As everything else in life, trucking as an owner operator has its own pros and cons, and there a few things that one should consider, with the most obvious being the trucking expenses that comes with it!
Now, when it comes to trucking expenses it’s a wide field which has a lot for discussion. It all depends on which point of view you are going to take. If you are speaking with a driver you’ve met in a bar, he will tell you one thing, while if you speak with a small trucking business owner he will tell you the opposite.
One thing is for sure though, and that is that the owner operators are dealing with completely different trucking expenses from the rest.
Why do I say that?
Well, it’s not the same when you are a company driver and when you are an owner operator. Nothing it’s same, especially not the overall trucking expenses!
With that said, in addition I will try to present you my point of view on the real trucking expenses of an owner operator.
Trucking Expenses of an Owner Operator
The trucking expenses of an owner operator can add up really quick. When you decide to get involved with a trucking business as an owner operator, you are not only making a business decision but you are also making a big financial investment as well.
So let’s say you have it all worked out really well! You have an organized business plan and a reasonable budget to work with! You have the desire, and you can turn owning and operating your own truck into a long-term, rewarding career.
Now, that is all good and well, but there are quite few miscellaneous or not that miscellaneous things that people often overlook and don’t pay attention to, until something start feeling wrong.
Yup, I guess you know already what I am speaking about! It is the trucking expenses that come together with the joy of owning your own business and being your own boss!
It’s not the out of pocket trucking expenses that should get you all worried! You know, I am speaking about the entertainment, meals, accommodations, and so on. Even though these costs can add up to more than $10,000 a year!
The crazy part is they’re only some of the things on the pile of all those other additional costs. Believe me when I say, they will add up with every mile when you hit the road, and can soon blow your mind and wallet!
So besides the out of pocket trucking expenses, also called ‘soft costs’, you will have to deal with many other bigger expenses that comes along.
The two most obvious trucking expenses that eat up your hard earned dollars are:
- Fuel Costs; (So, if a driver who drives 100,000 miles a year needs about 16,667 gallons of fuel, at the current price per gallon, that driver will spend well over $67,000 in gas. After all, Diesel fuel is not cheap! So maybe the idea of investing into an aerodynamic design of truck is not bad after all!)
- Maintenance and Repairs cost; (I don’t want to sound all skeptical but you can never know how reliable your truck will be. Because of that you should always have some money set aside for repair costs and worst case scenarios).
On the top of the two biggest trucking expenses, if you add up the other expenses like the actual truck price (regardless if is rental/lease or you own it,) then the plates and the permits, taxes, as well as the insurance, you will get the big picture!
But, investing is good. We are Capitalist’s after all! You have to give if you want to receive! So let’s not let this scare you!
If you have the right amount of savings to invest in the business, and you posses the sense of running business, then you could be earning over $100,000! Hope this number encourages you!
Why Reducing Costs Is So Important?
It is always good when you can save few dollars here or there, but when you are an owner operator reducing trucking expenses is a MUST!
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After all, being an independent owner operator is a small profit margin business, and you should work towards increasing your trucking salary!
In other words, you are responsible for running your own business and the direction it takes! So, if you want to own that nice house that you saw listed on the real estate market, than you better start saving for it!
But before the house, you will need to save few dollars for the business first, if you want your trucking business to run smooth.
Remember as the only person responsible for your trucking business’ future, you are the one that needs to take care and pay for everything that is involved in it. Tires, fuel, insurance, truck repair and maintenance; this is all your responsibility!
So first and most important, you need to understand the business cost and the trucking expenses. Then you need to try cutting corners and tying loose ends where you can! Understanding owner operator trucking expenses will help you run your business while reducing and decreasing those costs will help you run it successfully!
Cost-reduction is important! Some might even say it’s crucial when you run a small fleet or you are an independent owner operator. The experienced truck drivers and owner operators know that already, and are constantly streamlining costs. But on the other side, the rookies can always use some heads up and few tips and bits from the experienced drivers when they enter this profession field.
By rundown of what the most common expenses are, you will know or at least have the idea and estimate the most common trucking expenses, and then be able to work on their reduction.
Trucking Expenses and the Real Profit
Various business costs can greatly impact your bottom line and what is left over for you to take home as a profit!
The average independent owner operator works at only a 5% profit margin. That means that for every $20 in gross revenue you make, your profit is only 1$, while the other 95% of that revenue is going towards your trucking expenses.
These include things like truck payments, maintenance, fuel, insurance, food, permits, and etc. So, on the end of the day when you deduct all those trucking expenses, it’s not that much that you take home for your hard work.
