I recently purchased an old red truck which is one of the most important steps to becoming an owner operator leased on to a carrier. Notice I said most important and not the first step.
The first step to becoming an owner operator is to research and study everything you can get you hands and eyes on about the business of owning a truck. The driving part is easy most people can learn that in just a few weeks.
I already had the basic business skills from working in a small business outside of trucking, but I still went through the same steps as if I knew nothing about business just to be sure I would be applying them correctly in trucking.
Like you I was a company driver for a few years and was never satisfied with driving someone else’s truck. This was my main motivation to push forward and save every penny I could so I could someday purchase my own truck and realize the freedom of being an owner operator.
- 1 There are many ways to getting you first truck
- 1.1 This is step one and ongoing find others willing to share and follow their successes and failures for quite a while before spending any money of your own.
- 1.2 Step two Learn how to buy a truck – but don’t buy one yet just learn what you need to do
- 1.3 Step three find a carrier to to work with or learn how to get your own authority
- 1.4 Step four learn and know your numbers
- 1.5 Step five get approved to lease on to a carrier before you buy a truck
- 1.6 Step six find and buy the darn truck now
- 1.7 Step seven put in two weeks notice with your employer
- 1.8 Step eight get the truck road ready
- 2 Step nine finish getting signed on with your carrier and get a trailer
- 3 Step ten pull your first load
- 4 Update October 18, 2017
- 5 Update November 19, 2017
There are many ways to getting you first truck
- Saving and buying a used truck with all cash
- Saving a down payment and financing an inexpensive used tractor
- Financing a brand new truck – not recommended for a first time O/O
- Partnering with someone willing to supply a truck for part of the profits – also not recommended
- Renting a truck from Ryder, Penske, Ideal lease or some other truck rental company
- Doing lease purchase from an independent truck leasing company
- Lease purchasing a truck from a carrier – another path I cannot recommended
OK, so I think you get the idea from the examples above. I spent almost two years researching and studying how to be a success in owning your own truck and leasing to a carrier.
One major step of my research was to read and re-read threads in thetruckersreport.com forum ask an owner operator section. I was able to find threads where others posted step by step the process of buying their first truck, leasing to a carrier (or getting their own authority) and pulling their first loads.
For most one of the best ways of learning is to experience things first hand and actually going through all the steps. This could be an expensive mistake if you were to just jump in and do it. The next best thing is to experience it by carefully following and studying what others have done through their similar experiences.
Step two Learn how to buy a truck – but don’t buy one yet just learn what you need to do
I’ll briefly go over this step now and come back to it later.
- Learn what kind of specs will work best for your type of trucking, engine, transmission, gear ratio, mid roof or high rise
- Start viewing for sale ads to get an idea of cost and availability for trucks with the right specs
- Learn how to do a good self inspection
- Take oil sample and mail off to a good lab service
- Prepare to get a professional bumper to bumper truck inspection
- You’ll need to get Dyno and engine blow-by test for the best shot at getting a good used truck
These are the major steps in buying your truck.
I highly recommend leasing to a small carrier that will let you work at finding your own loads before getting your authority so you can learn about and experience working with brokers or agents to negotiate rates.
You’ll also need a lot more cash and or credit in reserve with your own authority vs leasing to a carrier because it takes much longer to get paid and you’ll have to pay a lot more up front for insurance, plates and permits to get started.
I don’t like paperwork or chasing down invoices all while finding loads and driving at the same time so I choose to lease to a small carrier that will provide me with a trailer to pull.
Shop around and get recommendations from other owner operators then talk with several carriers before making decision.
Step four learn and know your numbers
Combine your research from step one with info you get from carriers and other O/O’s. Get the cost of operation spreadsheet from the OOIDA website. Put everything down on paper know what you are getting into. Here is the link to the spreadsheet
Here are some of the things you’ll need to know again before you purchase the truck.
- Rates and percentage of rate you will be paid – I don’t recommend you look at a mileage contracts offered by larger carriers
- Fixed expenses like plates, truck payment, company deductions or charge backs for things they provide but pass on costs
- Variable expenses like fuel, tolls, food cost live on the road
- Repairs – estimate high you never know what will break no matter how well you inspect the truck
Here are some real life examples of my owner operator expenses broken down into cents per mile. Feel free to use these along with the OOIDA spreadsheet linked above.
Step five get approved to lease on to a carrier before you buy a truck
Once you’ve narrowed your list of carriers down apply and get approved with a least one. This is one of the easiest steps similar to hiring on as a company driver. Make sure if you’re buying an older truck they will accept it. Many carriers only lease on newer trucks some will make exceptions if they can inspect it. If this is the case have a back up in case they don’t accept your truck after you’ve purchased it.
Step six find and buy the darn truck now
This is the step I am currently on right now, I am writing this as I go so you’ll get a fresh first hand information from my experience. So far so good and if it does not go so well I’ll write that as well.
A lot of advice you’ll get is that the first truck is not your dream truck so don’t get too hung up and just get a good truck with the right specs. I don’t know about this one. The truck I bought has the right specs and very low mileage but I wish I would have waited just a little longer for a cleaner more road ready tractor.
Step seven put in two weeks notice with your employer
Step eight get the truck road ready
You should have already inspected and had a DOT inspection done as part of your buying process. This is the time to make any need repairs and do preventative maintenance. Look for things that could likely fail on the road like hoses and belts than have them replaced.
Also put together a tool kit and spare belts and hoses to carry with you. I even purchased a 20 ton bottle jack and lug nut buster so I can change a tire on the road to avoid an expensive road call. I just need to get a spare tire with the rim and a mounting bracket as well.
Here is an example of the repairs I an doing to the old farm truck.
Adjust clutch – Youtube is your best friend as a truck owner. This was surprisingly easy to do myself.
Replace broken ABS sensor and reset ABS controller – this took a little more digging but was easy once I found the how to write up on resetting the ABS computer with a magnet, who knew?
Sample the oil and get it changed – I took truck to a dealer shop for this.
New rear brakes and rear wheel end seals – not sure of I will tackle this or have shop do it.
Replace a differential seal on the back of the front drive axle.
Buy eight new drive tires – ouch a major preventative expense before I even pull my first load.
Oh yeah I forgot to mention something an experienced O/O reminded me of – the purchase price of the truck is not important when compared to the cost to of keeping it in good safe working order. He spent close to $40,000 on maintenance, repairs and upgrades his first year or so to a $12,000 truck.
Step nine finish getting signed on with your carrier and get a trailer
Larger carriers will have you do and orientation similar to what a company driver goes through, it could last one to three days.
Smaller carriers will usually get right to business with the signing the paperwork and get you going the same day.
In my case I was already in my carriers system and a driver so I just needed to sign the lease and get the decals put on the truck. The carrier did a quick inspection and noticed a few things that need to be added and repaired.
I went to their mechanic and got some reflective dot tape added to the back of the truck and got a small air leak fixed by replacing the sleeper air bags.
Step ten pull your first load
It’s a good thing I had a second set of eyes go over my truck since my first loads with the new to me old truck were during DOT blitz week.
I had a bulb go bad and broke the plastic cover for a front parking lamp, fixed it with packing tape until I could order a new assembly. As luck would have it the tape gave way going through a Texas DOT inspection line during the blitz. They asked me to pull over and I noticed the light hanging by the wires. I quickly taped it back up and they signaled for me to get out of there without an inspection.
The first load went great and my first few loads paid above average rates due to a shortage of trucks during the summer DOT inspection blitz.
Update October 18, 2017
I have to say it feels great being an owner operator.
I’ve been very conservative with family / personal expenses and became profitable this month. I had hoped to get all the money invested back in three months and it took five. So now everything I keep after the carriers cut, fuel, maintenance, tags, insurance, and reserve fund is pure profit.
As you know if you’ve read the entire page I went the cheap old truck route. It’s true you can make a ton of cash with a cheap old truck.
It’s also true initial repairs and maintenance will cost more than double of what you planned for so make sure you start with twice what you carefully plan for.
I hoped for just under 90 cents per mile cost to run the truck and so far it’s been closer to $1.47. This includes the cost of the truck, all repairs and upgrades, along with the normal expenses most account for.
It has cost me double my original (hopeful) estimate to keep her in tip top shape, about $1,100 a month after the initial $10,000 or so in new tires and repairs to get her road ready.
My carrier stressed not to be cheap when it comes to repairs and this is great advice that I will pass on to you as well.
In the past month I’ve started to slow down to save on fuel costs and rates are better than ever right now.
Update November 19, 2017
My numbers are getting better every day costs are coming down and I’ve completely recouped my entire startup investment and then some.
Costs have fallen to $1.32 per mile including the entire purchase price of the truck and all expenses. I’ve been holding out for the best rates, even if that means deadheading further. My TTT rate has gone up over 20 CPM on average and I am 40 cents per mile above my lowest month which was July.