5 keys for maximizing profit as an owner-operator
Unlike drivers for big trucking companies, owner-operators are fully self-employed. They own and drive their own vehicles and find their own clients. Some owner-operators manage a small team of drivers as well. As an owner-operator in the trucking industry, you’re responsible for every aspect of your business, including your finances. Managing your time and your resources efficiently is key to growing your business. Here are five ways to maximize profit as an owner operator:
1. Implement a transportation management system
Fleet owners and operators juggle a huge range of tasks throughout the day. Using technology will help you get through your to-do list faster and find ways to maximize your profit margin. A transportation management system, or TMS, is a software program designed specifically for trucking industry professionals. A TMS will help you find and dispatch loads, generate quotes and invoices, and track every aspect of your business. By using a TMS, you’ll have all of your business data in one place. You’ll be able to identify places where you’re overspending, as well as opportunities to expand your business. A TMS will also help you operate more efficiently, so you’ll be less likely to miss out on high-paying loads.
2. Be smart with your travel expenses
When thinking about variable costs, many trucking professionals focus on things like fuel and vehicle maintenance. However, travel expenses while you’re on the road can add up just as quickly. Many drivers overlook the ways that they could save on lodging, food, drink, and other travel essentials. Where possible, pack your own food and drinks ahead of time. You may want to invest in a small refrigerator or even a travel-friendly microwave for your rig to help you avoid expensive restaurant meals. Before heading out on the road, look at which restaurants are located on your route and comparison shop for meals that offer the best value. Saving even a dollar or two per meal can add up quickly. Additionally, look for trucker-friendly hotel chains to stay at with large parking lots and 24/7 check-in options. Try to stay with the same hotel brand every time to rack up loyalty points, which can help you cut back on future stays. Many truckers use sleeper cabs rather than staying in hotels, which will help you cut your costs down even further. If you go this route, make sure that your sleeper cab is comfortable enough for a good night’s sleep so that it doesn’t compromise your driving the next day.
3. Conduct preventative maintenance
One of the biggest and most unpleasant expenses for owner-operators is unexpected repairs, especially if they come at an inopportune time. Things like engine repairs or tire replacements can easily set you back thousands of dollars and impede your business growth. Scheduling regular preventative maintenance for your vehicles can help you avoid some of these emergency repair costs. While you’ll need to invest some money up front in repairs, you’re less likely to experience a costly emergency. Even with preventative maintenance, emergencies will still happen occasionally, and it’s important to be prepared. By building fixed costs for repairs into your budget, you could save more than you think you need.
4. Be fuel efficient
Fuel efficiency is another way to minimize your cost per mile and maximize your profit margins. Many truckers leave their vehicles idle for hours each week, which wastes expensive fuel and puts unnecessary wear and tear on your engine. Track and report your idle time for each driver. Many drivers don’t realize how much they idle throughout the day and awareness is a good first step to cutting back on these variable costs. Then, you’ll need to figure out why you and your team are idling, and looking for alternative solutions. For example, many drivers idle to leave their air conditioning on. Try using portable fans or other cooling solutions instead.
5. Build strong relationships with both clients and drivers
Strong relationships are often key to maximizing profit. On the client side, focus on attracting repeat customers in addition to picking up one-off assignments from load boards. Working with repeat clients means you’ll spend less time and money on marketing to find new loads. It’s also easier to negotiate rates with repeat customers and ultimately generate more income. If you have a team of drivers that you work with, it’s also important to build strong relationships with them and keep your retention rate high. It costs far more to hire and train new truck drivers than it does to continuously work with the same team. Working with a team of experienced drivers can also help you cut back on insurance costs per truck. Additionally, you’ll be able to work with your team to improve their driving skills, which reduces expensive driving violations.
The bottom line
To maximize your profits as a trucking owner-operator, you’ll need to look for ways to cut back on business expenses while taking advantage of new opportunities. A reliable TMS is one of the best tools to help you do this. Want to streamline your trucking business? Get started with Rose Rocket, the #1 rated TMS.