2 ½ days of intense training for those taking their first steps into becoming an owner-operator and guidance for those that have been in the industry for years on how to cut costs and be more financially successful.
Speakers will not be from outside the industry but from those within the industry that on a daily basis deal with the issues that truckers face. True “trucking experts” who have worked and do work for the largest trucking association dedicated to helping drivers in all areas be successful. The training consist of expert trainers and interaction among participants, some homework is even required for full participation. A question and answer period will be provided after each speaker and training session.
Training will follow a logical path of information of the transition from a company driver to an independent contractor.
Developing a Business Plan that works for you:
What should be in your business plan, chances are you are going to be borrowing money and the plan needs specific information that reflects on your success. Over 90% of small businesses fail in their first year due primarily to a lack of planning. Financial institutions want to know that you have done your “homework” and understand basic economic terms and trends within the industry.
Short term –midterm and long term goals that are realistic need to be explored.
Be able to show your cost of operation including the fixed costs and variable costs. What are they and how can you control those costs. Learn what your operating assets are in comparison to your liabilities. Learn how to manage costs and be able realistically project your financial success. Determine how much cash flow you will need to succeed.
Develop realistic operating procedures that reflect the freight you will be hauling and the demographics of where the freight originates and where it is delivered. Understand that different freight lanes require different rates and why. Know where to get freight and when to use and when to avoid load boards. Spot market vs contract rates. How to figure a fuel surcharge or should you figure a fuel surcharge, advantages and disadvantages?
This first training class is an overview of what you need to succeed and what you will need to show to financial institutions and lenders in securing financing. The other training classes will help you to answer the multitude of questions that you will face in securing a realistic and comprehensive Business Plan.
Equipment: You are going to need a truck. New vs. used?
One advantage of a new truck is that you can “spec” it to your operation. You will need to know the demographics of where you are planning to operate. Learn what specific tools are out there to help you “spec” for your operation. Is a ten speed better or an 18 speed, what gear ratios and tire size should I use for my operations that gives me the best fuel mileage and power. What should you look for in truck and engine warranties? “Get it in writing” will be discussed. Our experts are not bound to any one engine manufacturer and can and will tell you the experience OOIDA has encountered with engines that should be avoided. What are the life cycle costs of new trucks and ancillary costs due to newer emission costs and maintenance? Keep in mind there are few states that have lemon laws for trucks.
Used trucks are out there but how do you judge if the truck has been abused or taken care of, we have the experts to walk you through what to check and where you will most likely find the red flags. Should you ask for an oil analysis? Should you ask for the last ECM reading and how to read and look for potential problems with the truck and engine?
Whether buying new or used, going through a financial institution or leasing your credit score is reviewed. Learn what these lenders concentrate on. Lenders look at tradelines both negative and positive. Tradelines will be discussed and what lenders look for on a credit application. The “magic score” on credit will be given and the whys of such a score.
The pros and cons of various financing options are discussed:
- Finance lease
- Residual lease
- Lease purchase
Should you also purchase a trailer and the pros and cons of the various types of trailers.
Some insurance you must have and the amounts are set by the Federal Motor Carrier Safety Administration others apply only to those under their own authority and those that are leasing on to a carrier. Some are optional and not needed others are optional but are really a good idea for your protection. There specific insurance needs for those operating under their own authority and those that are leased on to a carrier. While it is true that the carrier is responsible for carrying the public liability many charge the premiums back to the owner-operator. In addition even though the carrier has the required insurance there are instances where the leased on owner-operator needscoverage and will not be covered by insurance.
Insurance costs will vary dependent on a number of factors that you should know and understand. Controlling cost is essential to success but a single accident can cost you your business and all your dreams so know what is needed and what is required. You cannot operate without insurance and it must be in place before you can begin operations. Learning how your truck and trailer, costs, age, use, demographics and driving historyaffects your insurance rates.
The big decision to be an owner-operator under your own authority or lease on to a carrier?
There are some very definite pros and cons of each. In OOIDA’s experience leasing on for a specified time is the usual and best first step into becoming an owner-operator. In doing so you will sign a lease agreement which is a legal binding agreement between the owner-operator and the carrier. This is one of the biggest concerns and has resulted in many law suits between carriers and OOIDA. Special attention will be given to the leasing regulations and the responsibilities of the carrier and the owner-operator. The majority of owner-operators are leased on to a carrier; knowing your rights and liabilities of those leases are vital to your success or failure.
As an owner-operator under your own authority you must apply for that authority through the Department of Transportation. While the process is not complicated it can be confusing and you want to have advice so as not to mark anything incorrectly. Thousands of authority filings are not filled out correctly and the DOT does not notify you so you may wait indefinitely without knowing. The OOIDA authority department will walk you through the process. There are potentially many pitfalls that you may not have considered. For instance you may want to haul hazmat and that is a whole different program or you list that you want to run in all 48 contiguous states but that will greatly affect your insurance rates and the number and type of permits you willhave to purchase. As an owner-operator you are totally responsible for all aspects of your trucking business. There is a ton of extra paperwork and accountability involved and we will take you through it all providing guidance and suggestions.
New Entrant Safety Audit and a Compliance Review:
All new owner-operators have to go through a new entrant safety audit, fail it and all that work you put in is gone as you will not be allowed to operate. We will take you through an audit and what the auditors are looking for. There are what are called the 16 deadliest sins that the auditors are looking for in your operations and we will discuss each and how you can show you are not guilty of those sins. A compliance review for established owner-operators is essentially the same audit but with less tolerance for error. In today’s trucking world FMCSA is conducting more focused audits based off of the carrier CSA scores. A brief look at CSA and its effects on your operation will be discussed.
Drug and alcohol consortium and requirements:
The most cited audit violation is the fact that the owner-operator does not belong to a dug consortium. It is mandatory that you belong to a drug consortium that is approved by the FMCSA and that when doing drug test you have them done at a certified lab. Most drivers know about drug testing requirements for drivers but as an owner-operator under your own authority and if you have a driver(s) you have to have a written drug policy that meets certain federal guidelines. There have been new drugs that are tested for which can affect your authority and your ability to keep your CDL all of this will be covered.
Permits and Licensing:
There are three permits that all owner-operators must have:
Learn what you must have handy when applying for your permits.
In getting your IFTA and you are leased on do not allow the carrier to get your IFTA as it could affect your taxes. Do not let the carrier pay for your Heavy Vehicle Use Tax, form 2290. Some states have a mileage tax and you will need a separate account with them in order to drive in those states. Some states have a corporation tax for those carriers that incorporate, called a franchise tax.
There are special permits that may be required if on your authority filings you listed that you want to haul alcohol and/or hazmat. There are oversize permits, overweight permits and in some states trip permits.
Taxes and Business Structures:
As an independent business person you have entered into a different tax tier. You will have to pay taxes on a quarterly basis and if it is your first year you will have to estimate your revenue and income. What deductions are allowed and what are not? You need to organize your tax information with the help of an OOIDA guide. Know what you can depreciate and when especially if you have purchased a new truck. What you can claim as deductions as an owner-operator under your own authority and what you can deduct as a leased on owner-operator is different.
Should you incorporate? What are the pros and cons and what types of business structure works best for owner-operators: LLC, Partnerships, S-corporation or Sole proprietorship?
Brokers and Factoring
Almost all carriers and owner-operators under their own authority use brokers at some time or other. It is important that you do your due diligence when using and selecting a broker. Understanding broker bonds, surety bonds and trusts. Filing on these bonds can be tricky but if you do your due diligence you are less likely to get burned by a broker.
Learn how good load boards work and how they can help you locate ‘good” brokers. Know of the different load boards and the services they offer, also know that relying on load boards is a sure way to lose money.
Factoring is probably not something you want to get involved with but it can provide a cash flow if in immediate cash need.
Finish with current issue that are affecting the industry and what they can do to respond to those issues.