Successful Owner Operator
When beginning a career in the trucking industry, drivers must decide whether they want to work as a company driver or independent owner operator. There are advantages and disadvantages to each arrangement.
Company drivers have the benefit of security and company backing. Independent owner operators must handle all aspects of the business themselves. This includes finding loads, coordinating delivery, driving, and managing the business. In addition, a successful owner operator will maintain his or her business through a strong cash flow.
A strong cash flow means setting aside an emergency cash fund. This fund is used for a variety of things including maintaining the business when work is slow, breakdowns, and other unforeseen circumstances that threaten your business.
Most successful owner operators recommend that individual truck drivers maintain 3 to 6 months of cash in a separate fund for emergencies. The emergency cash fund should include all of your business expenses and should maintain your operations even if you did not have one load during this time.
A recent survey found that:
1. The average emergency fund savings was $11,500. Most felt $14,000 was a more realistic number.
2. The owner operator emergency fund should equal about 33% of your operating income (revenue - expenses = operating income)
Many drivers agree - maintaining and growing a successful business is dependent on good planning and maintaining a strong cash flow for unforeseen circumstances.