5 Easy Steps to Becoming an Owner Operator
Starting a trucking company as an owner operator may seem like a daunting task, but by following these 5 easy steps you can be on your way to becoming your own boss. Before we get started, lets take a look at a couple reasons why you would want to become your own boss:
- There is high demand for qualified drivers. For the last several years, more drivers are retiring from the trucking industry than are coming into it to replace them.
- The market is growing. This year, the trucking industry will gross over $720 billion in 2018 and the market is expected to rise to over $1.25 trillion by 2028.
- There is a blueprint for it. Over 85% of trucks on the road are small companies of 6 or less trucks.
Now that you are excited about the opportunities, lets talk about how you get there.
Step 1: Applying for authority
What is trucking “authority”?
Trucking authority allows owner-operators an opportunity to be their own boss and potentially maximize earnings by hauling freight. Trucking authority also known as operating authority means the FMCSA will allow you to transport freight as a motor carrier.
What is the process for applying for a trucking authority?
To become a trucker in the US you will have to apply for trucking authority and get a US DOT number. The DOT number filing is free, and fairly straightforward. If you are applying for your US DOT number for the first time you will need to visit the Unified Carrier Registration system’s website and apply for motor carrier authority. After submitting your form, it can take up to a month to get approval so apply for this early.
Is there a cost for applying for a trucking authority?
In addition to filling out the UCR form, there is a $300 fee associated with application for trucking authority. You can find more information about the process here: https://www.fmcsa.dot.gov/registration/getting-started
Step 2: Finding a Process Agent
What is a processing agent?
A process agent is a service that is enables your company to accept legal documents on your in any state. The Federal Motor Carrier Association offers a list of certified Process agents on their website.
Why do I need a processing agent?
This is a mandatory service that you must have to become a legal trucking company. Once you choose your process agent, they will be responsible for filing your BOC-3 paperwork.
Is there a cost for a processing agent?
These services are privatized and are normally charged on a yearly basis and is normally between 100 and 300 dollars per year depending on the service you use from the agent.
Step 3: Insure your truck and your loads
What type of insurance do I need?
Determining the right insurance depends on what you plan on hauling. At a minimum you will need to obtain liability insurance for your commercial vehicle(s) and the loads you will be transporting. Make sure to shop around to obtain multiple quotes and offers and decide which one suites your companies needs. For more information, you can also find a detailed list of insurance requirements on the FMCSA website.
Step 4: Buying or leasing a vehicle
Whether you choose to be a hotshot trucker hauling LTL freight or run a tractor trailer. Make sure to do your research before making a decision. Starting a hotshot company may be the best option if you don’t have much experience as a driver. It can be a fun and profitable way to get started in the trucking industry with a smaller investment.
At this point you will also need to decide what type of trailer you would like to run. Each type of trailer and freight has its own advantages and disadvantages. Do your homework and research which type of trailer fits into your operation best, and then shop for the best value you can find. Make sure to look into industry trends as well as historical data in order to determine what your trailer will be.
A few tips when looking for a vehicle:
- Beware of Bad Lease-Purchase Agreements – Many companies will offer you lease-purchase agreements if you work for them for a certain amount of time to pay it off. There are countless stories of “hidden” clauses or promises that were broken by the company and not put into a contract. Before signing any leasing agreement, consult a tax accountant and an attorney to determine legalities, profit margins, and tax liabilities before signing any contract. All details such as runs, tolls, and escrow provisions should be spelled out in the contract. If a company won’t allow you to preview their contract, look elsewhere.
- Beware of Junk Trucks – Purchasing a fixer-upper might be a cheaper way to enter the market, but it comes with its own risks. The last thing you want to do is drop thousands of dollars into a truck that falls apart a month later. If you are going to go this route, make sure you know what you are buying and are qualified to work on it. Also make sure you are able to acquire a warranty
- Before you purchase a truck, be sure that the truck you purchase will match all the specifications for the type of freight you are looking to haul. Beware of shady banks and dealers – if a financial institution won’t disclose interest rates, walk away.
Step 5: Register your truck!
Now that you have your business, your trucking authority and your insurance, it is time to apply for apportioned tags so that you can haul across the US. These tags very in price depending on your state and the size and weight of your rig. You can expect to pay somewhere between $1000 and $2500 dollars for normal rigs hauling non-hazardous materials.
Now its time to start hauling! Looking for advice on setting up your own Owner Operator company or looking for your first haul? We would be happy to help!