a copy and enjoy:
A Motor Carrier’s Guide to Improving Highway Safety
While you’re there, check out the two links on the right hand side of the webpage to review the FMCSA’s Resources for Drivers and the New Entrant Program information.
Hopefully, this gives you some insight into some new entrant expenses that you will face as an owner-operator. Perhaps you are now more scared but better informed.
Neither small business ownership nor truck driving are for the faint of heart. But, if you prepare well and execute better, then you have a decent shot of earning a nice living.
Connect with us by calling 1-855-211-5550 or by email: STucker@CarrierRiskSolutions.com.
Good luck and God Bless!
Sam
