Owner-Operators: Importance of a Mindset Shift
Truck drivers need to think like small business owners.
Thinking Like a Small Business Owner
To succeed as an owner-operator, you need to think like a small business owner, not just a truck driver. You have to consider the big picture and make decisions based on what is best for your business in the long term, rather than just for your immediate needs.
This includes thinking about factors such as profitability, cash flow, and growth opportunities.
The Benefits of a Small Business Mindset
The benefits of thinking like a small business owner are numerous. You’ll be more proactive about finding new customers and building relationships with existing ones, which can help you generate more revenue. You’ll also be more strategic about your expenses, looking for ways to cut costs and increase efficiency. By thinking like a small business owner, you’ll be better equipped to handle the ups and downs of the trucking industry, from changes in fuel prices to shifts in demand for different types of freight.
The Importance of Keeping Score and Understanding Costs
To succeed as an owner-operator, you need to understand your costs and keep score. According to Winkler, “The last figure I look at is usually the net check of how much is actually going home in the bank. It’s about 60% of the revenue you generate with that asset is going to go back into your business for expenses. It should leave about 40% for you to take home.”
Understanding Your Owner-Operator Costs
This means that you need to keep a close eye on your expenses, including fuel costs and maintenance costs, and make sure that you’re generating enough revenue to cover those expenses and still take home a profit.
Understanding your costs can help you make informed decisions about pricing your services and negotiating with clients. It can also help you identify areas where you can cut costs and improve your profitability.
Fuel Surcharge Programs
Additionally, understanding fuel surcharge programs is crucial to stabilizing your overall cost of fuel, regardless of the pump price. A good fuel surcharge program can help you avoid the volatility of the fuel market and ensure that you’re being fairly compensated for your fuel expenses.
The Importance of Business Planning and Financial Statements
As an owner-operator, you need to have a solid business plan and financial statements to guide your business decisions. This includes keeping track of your revenue and expenses and understanding your profit and loss statement.
Financial Statements
Winkler recommends finding a trusted bookkeeping service that can produce monthly profit and loss statements for you. These statements can help you track your progress over time and identify trends and areas where you can improve your profitability.
By keeping accurate financial statements, you’ll be better equipped to make informed decisions about your business and avoid costly mistakes.
Business Planning
Having a solid business plan is also critical to the success of your trucking business. A business plan should outline your goals, strategies, and tactics for achieving success, as well as your financial projections and marketing plans.
By having a clear plan in place, you’ll be better prepared to navigate the challenges of running a small business and capitalize on opportunities as they arise.
There’s a lot that goes into succeeding as an owner-operator. Now, let’s dive in and learn the importance of understanding costs and keeping score!
The Importance of Keeping Score and Understanding Costs
As an owner-operator, understanding your costs and keeping score is critical to your success. According to Andrew Winkler, “The last figure I look at is usually the net check of how much is going home in the bank. It’s about 60% of the revenue you generate with that asset is going to go back into your business for expenses. It should leave about 40% for you to take home.”
To ensure you’re generating enough revenue to cover your expenses and still take home a profit, it’s crucial to keep a close eye on your expenses. Fuel costs, in particular, are a significant expense for owner-operators.
Winkler suggests being willing to change habits to improve fuel efficiency, such as slowing down your overall speed and running at 65 instead of 70 miles per hour. These small adjustments can add up to significant savings over time.
Understanding fuel surcharge programs are also critical to stabilizing your overall cost of fuel, regardless of the pump price. A fuel surcharge program is designed to keep your cost of fuel consistent, regardless of fluctuations in the price of fuel. It’s essential to ensure that any carrier you work with has a reliable fuel surcharge program in place.
Owner-operators need to better understand the importance of business planning and financial statements, too.
The Importance of Business Planning and Financial Statements
Having a solid business plan and financial statements is essential to the success of any small business, including an owner-operator trucking business. It’s essential to keep track of your revenue and expenses and understand your profit and loss statement.
This information can guide your business decisions and help you identify areas where you need to make changes.
Winkler recommends finding a trusted bookkeeping service that can produce monthly profit and loss statements for you. Having a third party handle your bookkeeping ensures that you have the accurate financial information and frees up your time to focus on other aspects of your business.
Education and resources are also critical for success as an owner-operator.
Organizations like the Owner-Operator Independent Drivers Association and ATBS offer education and support specifically for owner-operators. Taking advantage of these resources can help you navigate the challenges of running a small business and increase your chances of success.
The Transition From Company Drivers to Owner-Operators
Making the transition from a company driver to an owner-operator can be challenging, but it’s essential to approach your trucking business with a small business owner mindset. Understanding the importance of keeping score, controlling costs, and having a solid business plan and financial statements are critical to your success.
By taking advantage of education and resources and partnering with a trusted bookkeeping service, you can increase your chances of success as an owner-operator.
For more information, check out the video podcast on the Chief Carriers YouTube page or the audio podcast on your favorite listening platforms, such as Apple or Spotify.
