Questions/discussion About Going Owner/Operator

I know that both here and a number of other sites there are people saying "Don't go O/O its a waste of money" or "you won't make any more than a company driver after expenses" or "there's no money left in O/O anymore" and the like. I have also been talking to a number of truckers who tell me that O/O's who don't make good money simply aren't doing it right, and that there are lots of O/O's making several times what company drivers make.

I have been told one of the main reasons O/O gets a bad rep is all the leasing to own new trucks BS that trucking companies try to get drivers to do, which I agree is crazy expensive and not worth it. But I've also heard that if you get a used truck several years old in decent condition, you can get it very cheap and it should allow you to make a lot of money as an O/O if you play your cards right. And I've seen how most trucking companies are looking to hire O/O's with great benefits if you work for them with your truck, making 2-3 times the cpm of a company driver plus fuel compensation and benefits like discounted parts and service with their service centers. Also I keep finding O/O's who claim to be making way more money than they ever could as a company driver and are enjoying the O/O life. I also found several articles on other websites that make going O/O seem very lucrative, such as this excerpt from an article on "alltrucking.com":

"To get an idea of how much more Owner Operators make than other types of truck drivers we’ve listed the Indeed Salary Comparison tool to the side and listed different trucking positions. As of November 19th, 2013 an Owner Operator had job listings with an average overall pay of $163,000 a year which is $100,000 a year more than every other single trucking position compared to. An O/O earns more than $100,000 more than a $63,000 a year CDL Hazardous Materials driver. A CDL Tanker driver getting $63,000 a year is making $100k less than an O/O and a trucker with a CDL A making $57,000 a year average is getting paid more than $106,000 less than an Owner Operator in the United States."

Is this true? If so, why does going O/O get such a bad rap?

My initial plan was to drive for a company my first year, and then go O/O by purchasing an inexpensive older model truck, but I was then somewhat discouraged by the article on this site telling people they definitely should NOT be an O/O, and now after more research and hearing positive experiences of successful O/O's I'm starting to reconsider again. What are your opinions of going owner/operator with an older used truck? Is it really not possible to make much better money than a company driver using your own truck? It seems like it can be great but its all in how you do it. Am I missing something here?

Thoughts, discussion.

Just as an example of what I'm talking about, right now on Craigslist in Atlanta there's a really nice condition 2008 Volvo 780 team truck for sale which the seller claims is in perfect condition inside and out, for $21k. http://augusta.craigslist.org/ctd/5238882269.html

If I bought something like that, and I run it as a team truck, wouldn't we (me and my partner) be able to make a lot more money than driving a company truck? I feel like we would, but I want to hear from people who know.

Kieran, think about this: if that was the way to get ahead and make a lot of money at this, why don't all these large trucking companies who are trying everything they can to turn a profit just run a whole fleet of 25,000 dollar used trucks?

I'm hoping to trigger your imagination here instead of just giving you my usual answers.

Kieran, never take an O/O's word for it that they're making a lot of money. Since they've already chosen to tell you about it, ask them to show you. Tell them you'd like to see the line on their taxes for "Net Income" after all expenses....the amount of income they actually pay taxes on.

Here is an excerpt from the Owner-Operator Member Profile 2014 from OOIDA which is the Owner-Operator Independent Drivers Association. They surveyed 2,000 of their drivers and found:

The gross income for the average owner-operator was $185,000. However, he or she typically accumulates a gross expense of $155,000 per year to turn out an average net income of approximately $54,000.

Of course I love to laugh about what I call "Owner Operator Math" and right there is a great example of it. Even OOIDA does Owner Operator Math. Let's try it:

$185,000 in revenues minus $155,000 in expenses leaves you with a net income of $30,000. Where they got $54,000 from I don't know, which is why I call it "Owner Operator Math". It's like a disease that prevents you from coming up with an embarrassing number for how much you make in profits.

So there you have it, straight from an organization whose goal is to help Owner Operators be successful, or at least teaches them a unique form of accounting that makes you look far more profitable than you are. After paying all of the expenses for running their business the average owner operator has $54,000 left over (or $30,000 - depends on your math). They then have to pay taxes on that. That's not what they bring home after taxes. That's what they bring home before taxes.

The average profit margin in the trucking industry is 3%. Basically that means after all expenses, including the driver's salary, your profit will be about 3% of your revenues. So what that means is on average the owner operator will make 3% of revenues more than a company driver will make. The average revenue in their survey was $185,000 and 3% of that is $5,500. An experienced company driver can expect to make about $50,000 or so. Add that $5,500 to it and that's what you'll make above and beyond what a company driver would make. That works out to about $55,500.

As Old School often points out, owner operators famously like to use their revenue figures when they talk about how much they make. And often times they are poor enough at tracking business expenses that they really don't know what their profits are, if any. So it's common to hear an owner operator claim to be making $150,000+ per year. But they're not making anywhere near that in profits.

On another OOIDA Page Of Industry Facts they state:

Owner-Operators averaged net income is $39,927

Now that's what they made before taxes.

On the website for the Bureau of Labor Statistics they have a page titled Occupational Employment and Wages, May 2014 53-3032 Heavy and Tractor-Trailer Truck Drivers where it states:

Mean Annual Wage: $41,930

So when you're using verifiable data you'll see that owner operators make about the same as company drivers overall. When you ask an owner operator what they make they'll almost always give you their revenue figure or some relative statement like, "Way more than a company driver" or "Five times what I used to make as a company driver" - that kinda stuff.

Also I keep finding O/O's who claim to be making way more money than they ever could as a company driver and are enjoying the O/O life.

Define claim:

state or assert that something is the case, typically without providing evidence or proof.

Brett said it best:

Since they've already chosen to tell you about it, ask them to show you. Tell them you'd like to see the line on their taxes for "Net Income" after all expenses....the amount of income they actually pay taxes on.

Trust, but verify!

Take a closer look at your alltrucking.com note:

As of November 19th, 2013 an Owner Operator had job listings with an average overall pay of $163,000 a year which is $100,000 a year more than every other single trucking position compared to.

That pesky "overall" means the company hands the O-O $163,000 in a year. That's like your 36¢ per mile. You don't get 36¢ per mile in your paycheck, there's deductions. You actually get more like 24¢ per mile take-home.

The "overall" $163,000 is the O-O's revenue, or gross income which he uses to pay for fuel, truck payments, repairs, tires and such. After all the expenses evaporate (Yes, they're mostly "tax deductible") the O-O gets closer to that $39,927 each year to buy groceries and take the family to the movies.

The only people that I know for a fact that did well as O/O:

1. Owned multiple trucks.. no payments. 2. Also had a few trucks leased to them. 3. Ran under their own authority. 4. Were certified mechanics and did ALL of their own maintenance. 5. Used paper "creative" logging. 6. Got out before the regulations got so tight.

So how did my ex brother in law get started? By driving teamsters and living extremely frugally before purchasing his first truck and mortgaged his home to do it. Once that was paid off he gradually added more trucks, hired drivers and stopped driving himself and turned wrenches full time and I mean darn near 7 days per week. . There was always at least one truck coming in and because of how hard they ran, they were gone over at every opportunity. Sundays off to go fishing, if he was lucky. My ex both drove and turned wrenches.

I distinctly remember once when a slightly used truck he had just purchased had a major breakdown out west. The repair shops wanted way too much to fix it. The driver was upset at losing the load so we flew him home. They leased a small car, loaded it down with tools and parts, and drove to where the truck was and repaired it where it sat. The load of produce had already been offloaded to another small company to deliver, Chaching.. hear that $ going down the toilet? When he was done repairing the truck, he actually loaded the rental car and all the tools into the empty trailer and drove it back to the shop in Illinois to fine tune the repairs.

I also remember a time (and I was on that truck) we were headed to Toronto but only about 100 miles from the house, with a load of produce. . Strawberries... a very time sensitive product. A belt broke and we were stuck on the side of I-57. My ex called a cab, went to an Autozone, managed to find an appropriate belt, came back and changed it on the side of the road. It was cheap and didn't take him long.. why? Because he knew what he was doing.

Why am I bothering to tell you this crap? My point is they were successful because they were extremely cheap/frugal. Too cheap to pay someone else to repair a truck. They changed their own tires too. Don't get me wrong, they had good equipment and they maintained it well, but things can and do breakdown. . Even on a brand new truck. An alligator (shredded tire) damages an airline, etc... little things that will nickel and dime you to death.

They started having trouble finding good drivers to keep the wheels rolling and they began selling off trucks. Another area mom and pop shop started getting too many visits from DOT inspectors and eventually was put out of business. They had a few visits too. It was a really close call and I remember leaving the office and seeing the friendly dot inspector just down the road headed for our office. I remember quite a few logbook parties I had to attend. I confess, i had a knack for forging drivers signatures to rewrite and fix log books and had a cdl permit as well. Let's just say I went on more trips in more trucks than I actually did. Too close for comfort. We had 100 mph trucks.. 3 days out and back to west coast with 1 driver, change drivers in IL and head on to Cleveland or Toronto which took another day and a half round trip. We ran what was commonly known as chicken trucks. We never had accidents, luckily, but I can tell you some CRAZY stories on how I helped drivers get out of tickets.

The stress of running like that, which they felt was the only way to remain profitable in a really nasty cutthroat industry wasn't worth it. The trucks were all sold off, the shop was sold and the company closed. My brother in law went to work for another teamster company, finished up his time and retired. My ex runs his own mobile tractor roadside repair service and no longer drives either. He tried the company driver route but, being accustomed to being treated like this prima donna super trucker, lol, he didn't do well. My brother in law felt lucky to get out of it before the inevitable happened, (massive dot fines and a forced shutdown) with plenty of cash in the bank.

I really don't see how O/Os survive financially these days. Paper logs aren't generally an option, running like they used to isn't one either due to all the regulations and even if it was.. ive lived in that hell and wouldn't recommend it. It's probably small companies like that which caused all the regulations we have now.

That said, I always loved driving and I will be quite happy and content to be a company driver and let someone else (the company) take all the risks and stress.

Thanks for all the replies, and that's given me a much better perspective. I didn't realize it was so common for O/O's to make outrageous claims about how much they're making without being able to back it up like you said.

If they aren't qualified mechanics they are way behind the 8 ball from the start, IMO. Do you know what those repair shops charge?? It's bad enough having no income during a breakdown and then having to shell out thousands to a shop? Fuel costs.. even with a discount. . Tires OMG $750+ a pop these days. Income taxes, workmans comp, fica, self employment taxes, insurance, (both p&c and health), drivers.. you really don't think you can be an O/O and not run team do you?

It's a whole lot to think about. Yes, they absolutely gross some big bucks. But when the settlement is received and the bills are paid, the bottom line is.. about the same as a company driver-- maybe even less if they had a bad week, month, or year. Yeah the O/Os love to brag about money.