Becoming an owner-operator in the trucking industry is a significant step towards achieving independence, control, and the potential for higher earnings.
As an owner-operator, you have the opportunity to run your own trucking business, set your rates, choose your loads, and shape your professional destiny.
However, transitioning from a company driver to an owner-operator or starting from scratch requires careful planning, research, and preparation.
Meeting Requirements for Becoming an Owner-Operator
All commercial drivers are regulated by the Federal Motor Carrier Safety Administration.
This is a government entity that oversees all commercial trucking regulations and requirements.
The following requirements are those set forth by the FMCSA or local governing agencies in your state.
Compliance with these requirements is the first step to becoming an owner-operator. MCHQ (Motor Carrier HQ) is a partner of AAOO that can help you with any requirements to get the ball rolling on your career as an owner operator.
- USDOT Numbers: If you will be transporting goods or passengers in exchange for payment, you must have a USDOT number. This indicates that you’re hauling someone else’s materials for hire. To apply for a USDOT number, you’ll be required to register, pay the applicable fees, and obtain a valid USDOT number.
- MC Number: An MC number is essential for hauling passengers, crossing state lines, or carrying any amount of hazardous material (HAZMAT).
Note: To register as an owner-operator, you must have both a USDOT and MC number. This allows you to be a for-hire carrier, transport passengers or freight across state lines, and haul hazardous or federally-regulated commodities.
- International Fuel Agreement: The International Fuel Agreement (IFTA) is a tax initiative that aims to reduce the number of quarterly fuel reports required for those operating within IFTA jurisdictions. If you’re driving a vehicle with two or more axles that weigh over 26,000 pounds or has more than two axles, you must display your fuel credentials under the IFTA program. This includes two decals that must be visible on the cab’s exterior and a clear photocopy of the IFTA license that you must carry with you.
- State Driver Licensing Agency (SDLA) License: If you utilize your commercial motorized vehicle (CMV) to transport goods across state borders, transport within a state but will cross into another state’s boundary during the journey, or if you are transporting goods within the state, but the load initiates or finishes its voyage outside of the state – you’ll need an SDLA License. This is a state filing, so your state or those you travel to will determine which specifications are required.
6 Steps for Becoming an Owner-Operator
Once you determine whether you qualify for this role, you need to begin the process of starting as an owner-operator. This means that you will have to follow some steps to help you get on the right track.
Step 1: Decide Whether Being the Boss Suits You
Being your own boss is a dream come true for many people, but driving as an owner-operator is a big responsibility.
As a driver, you are bound to spend a lot of time away from home and you’re responsible for your own equipment and safety.
Evaluate your trucking experience, driving record, and overall knowledge of the industry. Consider if you have the necessary skills to manage a business effectively.
Step 2: Obtain Your License
If you don’t already have a commercial driver’s license (CDL), the first step is to get your license.
Unlike obtaining a standard driver’s license, obtaining a CDL requires more effort.
You will need to pass a Department of Transportation (DOT) physical examination, determine what type of freight you will be hauling, consider any specialized endorsements required for your specific freight, pass knowledge tests, and finally, pass road skill tests.
This is a critical step in your journey toward becoming an owner-operator.
Step 3: Consider Making a Financial Investment
Becoming an owner-operator requires a significant financial investment that goes beyond the costs of obtaining licenses and endorsements.
In addition to weight taxes and registration fees, you must account for ongoing expenses such as equipment maintenance, loan or lease payments, insurance costs, and savings to cover living expenses.
To do this, use our trucking calculator which will help determine your cost, revenue, and profit per mile.
These costs are critical to consider before embarking on the journey of becoming an owner-operator, and proper financial planning and management will be essential for success in this career.
Step 4: Purchase Equipment
The step of purchasing a truck is often the most exciting and daunting aspect of becoming an owner-operator.
This moment involves a significant financial commitment, whether it involves investing in personal savings or taking out a loan. Choose a reliable and suitable truck that meets your business needs and budget.
Consider factors such as fuel efficiency, maintenance costs, payload capacity, and equipment specifications.
Once you have made these decisions, you can make a meaningful purchase that aligns with your business goals and ensures your success as an owner-operator.
Step 5: Decide On Your Owner-Operator Role
Once you have obtained a CMV, the next step is to decide whether you want to lease your vehicle to a company or operate under your own authority.
Many owner-operators choose to lease their vehicle to a motor carrier because it can provide work opportunities and cover some of the expenses associated with hauling freight. This arrangement can be particularly helpful if you are new to the trucking industry and need support to navigate operations.
However, if you choose to operate under your own authority, you have the potential to earn more money. It’s important to keep in mind that operating independently will require you to commit resources to find loads to haul, which can offset some of the gains.
Step 6: Purchase Insurance Coverage
Acquire appropriate insurance coverage, including liability insurance, cargo insurance, physical damage coverage, and bobtail insurance. Consult with an insurance specialist familiar with the trucking industry to ensure you have adequate coverage.
This will help ensure that you’re properly covered and protected in case of accidents or incidents while on the road.
FAQs About Owner-Operators
What are the characteristics of a good owner-operator?
Becoming a successful owner-operator in the trucking industry goes beyond simply owning a truck and running a business.
It requires a unique set of qualities and characteristics that contribute to long-term success and profitability. You should have the capability to work and make decisions independently.
Owner-operators should have a strong work ethic, excellent time management, a solid understanding of business practices, and strong communication skills.
Are there disadvantages to being an owner-operator?
Compared to company drivers, owner-operators typically have to work longer hours as they have more responsibilities to manage.
In addition to hauling freight, they also have to maintain their trucks, establish contracts, and handle administrative tasks, which leaves them with very little downtime.
How much do US owner-operators earn?
The average owner-operator salary is anywhere between $100,000 to $150,000 or more per year depending on where and what you haul. However, this does not take into account business expenses, which vary and affect your take-home pay.
Become a Member of AAOO
Being part of the AAOO (American Association of Owner Operators) connects you with a network of like-minded owner-operators, creating opportunities for collaboration, knowledge-sharing, and mutual support.
We are a network of professionals who understand the unique challenges and triumphs of the independent trucking industry.
The AAOO also provides a range of exclusive benefits and discounts to its members. These may include discounted insurance rates, fuel programs, equipment discounts, access to legal services, and more.
Additionally, AAOO often organizes educational programs, workshops, and training designed to enhance your skills, expand your knowledge, and stay up to date with the latest industry advancements.
By participating in these initiatives, you can develop professionally, improve your operational expertise, and increase your competitiveness as an owner-operator.
Become the Best Owner-Operator with AAOO
Becoming an owner-operator in the trucking industry requires careful planning, thorough research, and diligent execution.
While the path to becoming an owner-operator may present challenges, with a little determination, perseverance, and a commitment to learning, you can achieve your entrepreneurial goals and enjoy the rewards of running your own trucking business.
Embrace the freedom, control, and potential for higher earnings that come with being an owner-operator and embark on an exciting journey toward professional and financial fulfillment.