Assembling outside advisers to help with finances, taxes and legal issues will help you concentrate on running your business
How many hats can you wear? As a startup owner-operator, you have plenty to do buying equipment, finding customers and tending to your business without having to worry about doing your taxes, getting permits and taking care of legal issues. Going on your own is tough, but advisers will help make easier the transition from driver to owner.
Start with a financial adviser, says Eric Cook of Peak Trucking Consultants, someone who can help set your goals and build a budget. “This is your financial roadmap,” he says. “It determines what you need to do to be successful financially.” That person helps determine whether you have enough cash in reserve to make it to your first check or in the event of an economic slump. He adds, “You may decide it’s better to lease on at first and go for your authority later on.”
An adviser with trucking experience will be able to get you thinking about costs per mile and how much revenue you’ll need to cover expenses. That adviser might be able to help you pinpoint the best truck for your needs, decide whether to buy used or new and estimate equipment longevity.
Another useful adviser is a mechanic you trust, one who might help you spec your equipment based on your loads, lanes and trucking niche. “When you go to the lot, you’ll know what you’re looking for and, if it’s used, what repairs are needed,” he says. A trusted mechanic “could help with setting up preventive maintenance and understanding a truck’s life cycle.”
An insurance agent with trucking industry knowledge can help you identify what coverage you’ll need at what rate and the correct procedure in case of an accident. You’ll want a resource who is looking after your interests, not those of the finance company. “The more independent you are,” Cook says, “the more important this resource will be for you.”
You should have a lawyer among your contacts. A legal mind can help you determine the best structure for your business, whether you’re leasing to a carrier or running on your own. “If you have assets to protect, it’s important to have an attorney to make sure you are legally protecting yourself,” Cook says.
If you’re going for your own authority, turn to a firm that specializes in helping independents obtain needed permits. They will know what licenses, forms and permits you’ll need for your specific business, Cook says.
Tapping into successful owner-operators should round out your circle of advisers, Cook recommends. They won’t cost you anything but a cup of coffee, maybe, but they “can tell you what’s going on at different carriers,” Cook says, “what’s happening with freight and where to go to get the best rates.”
Your meetings with these advisers should begin well before you plan to go independent. Before you get your authority and DOT number, you should be establishing your business plan and structure.
Independents use outside help
After driving other people’s trucks for 18 years, Tony Fletcher wanted to go on his own in late 2008. But after buying a 2000 Peterbilt and a 2000 reefer last September, he had to sit around until late December waiting for his base state, Oklahoma, to issue his vehicle tags. “I was sitting there making no money those months,” Fletcher says. “I had a little extra money, but I just got by.”
Jimmy Borum was getting his authority this spring to transport specially equipped trucks for oil-field customers of his TPG Equipment Co. of Fort Smith, Ark. He’s not operated under his own authority since the 1980s. “When I started, there was a lot less red tape than there is now,” he says.
Both Fletcher and Borum quickly learned the value of working with outside advisers. Both used The Permit Connection to wade through the bureaucracy to obtain permits – Fletcher to run across the country from California to the East Coast and Borum to pull trailers in a five-state area including Arkansas, Oklahoma and Texas.
Fletcher estimates he spent more than $4,500, not counting his tractor and trailer, to go on his own. Now he’s concerned about finding funds to retrofit his reefer unit to meet upcoming California Air Resources Board regulations covering emissions. He could stop driving in California, but it would mean giving up high-paying produce runs in the spring and summer. “I don’t know what I’m going to do,” he says.
Borum says this time getting his authority went much smoother than the first time. “I’ve done all this in the past, and I know what a hassle it is. [The Permit Connection] can take care of it in a matter of weeks, while it takes the average person months,” he says. Borum uses a CPA to do his taxes and to look over his books, which his father-in-law takes care of daily.