A good friend of mine once told me, “When you start your own business, for the first few years it’s not about what the business can do for you, but what you can do for the business”.
Running your own transport business is not for the faint-hearted. There are many things that must be taken into account before you take the leap into buying equipment and becoming self-employed, some of which may come as a surprise to the uninitiated. While the returns can be well worth the effort, many first time business owners underestimate the amount of work that goes into running a successful transport operation.
Most of those who decide to go out on their own in the world of transport are experienced employee drivers who see the opportunity to buy their own truck and build their own empire. While the rates on offer for an owner driver might seem generous when compared to an employee driver’s wage, there are also plenty of extra costs involved, and a lot of time needed behind the scenes to make it all work. As a company driver, you enjoy many benefits that don’t necessarily apply to an owner driver.
Before you go out on your own, it’s important to understand the costs of running your business. Chances are you know the work you will be doing and the rates of pay before you go looking for equipment. With this in mind, you should also research the costs associated with running the business.
These include the obvious ones, like vehicle repayments or rental costs, fuel, registration, vehicle servicing, tyres and insurance, but also a few others that are not so obvious or simply overlooked. These are often things like accounting software, accountant services, truck washing equipment and perhaps even parking. Depending on which state you live in, things like worker’s compensation insurance may need to be factored in, and it is worth doing your research on this to make sure it’s right; the last thing you want is to be caught short if the worst should happen.
Once you’ve considered all of these costs and compared them with the potential income, you need to decide if the remaining amount is enough to support your own personal outgoings and still leave a safety net for the unexpected. Remember, it doesn’t matter whether you are working as an employee or an owner driver, there will come a time when you want to retire, so be sure to factor in paying your own superannuation.
You should also keep in mind that the business may not see any income for two months, as most in the transport industry work on monthly invoicing which is paid thirty days after being received. For example, you begin working on 1 January, work for a month and invoice all of that work on 31 January . This invoice may not be paid until the end of February, leaving you to bear all the operating costs for that two months (January and February).This is one of the things that most newcomers don’t realise. In most cases, you need to pay your own bills for the first two months, including your own wages.
Running your own business also comes with a huge amount of responsibility. To put it bluntly, the buck stops with you. This is why things such as insurance, proper record keeping and safe work practices should be top of mind in order to keep your business covered. This can be time consuming, so don’t be shy about paying the experts to do it for you. At least you’ll know it’s done properly!
The step into being a business owner also means you take on more roles within the business, and can’t just give the keys back and go home at the end of the day. As a small business owner, you take on the responsibilities of sales, customer service, accounts, debt collection, compliance, and a whole raft of others.
It is almost impossible to do all of these things while in the truck, and so the after-hours work at home increases dramatically. If you are lucky, you will have a partner, family or friends who are happy to assist with some or all of these things, but even then the office side of the business will still take up plenty of your valuable time.
As an owner driver, you make a lot of sacrifices. Whereas a company driver is entitled to annual leave, sick leave and overtime rates, the owner driver generally isn’t. The reality is that if your vehicle is not out working, you are not making any money. That doesn’t mean the bills stop coming in though, with registration, insurance and finance payments all needing to be paid even when your truck is off the road.
An owner driver’s business relies on them being out there working, and so holidays and sick days can have a serious effect on the viability of the business. If you come down sick overnight, your client will still be relying on you to be at work, and it doesn’t take many no-shows to lose your work.
Family outings and holidays can also be affected by self-employment. In most cases, holidays can be arranged with clients once the business relationship has been developed, but they must also be factored into the budget. All business commitments must still be met during and immediately after an extended break, until the business resumes generating income. It is often the case that owner drivers will take their holidays when the work is quiet, and with the peaks and troughs of transport being hard to predict, this can sometimes create difficulties in making long term arrangements.
It is also worth mentioning that your own income will likely be sacrificed at times to support the business. If the workload drops off, or you have a major mechanical failure, the business may not be able to support your usual income for a period of time. Being financially savvy will help to soften the blow should this happen.
In any business, you should have a backup plan. This is especially tough in transport, even more so for an owner driver. There will be times when, through no choice of your own, you will need some time off. It is important to plan for these times, though more often than not they will come as a surprise. Injuries, illness and family matters often call for time away from work but, with financial commitments to be met, the business may still need to operate.
For times like these, it is worth having a back-up driver who knows your work, your values and your expectations. There are a number of younger drivers looking for a start and, at the other end of the spectrum, plenty of semi-retired and extremely experienced older drivers out there looking for casual work who might be glad to only get in the truck now and then. While good drivers are getting harder to come by, you should remember that you may be leaving this person in control of not only your truck, but also the image and financial security of your business. If they were to upset your clients, the damage could be irreversible.
It will be almost impossible to find someone who will give your business as much effort as you do, simply because they won’t have as much riding on it, but putting in the time to find, train and mentor the right person could pay off in the long term. This person could well be the answer to your prayers if you decide to add another truck to your fleet down the track, as they will already know the things that are important to you.
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Authored by Dave Whyte
Dave Whyte grew up around the transport industry, spending most of his school holidays in various trucks with his dad. He began professionally driving at the age of 19, starting in small rigid trucks in Melbourne. He worked his way up to driving B-double combinations on interstate duties, working as a company driver. In 2007, Dave won the Scania Young Australian Truck Driver competition, which led to him winning a new Scania prime mover.
This meant Dave was thrust into the role of being an owner-operator and had to quickly learn the business side of the industry. He sold his first truck in 2012 and within a month had bought a second which ran until late 2016. It was then that Dave decided to take a break and spend more time with his family.
Since 2010, Dave has also been working as a journalist for a number of transport industry publications, initially combining the role of a full time driver with that of a part time journalist. His insider knowledge of the transport industry, including experience in various types of trucks, trailers and freight, provides a different perspective to many other transport industry journalists. The hard learned lessons from running his own business also give him an insight to the dollars and cents side of transport.
While Dave now focuses on his role as a contributor to Trucksales.com.au, he also spends a bit of time on the road as a casual driver- a job he still loves to do. Dave sees this as important, as it keeps him up to date with what’s going on in the “real world” of transport and allows him to maintain his skills in various roles. Whether it’s carting cars or delivering dairy product in fridge vans, he enjoys spending time out on the road amongst the people of the transport industry.
Dave is proud to be part of such a diverse and dynamic industry, and is passionate about the industry and its people.