Last Updated October 2, 2024

When it comes to a career as a truck driver, there are generally two main options: working as an owner-operator or a company driver.

Naturally, this leads to comparisons between owner-operators and company drivers. And of course, because owner-operators have to deal with the complexities of running their own business, there’s the big question: is being an owner-operator worth it when you could instead be a company driver with less responsibilities on your plate?

For those wondering whether or not it’s worth it to become an owner-operator, we’ve answered the following questions to help you make your decision:

• What needs to be considered becoming an owner-operator?
• What are the responsibilities of an owner-operator?
• What are the pros and cons of running your own trucking business?
• How much do owner-operators make on average?
• What is the current outlook of the trucking industry?

Responsibilities of an Owner-Operator

In its simplest sense, an owner-operator is a self-employed truck driver who works as a business owner. They own or finance their commercial truck, instead of using a company truck, and set their own hours and schedule. This gives owner-operators a lot of freedom, but it also results in them taking on a lot of the responsibilities associated with running their own trucking company. This includes:

• Managing paperwork
• Booking loads
• Maintaining equipment
• Negotiating payment terms
• Handling taxes and insurance
• Managing accounting responsibilities
• Obtaining trucking business financing, if needed
• Project management tasks, such as scheduling, route planning and route optimization
• Driving your truck
• Other administrative tasks

Successful owner-operators must develop a trucking business plan that will help them operate efficiently and maintain a positive cash flow.

Is Being an Owner-Operator Worth It? Pros and Cons

There’s no one size fits all answer as to whether becoming an owner-operator is the right decision for you. Answering for yourself, “Should I become an owner-operator?” largely comes down to weighing the pros and cons of being an owner-operator as opposed to working as a company driver. Let’s take a look.

Things to Consider Before Becoming an Owner-Operator

If you’re wondering “How do I start a trucking business?”, giving the following aspects of running your own trucking business some extra consideration is an absolute must:

Qualifications

Truck drivers must meet several key criteria as part of their driver qualification file. In addition to obtaining a CDL, interstate drivers must be at least 21 years old, submit a 10-year driving history for each state they’ve lived in, and meet the Department of Transportation’s medical standards. You’ll also need to file form 2290 with the IRS, obtain operating authority, join the International Fuel Tax Alliance and obtain an IRP plate for your vehicle.

Financing

Most owner-operators need financing to obtain a truck and trailer for their work, otherwise you may have to enter a lease-purchase agreement or lease program. With a better credit score and stronger overall financial health, you’ll be able to get more favorable terms for owner-operator financing or leases.

Operating Under Your Own Authority vs. Leasing-On

Operating under your own authority allows you to operate as a business owner, giving you full responsibility for tasks such as following regulations and finding loads. A lease-on agreement, on the other hand, involves an owner-operator hauling loads for a specific carrier. In this setup, you have a boss who finds loads and sets your schedule, while also leasing your rig and services to the trucking company.

Finding Loads and Routes

Knowing how to get loads and find routes that meet your needs is a crucial part of being an owner-operator. You’ll need to use load boards and other resources to find loads that match your preferred type and location. You’ll also need to negotiate rates after you find a load that you want to carry. This requires a lot more administrative work than having loads dispatched to you.

Importance of Liability and Insurance

Obtaining good insurance is particularly important in the trucking industry due to the frequency of maintenance required for your truck or equipment and the chance for bodily injury from accidents.

The FMCSA has minimum insurance filing requirements that vary depending on your classification. Good insurance coverage can also help cover expenses for repairing your rig after an incident. Carrying appropriate insurance keeps you legally compliant for running your business and will help cover repairs for your rig in case of an accident.

Generating Revenue

As you work to find quality loads, you’ll need to build strong relationships with freight brokers. Showing that you can be trusted to provide reliable work will strengthen your reputation with brokers and help you build a relationship that leads to steady, high-paying work. You’ll also need to have a strong invoicing system in place to ensure you receive prompt payment.

Some owner-operators benefit from freight factoring, which lets them sell unpaid invoices for a cash advance.

What Will Your Niche Be?

Many of the most successful owner-operators build a strong repeatable business by focusing on a particular niche. This could involve transporting a particular type of goods or serving a specific geographic area or route. Finding the right niche will help you set yourself apart as an owner-operator.

Pros and Cons of Being an Owner-Operator

Pro #1: Independence and Flexibility

For many drivers, the biggest benefit of becoming an owner-operator is the level of freedom and flexibility it provides. When you’re your own boss, you get to choose your routes and schedule. You choose which clients you work with, how you operate, and how often you get to be home. You don’t have to worry about missing family events or being unable to take a vacation. You get to run your business as you see fit.

Pro #2: Very High Earning Potential

How much can an owner-operator make? The average owner-operator salary ($322,278) tends to be much higher than that non-owner operator truck drivers ($96,927).

The average owner-operator also makes $2.94 per mile — well above the rates for company drivers, who have an average compensation of $0.72 per mile (though that you’ll have to allocate some of these extra earnings toward expenses such as maintenance and day-to-day business operations).

But by managing your business expenses wisely, you will retain more of your gross income, which you can take home as a salary or invest to grow your business even more.

Pro #3: Choose Your Own Equipment

Every driver has their own equipment preferences. As an owner-operator, you get to decide which equipment you use! You also get to decide whether you use automatic or manual transmission, which comfort or safety features you want your vehicle to have, and even which make and model you prefer. Of course, you’ll need to carefully consider whether buying a new truck, a used truck, or leasing a truck is best for your business finances.

Con #1: Obtaining Funding

One potential challenge of being an owner-operator is that, just as with any startup, you’ll have to obtain funding to launch your business. You’ll need a lot of money to purchase a truck, general equipment, insurance and other essential startup expenses. For many, this requires using third-party financing. Depending on your business plan and current financial standing, obtaining favorable owner-operator financing can be a challenge in and of itself.

Con #2: Added Business Responsibilities

As an owner-operator, you’re responsible for managing all aspects of your business — and this can be a pretty lengthy list. Key responsibilities include maintaining your equipment, tracking profit margins, handling paperwork and scheduling, calculating your cost per mile so you can set competitive rates, and filing taxes. Most importantly, you’re responsible for finding your own loads. This involves a lot more work than being a company driver, and for some, it can become overwhelming.

Con #3: Extra Costs

While there is the opportunity for significantly higher income as an owner-operator, you will also be responsible for all business expenses. These include maintenance, truck payments, fuel, insurance, taxes, business registration and licensing fees, and so on. If you can’t afford to properly manage payments with your brokers or clients, you could have a hard time maintaining a positive cash flow.

Owner-Operator Financing

One of the biggest challenges for owner-operators is obtaining adequate financing. While starting a trucking business can clearly be a lucrative venture, it costs a lot of money to get a business up and running.

It’s critical that you have a funding plan before you get started. This should be one of the focal points of your business plan.

Know that if it’s your first time opening a business, there’s a good chance you won’t be able to qualify for a traditional bank loan due to a lack of creditworthiness. Banks don’t want to risk handing over large sums of money to new owner-operators who haven’t yet proven they can manage that money effectively.

Fortunately, there are alternatives to finance your venture. Some of the most common trucking business loans include:

• Business Line of Credit
• SBA Loans
• Equipment Financing
• Short-Term Business Loans
• Microloans
• Freight Factoring

The latter of these—freight factoring— is technically not a loan. It involves selling outstanding AR to a freight factoring company in exchange for an immediate cash advance, and once your debtor pays the invoice (to the factoring company), the transaction is finalized. This can actually make it a very useful form of funding as it doesn’t incur debt and doesn’t require collateral (aside from the factored invoices).

Many of these financing solutions, including freight factoring, are readily available to trucking business owners with bad credit.

In Summary: Should I Become an Owner-Operator?

So, is being an owner-operator worth it? Let’s break down the pros and cons once more.

Is Being an Owner-Operator Worth It? FAQs

How hard is it to start a trucking business?

Starting a trucking business isn’t necessarily hard, but the number of steps to launch your business will bey are fairly time-consuming and require adequate financing.

To start a trucking business, you must first have a commercial driver’s license (CDL). You’ll then need to obtain a truck and trailer, file Form 2290 with the IRS, obtain trucking insurance, and apply for your own operating authority. After registering with the federal Department of Transportation, you’ll also need to join the International Fuel Tax Alliance (for gas taxes) and get an IRP plate. You may also need to obtain additional permits from certain states.

Carefully following these steps is necessary to run your business in a legally compliant manner.

How can I become a successful owner-operator?

A successful owner-operator relies on patience and hard work to obtain quality loads. They are meticulous about the business side of things, ensuring that finances and paperwork are properly managed so they can stay compliant and maintain healthy cash flow. As part of this, they look for appropriate ways to reduce operating expenses. They do all of this on top of being a safe, dependable driver.

How much do owner-operators make after expenses?

Owner-operators are responsible for all of their business expenses, which can add up surprisingly quickly. Many have operating expenses well over $100,000 per year. So, while the average owner-operator salary is over $300,000, depending on how you manage your business finances, actual net income may be closer to $100,000 per year.

What is the average salary for an owner-operator under their own authority?

Owner-operators make great money. The average owner-operator operating under their own authority has an average salary of $322,935. Keep in mind, however, that this doesn’t account for business expenses, which can significantly lower your actual take-home pay.

Jim Pendergast

Jim is the General Manager of altLINE by The Southern Bank. altLINE partners with lenders nationwide to provide invoice factoring and accounts receivable financing to their small and medium-sized business customers. altLINE is a direct bank lender and a division of The Southern Bank Company, a community bank originally founded in 1936.