The challenges and the principles of succeeding as an owner-operator
Despite the fact that there is a high demand for truck drivers and truck driving services, succeeding in this field of work is still a tough challenge. With rising equipment costs, rising insurance and skyrocketing fuel prices, as well as a grueling schedule, achieving and maintaining a meaningful success in the owner-operator field of work is a daunting task for even the most skilled and experienced owner-operator truck drivers.
A deceptively straightforward task
On the surface, becoming an owner-operator, who either works alone or for a truck company sounds quite simple and straightforward. Many think that all there is to it is to buy a truck or a semi-truck, locate all the available and profitable driver jobs you can handle and make lots of money on an annual level. However, the fact is that the majority of owner-operator truck drivers usually fail in their endeavors completely, or fail to achieve any meaningful success. According to the most recent studies, it is estimated that less than 15% of self-employed owner-operators find any success.
Those truckers, who lack the necessary experience and the right mindset, are the ones most vulnerable and susceptible to this business challenge, within the initial period of 12-24 moths, once they decide to dive into truck ownership.
The failures of the Trucking industry
Unfortunately, the contemporary trucking industry has gotten a rather bad reputation of quickly ending the careers of young and inexperienced individuals, who try to establish their own truck businesses.
It is also a fact that the Trucking industry has kept failing in the last few years to properly train, nurture and cultivate prospective truck drivers and help them manage the financial aspects of the trucking business.
Effective cash flow
However, those owner-operator truckers, who have managed to balance the finances and make some profits, all share one thing in common, and that is that they all have set aside an emergency cash fund. It is no secret that the most important aspect of any successful business endeavor is the proper management of the cash flow. The same applies to the trucking business, as well. There is nothing more important and critical to the profitability of your trucking enterprise than sound business decisions. Always remember that, as an independent owner-operator, you are the only one responsible for the management of all the cash flow related aspects and elements.
Emergency cash funds
It is the effective management of the cash flow that determines your profitability at the end of each month. The majority of successful owner-operator truckers will suggest that novice truck drivers have at least 4 to 6 months of after-tax cash money placed in an emergency fund. This fund will be used in the case of various emergency situations, such as unexpected major expenditures, loss of a job etc. The emergency cash fund you set aside should include the total of your truck business expenses stashed away. These expenses should include maintenance and repair costs, fuel costs, insurance, truck payment and more.
All in all, there are two key principles you should hold on to when getting on the road. First of all, make sure to establish, as well as maintain a 4-6 month emergency cash fund, which will include all of the operating expenses. Secondly, cover all your emergency expenses with the money that has been earning interest, instead of covering them with the money you intend to pay someone else.