Is Being an Owner Operator in 2021 Worth It? [Updated for 2024]

Last year proved to be a significant year for the trucking industry as the entire globe faced the effects of the coronavirus pandemic. Trucking was declared an essential service for the delivery of food and water, but more importantly, for the distribution of vital medical supplies. While some trucking companies performed well during this period, others struggled just to survive. As vaccines begin to roll out and the economy regains strength in the pandemic’s aftermath, 2021 is predicted to be a transitional year for the industry. The year is starting off with positive trends – January produced growing demand for capacity and good freight rates. This creates the ideal environment for trucking businesses to start, grow and profit.

Is 2023 a good year to go into business on your own?

Yes, but only if you are prepared and disciplined to manage being your own boss. The predictions for  ahead sets the stage for lots of freight at good rates, but it takes more than knowing the industry to succeed in business. As the owner of a trucking company, you have to be good at management as well. A lack of business skills is one of the leading contributors to failure as an independent owner operator.

First and foremost, start with a business plan. If you can’t put on paper what your strategic goals are and how you are going to achieve them, you will probably never get there! The list of needs, details to consider and systems to implement is long:

Before you jump headfirst into the deep waters of being an entrepreneur, make sure you are well prepared. Speak to other owners, research everything and learn to be as good at business as you are at trucking. To help with research, to stay informed of industry developments and to access helpful management tools, eCapital provides The Truckers’ Hub. This online resource center is designed specifically for truck company owners. Features of The Truckers’ Hub include a “Let Us Help” directory, your portal to invaluable information articles and online tools:

Know your cost per mile.

By definition, being profitable is to cover ALL the costs of providing your service and having a financial gain at the end of the day, end of the month, and end of the year. Sounds simple right? But this is where too many startup companies set themselves up for failure. Knowing all your costs means having a disciplined approach to identifying, tracking and recording every single expense related to delivering your service. Even the cost of the coffee you buy when on the road needs to be accounted for.

Manufacturers produce goods and products, retailers sell merchandise, trucking produces loaded miles. In trucking, total operating expenses is expressed as “cost per mile,” the cost your trucking company expends on every mile driven. Know how to calculate your cost per mile and perform the calculation often to keep track of expenses.

Ensure you have a competitive rate.

Once you have determined your cost per mile, you now need to produce a freight rate that is:

• Higher than your cost per mile
• Low enough to be competitive

Do your research; monitor the competition’s rates, speak to brokers, customers and other trucking companies to understand who is charging what and in which regions for the type of freight that you haul. 

Drive as many loaded miles as possible.

This is where your experience as a road warrior comes into play. Know how to get loads and keep your truck(s) hauling profitable freight as much as possible. If you increase revenues using a freight rate higher than your cost per mile you will be profitable.

This is your year to start, grow and make good profits

2021 is gearing up to be a great year in trucking. If this is your year to start a trucking company as an independent owner operator, then congratulations – it’s a good market to get your first year under your belt. Remember to start with a business plan and track your progression to ensure you stay on track. Monitor your company’s KPIs regularly to evaluate progression toward your strategic goals.

If you need financing to get your business up and running, consider freight factoring. Factoring freight bills is the easiest, fastest and most reliable means for new and established trucking companies to immediately access working capital.

For more information about how to run a trucking company, to better understand freight factoring or to learn how to participate in cost-saving programs such as purchasing fuel at a discount, visit eCapital.com.

Providing payment terms to customers is common practice in the trucking industry. Failure to do so will undoubtedly lead to a dramatic loss of business. Shippers expect at least net 30 and are inclined to want more. During trucking’s recent boom years of 2017 and 2018 when capacity was low and freight rates were high, big shippers began to push back against the rising cost of transportation with demands for even longer credit terms.

Your trucking company is extending credit every time you take on a load and issue an invoice with payment terms. Terms, such as net 30, are a form of short-term credit by which trucking companies extend time, interest free, for the payment of freight bills. This is a great tactic for staying competitive, but it must be supported by strong healthy cash flow in order to be a successful long-term strategy. Avoiding bad debt and maintaining positive cash flow is of the utmost importance. This is where a freight factoring company can be of tremendous help with credit risk assessment and cash flow solutions.

Managing your trucking company’s credit risk

Unfortunately, the trucking industry is well known for having customers that stretch out payments as a common business practice. Taking on new clients and freight from load boards without proper due diligence can catch up with you and leave your trucking company in a difficult position. The following example illustrates this point;