One thing stays the same if you are a newly registered owner operator or a seasoned veteran who knows all the little details about your company expenses, thorough preparation is still the key to success. The more carefully you plan your expenses, the more success you will have with your business.
To manage your owner operator expenses you need to know what they are. There are always fixed and variable costs, but you should not forget the unexpected additional costs that can sometimes sneak up on you.
Let’s talk about the highest expenses you will face and solutions on how to lower them.
How to save on fuel expenses
Fuel costs are usually the largest expense for an owner operator, they often vary from state to state and they can change rapidly. Fuel efficiency is one of the important factors in your trucking business, knowing what your cost per mile is can help you see if fuel is one of your biggest costs. To calculate your truck’s fuel efficiency you need to determine your MPG-Mileage per Gallon, using this formula: MPG=(Mileage A – Mileage B)/Gallons. To do this, you should fill up your fuel tank. It might be a big expense, but try to look at it as an investment, it will help you calculate your costs so that you can find a way to lower them in the future. Before starting your drive, record the current number of miles – this is your Mileage A.
Start driving and do it in your usual manner. Fill up the tank again when it is nearly empty and record the number of gallons it took to fill up the tank again, this will be your Gallons, and again before continuing your drive write down the number of miles again – this is Mileage B. Now do the equation and you will get your MPG result.
The next thing you should do is figure out what is the best way to drive to get a better MPG score. Trucks get the best gas mileage at a lower speed, go easy on the gas pedal. Some other things that could help here are having proper tire pressure which helps distribute the weight of your truck evenly. Turn off your ignition when you are waiting, excessive idling burns more fuel and it may damage your engine. Always keep your truck well maintained because faulty parts can affect fuel costs too.
The costs of your truck
Your truck has ongoing costs, from truck payments to routine maintenance and sometimes additional unexpected maintenance expenses. You should plan and have a savings fund for future maintenance as well as regularly checking your truck’s condition will help you avoid the biggest expenses.
Knowing when you should change your oil and other fluids, adjusting the belts, brake pads, and hoses, regularly checking your suspension system will save you money. You should always remember that it costs more to get repairs than to do routine maintenance and identifying broken parts that need to be replaced. You need to consider other expenses like renewing your license and permits and your continuous toll expenses. Late payments and registration usually cost more, so be sure you don’t let your license expire. Planning your route carefully can help you lower your toll expenses too.
The IRS allows a deduction per day(per diem), which can reduce your food costs by up to 80% when out on the road. As an owner operator you are qualified for per diem if you: meet the IRS qualification overnight rule-your travel must be far enough, meaning up to 14h on the road; you have a place where you can park the truck when not in use; you provide proof that you traveled for business on the day you claim this deduction. This is a reimbursement and not a wage, so it doesn’t count as part of your income and can’t be used for anything else but what it was intended for food.
Insuring a big rig involves carrying a $750,000 in liability coverage for bodily injury and property damage liability. That and other business insurance costs can add up to quite a lot. The costs will vary from the type of your truck, your truck value, owner operator’s credit history, paying a premium in full and depending on if you are a leased owner operator or an owner operator with trucking authority. On top of your truck insurance, you will also need health insurance. Insurance costs can vary significantly, depending mostly on how much you want to pay. If you choose to pay less, you will get a higher deductible and a greater risk if there is ever an accident.
Professional services and bookkeeping
We often make mistakes if we try to do every little thing when starting a business. In this case, your strength is obvious, you are an awesome truck driver, so the best idea is to divide and conquer-hire professionals to do the business stuff in your company and you do what you do best. Hiring someone to do your bookkeeping can also be a tax deduction, so even though it seems like an unnecessary expense, it will actually save you time and money. They will help you keep track of all the small expenses like toll fees, they will provide you with a financial report of how much your business spends and help with your taxes too.
Besides the trucking part, there is one more thing to think about and that is developing your business more, planning for the future and where you want to go from here. Depending on how you want to approach this you should think about marketing tools you want to use, building a website, getting ads, using social media, all of this will help you get more business and attract new customers. Another thing to think about when it comes to costs is, if your business starts growing, you need to get more employees which means more expenses, but also more opportunities to do multiple jobs. In the long run, if you want to get bigger these are the things you will be thinking about, you just need to find what works for you best, and like always plan your expenses and earnings carefully.
Owning and operating your own trucking company can, in the long run, earn you more than working for someone else. You will definitely need some time to get used to planning all your expenses, and seeing how much money you spend and how much you will end up earning, but if you want to be your own boss and use all the knowledge you have about the trucking business, you will get a lot of satisfaction in return. Part of having a successful business is planning the unplanned, so get good insurance, calculate your fuel costs, plan your meals well and keep your truck in good condition. Planning your routes will also help cut the costs, and planning for the future and how you want to evolve while also having someone to keep track of all the paperwork and help you with the business side of your business, something that you shouldn’t skip on. Combine all your tools and success is sure to follow.