As a new owner-operator, it can be overwhelming to navigate the complexities of the trucking industry. However, with experience and knowledge, it is possible to avoid common mistakes that can lead to wasted time, wasted money, and even safety hazards. In this article, we will discuss five costly owner-operator mistakes and provide tips for avoiding them.
Mistake #1: Not Properly Planning Routes and Managing Deadhead Miles
One of the most important aspects of trucking is proper route planning. This includes not only determining the most efficient routes but also taking into account factors such as traffic, weather, and tolls. Not properly planning their routes results in wasted time and increased fuel costs.
- Remember to check for road restrictions and weight limits using routing software.
- Routing software will consider factors like distance, time, and fuel costs to provide the optimal route.
- Keep in mind any special requirements for the type of load you’re carrying that may affect your route.
Additionally, often owner-operators are not aware of the concept of deadhead miles, which refers to miles driven without a load (non-revenue generating miles). These miles can add up quickly and significantly increase operating costs. Look for ways to minimize deadhead miles by seeking out backhauls or round trips. Another popular strategy is the “triangle” route.
- Check load boards regularly to see if there are any nearby loads to pick up on your return trip.
- Network with dispatchers and brokers to see if they have something available for you to pick up on the return.
Mistake #2: Not Properly Maintaining Vehicles
Proper vehicle maintenance is crucial for the safety and longevity of your truck. However, new owner-operators often make the mistake of neglecting regular maintenance tasks such as oil changes, tire rotations, and brake inspections. This not only puts the truck at risk of breakdown but also increases the likelihood of accidents on the road.
To avoid this mistake, new owner-operators should develop a regular maintenance schedule and stick to it. Additionally, you should keep detailed records of all maintenance performed on the truck, as this will be required by the Federal Motor Carrier Safety Administration (FMCSA). Typically, you should perform the following maintenance tasks at regular intervals:
- Oil and filter changes: Every 5,000-7,500 miles or as specified by the manufacturer.
- Tire rotations and replacements: Every 10,000-12,000 miles or as needed.
- Brake inspections and replacements: Every 30,000-60,000 miles or as needed.
- Engine and transmission inspections: Every 100,000 miles or as specified by the manufacturer.
- Other regular maintenance tasks: Such as checking and replacing hoses, belts, and filters, inspecting the battery and charging system, and checking the fuel and air systems.
Mistake #3: Not Using a Factoring Service
Freight factoring can be highly beneficial for new trucking companies. Of course, the main benefit is quick access to funds. Factoring allows a trucker to receive payment for invoices immediately rather than waiting for 30, 60, or even 90 days for payment from customers. This helps owner-operators manage cash flow and cover operating expenses more effectively.
Not only that, factoring can reduce the administrative burden of invoicing, collections, and credit checks, freeing up time and resources to focus on core business activities.
Traditional factoring companies are known for not making it easy for new and smaller trucking companies to use their services. But now companies like BasicBlock.io are changing the way things are done.
BasicBlock removes the limitations for new owner-operators by not requiring minimum volumes of invoices, eliminating contracts that lock new companies into lengthy agreements, and offering a low factoring rate of just 2% with no additional charges.
Mistake #4: Not Planning for Volatility and Uncertainty in the Market
The trucking industry is subject to fluctuations and changes in demand, prices, and regulations. New truckers often make the mistake of not planning for these fluctuations and uncertainties. This can lead to missed opportunities or financial losses.
- Sign up for newsletters like FreightCaviar, which covers industry news and trends, changes in fuel prices, regulations, and customer demand and sends it directly to your inbox.
- Diversify your customer base. Avoid relying on a single customer for the majority of your business. Work with multiple shippers and brokers to reduce exposure to market volatility.
- Build an emergency fund in a separate account to access in case of unexpected repairs or market downturns.
- The trucking industry is cyclical, and you need to plan for slow periods when demand drops.
Mistake #5: Not Properly Monitoring Profits and Losses
Profit and loss monitoring is crucial for the success of any business, and the trucking industry is no exception. New owner-operators make the mistake of not keeping accurate records of their expenses and revenues. Without this information, it is impossible to determine if the business is profitable or to identify areas where costs can be reduced.
- Keep detailed records of all income and expenses, including fuel costs, insurance, maintenance, and other operating expenses.
- Create a budget and stick to it as much as possible. This will help you understand fixed and variable expenses.
- Minimize costs by shopping around for best costs on fuel, insurance, and maintenance.
- Regularly analyze your financial statements to understand the strengths and weaknesses of your business and find areas of improvement.
- Consider accounting software or working with a financial advisor to manage finances.
It is important to avoid common mistakes such as not properly planning routes, neglecting vehicle maintenance, not using a factoring service, not planning for market volatility, and not monitoring profits and losses. With the right knowledge and experience, you can mitigate these new owner-operator mistakes and increase the chances of success for your trucking business. Stay informed about the industry, plan for fluctuations, and prioritize safety, efficiency, and profitability to build a successful trucking business.
(Image by prostooleh on Freepik)