It can be difficult to be running under the owner operator business model. Revenues can be uncertain and they often must be estimated. That’s why one of the most common mistakes found in this business model is based on budgeting. Instead of creating a budget that is based on a year-by-year average, many owner operators create a budget that is based on their best year or best months.
It’s remarkably easy to sabotage one’s future when operating under the owner operator business model. Just about everyone knows of someone who changed carriers for their truck because the carrier promised them more home time. Now they sit at home every day with their truck, not earning any cash. That makes it rather difficult to meet one’s financial obligations.
Looking at the big picture can be the difference between success and failure for this business model. Here are the ways owner operators can find success and some of the struggles they’ll face along the way.
The Triumphs of the Owner Operator Business Model
1. Doing More Work Will Pay More.
Owner operators who expect to make big money because they’re running a hook and drop operation only are only fooling themselves. Carriers who pay the most per mile are those that expect more from their owner operators. Those who take on more responsibility will earn more.
2. Long-Term Relationships Are Critical For Success.
Many owner operators have a perspective that the grass is greener at the next carrier. The only problem is that most carriers have the same internal politics, the same costs, and the same rates. This causes owner operators to keep changing carriers 2-3x per year and never getting anywhere. Profitability comes from consistency and that can only come from a foundation from a long-term relationship.
3. Growth Industries Can Always Be Found.
The world of commerce is a series of peaks and valleys. Owner operators do have an advantage in the fact that they can switch industries based on expected economic growth while still staying with a carrier. By keeping a keen eye on trends, this business model allows for a constant chance at profitability.
4. Earn What You’re Worth.
Many owner operators drive their trucks like their life depends on it because it actually does. The same can’t be said of other small business owners. When there is no opportunity for failure, creativity and innovation rise to the occasion. The owner operator business model always allows people to earn what they’re worth.
The Struggles of the Owner Operator Business Model
1. It Is Difficult To Predict Profitability.
Many owner operators will take a look at trip sheets from other operators when transitioning to a new carrier. The only problem with this is that there is no baseline for comparison. If you’ve never met someone, can you know how strong their work ethic happens to be? Is it better or worse than your own? This makes it impossible to know if a transfer will truly be profitable or make someone happy.
2. An Assumption That There Will Always Be Work.
This is a struggle for all using the owner operator business model. In the world of freelance, there is no daily guarantee of revenues. Many owner operators see building revenues, but have no plan of action in case the work dries up.
3. Costs Can Vary Even With The Same Truck.
What if an owner operator has to climb a mountain with their truck against a steep headwind? The fuel costs of such a trip are going to be much higher than a downhill trip with a tailwind. Although these costs tend to average out, the challenge with this business model is that there are going to be cost factors that are always going to be outside of one’s control.
4. Warranty Issues Can Be A Killer.
Just because something is under warranty doesn’t mean there aren’t going to be maintenance costs. Many owner operators learn this the hard way.
What Are the Lessons To Be Learned?
The owner operator business model is much like every other freelance or self-employed business model. Budgets have to based on long-term averages instead of current successes. There should always be a place in the budget for unexpected costs. Not every task that needs to be completed is going to be glamorous or bring fame. If the discontent is allowed to prevail, then an inconsistent business model will be implemented and that’s a fast way to lose money.
The owner operator business model doesn’t say that financial success is a given right. It does say that financial success can come about as a reward because there has been a plan that was properly and consistently executed.