As an owner-operator in the trucking industry, it is important to understand the common pitfalls that can lead to failure. By recognizing and addressing these challenges, you can increase your chances of success and build a profitable and sustainable business. Here are 10 of the most common owner-operator mistakes:
1. Insufficient Capital
Starting and running a business can be expensive, and many owner-operators fail because they don't have enough capital to cover their expenses. It is important to have a solid financial plan in place that includes enough funds to cover your startup costs and ongoing expenses
2. Lack of trust in their dispatcher
Unfortunately, there is a common topic in the trucking industry that dispatchers and truck drivers are rivals. Moreover, the dispatcher's job is to make the life of a truck driver harder. This can't be further from the truth. The dispatcher's job is to help the truck driver on the road to be successful. That happens through trust and constant communication.
3. Waiting on a better Load
Owner-operators often decline loads today, hoping there is a load tomorrow that will pay $200 extra. While the idea of getting $200 extra for the same lane makes sense, waiting one day does not justify it. The driver has stayed on the road, and payments for the truck, trailer, insurance, etc. are not on pause. It is much better to get moving even. Getting another $200 in the next load from a better location is better.
4. Bad Fuel management
Many drivers think that since they drive their own truck, they can unlock it and run 75-80mph when the speed limit permits. This is equivalent to punching a hole in the fuel tank and keeping driving. Most modern trucks are set to have the biggest torque and efficiency at speeds up to 68mph and some trucks are even lower. The extra 10 mph road speed can lower fuel consumption by sometime over 1 mile per gallon. That means the truck will burn more fuel for the same distance. Is it really worth it, to pay over $1000 so you can feel "faster and superior" on the road while being less safe?
5. Lack of planning
Many owner-operators fail to plan ahead, and this can lead to a host of problems down the road. It is essential to have a clear plan in place that outlines your goals, strategies, and budgets. Here is a list of KPIs that Owner Operators can implement that will improve the planning. Vacation and home time should be preplanned ahead. The lack of income during the downtime should be factored into the projections.
6. Poor cash flow management
Inadequate cash flow management is one of the leading causes of business failure. Loads are up and down, so make sure to save money on each load. Taking cash advances is helpful in the short term, but make sure it does not become a habit. Buying shiny and chrome toys from the truckstop with the last money in the bank account is a bad decision. Chrome wheels make the rig look good, but this should be done after everything under the hood is properly maintained and the truck has good tires and brakes.
7. Unreliable equipment
As an owner-operator, your trucks are your most important assets. Preventable maintenance may feel like you are paying money without the need to(if the truck is not broken why fix it?), but it is actually the best thing you can do for your equipment. Simple greasing of the truck and trailer can extend its life and prevent road breakdowns.
8. Not knowing their breakeven number
Every business has a breakeven number. That is the minimum number of units that are sold at certain price, so the business can pay all its expenses. In the world of trucking that means that after the owner-operator reaches a certain number of miles at a certain rate per mile, then it breaks even. Every extra mile that is driven starts to bring the cash. Owner Operators mistake is not to know the minimum miles at the given rate. You can check your break-even numbers in our calculator.
9. Not seeking outside help
As a small business owner, it can be tempting to try to do everything yourself. However, this can lead to burnout and other challenges. Make sure to seek outside help when needed, whether it's from safety, accounting, legal, or operations. Working with a team of professionals can help you avoid common pitfalls and increase your chances of success.
10. Not Keeping an open mind
Often Owner-Operators will take advice from their colleagues who do mostly the same work. While that is helpful in some cases, it is important to keep an open mind for other possibilities. Maybe a dry van is not the best, and you should do reefer, or maybe reefer should be replaced with a flatbed, or car hauler, or drayage. Sometimes the best ideas come from outside our industry.