Over recent years the haulage industry in the UK has suffered due to truck drivers being overworked and underpaid, very often truck drivers consider setting out on their own, by becoming owner-drivers.
In this article, we take a look at some of the advantages and disadvantages of making the jump to owning your own truck and some useful tips about how to start your own trucking business as an owner driver.
Have You Got What It Takes to Start a Trucking Business?
It’s a difficult call to make, and there are several things to think about before jumping in as an owner-driver.
You must realize that you will not simply be a truck driver anymore, but a business owner, and it is important to understand the ins and outs of running one.
What qualities will you need to have before considering going into business on your own? below are some examples of tasks you will need to undertake when deciding how to start a trucking business as an owner driver.
Do you have good knowledge of how to read financial statements, how to make entries into your ledger, and how to interpret the results? you will need to keep control of your expenses and look after any receipts or invoices you receive.
Invoicing customers and understanding how to clearly structure payment details and payment terms are very important too.
You may need to employ someone else to look after the day-to-day financials, but it will still be your responsibility to make sure they are doing a good job and that you both understand how the accounts work.
Do you enjoy dealing with people? how do you deal with people on the phone and how do you handle complaints?
If a customer has a problem how would you deal with it, how long would it take you to respond to somebody who is angry or upset about something?
In the trucking business how well your customers are treated will have a greater impact on how much they spend with you over time. In order to build lasting relationships, you will need to be able to handle these sorts of things quickly and professionally.
Are You Ready for the Responsibility?
There is a lot more responsibility involved in owning your own truck than simply driving it from A to B. Successful owner-drivers will need to consider backloads to make each trip efficient and less costly, keeping to schedules can be difficult because many companies have tight deadlines and you may need to drop one delivery in order to pick up another.
You can’t just stop working when you want to either, if your truck is broken and needs fixing how will the costs get paid? how will you keep on top of all the financials and how will you find time for yourself away from work and back again. All of these things need to be considered before starting your own business.
The idea of being able to work how and when you want is a great reason why many decide to go into business for themselves, but in reality, this can be very difficult to achieve at first.
Over time if you are successful with your owner-driver business then the bigger jobs will pay for the smaller ones and you will be able to take it easier, but for now, there is a lot of hard work involved.
Being a truck driver that used to work for someone else, how would you rate your negotiating skills? can you find a good deal with a supplier of new vehicles and how do you negotiate the rates with a potential customer? if you don’t have these skills then perhaps hiring a consultant or manager would be the best option.
Before going through the process of becoming an owner driver it is important that your health is good, the job can be very demanding so being fit and healthy is essential before starting a trucking business.
One of the most common health issues a truck driver has is high blood pressure, so think very carefully about the demands that working long hours with added stress may have on your body.
Trucking is a profession that requires quick decisions, how would you make the decision on how to get to your location and how quickly would you make it? how do you react if something goes wrong, can you take an adverse situation in your stride or does everything need to be perfect all the time?
You might also need some knowledge about how different taxes work for your business, you may take on work that goes into Europe where changes to haulage have been introduced from the UK since Brexit. Sourcing a good accountant and fully understanding what will be required from you in order to keep control of the finances is crutial.
If you are driving a commercial vehicle there will be plenty of other licensing requirements too such as obtaining an operator’s license to enable you to run your haulage business.
When You Are Ready to Start a Trucking Business
So what processes are involved in how to start a trucking business in the UK. If you do decide that running your own trucking business is where you want to be then how can you best go about it?
Below we have highlighted some step-by-step tips that could help you on your way to setting up a successful trucking business as an owner driver.
Before you can apply for an operator’s license there are some things to consider about the requirements to obtain the license.
- Are you of good repute and fit to hold an operator’s license.
- Are you in a good financial position eg: do you have enough money to run your business, for a standard operator’s license you will require a balance of £8,000 if you operate one vehicle and a further £4,500 for any other commercial vehicles you have within your business. For a restricted operator’s license, you will require a balance of £3,100 for your first vehicle and a further £1,700 for any additional vehicles.
- Do you have suitable facilities or arrangements for maintaining your vehicles and a safe and secure place to park the vehicle when not in use?
- Are you capable of ensuring that both you and your staff obey all the rules required under the terms of the license?
- It is necessary once a location for your business is found that you register your intention of obtaining an operator’s license, this is achieved by placing an advert in your local newspaper using that location address. Local people will have 21 days to object to your business proposal. The advert, application forms, and payment can then be sent to apply for the operator’s license which can be very time-consuming and the whole process can take up to 9 weeks.
After An Operators License Has Been Granted
Once you have your operator’s license, you can look for a vehicle to start your business, this can be done by either purchasing a vehicle or leasing one.
Choosing the right vehicle is important so it is necessary to research what work you will be doing with the truck and understand all the requirements you will need from the vehicle to achieve that work.
Buying a Vehicle
If you choose to purchase a vehicle, you must consider how much the vehicle will cost in depreciation and how much it will be worth when you wish to sell it. It is also advisable to know how much the vehicle will cost in finance charges every month or how much your repayments will be on a loan.
Leasing a Vehicle
If you choose to lease a vehicle, it will be up to you how long you wish the lease agreement to last. If the aim is to replace the leased vehicle every 3 years then the monthly cost of leasing may differ from that of having finance payments each month or how much your repayments will be on a loan.
Owning and Operating Vehicles
Choosing how many vehicles you need and how often they will be used is important in order to calculate how much it will cost to run your business, this includes Initial Vehicle Cost – finance charge each month – monthly depreciation – fuel costs – insurance costs – maintenance costs – servicing costs, etc.
After Your Business Has Been Up and Running
The most important thing to remember is that when working as an owner-driver is that you will not be employed by someone, your business contract is with the customer, which means you must understand how much it will cost you to provide a service. Managing your business effectively and providing good value for money to your customers will be how you achieve growth in your business.
There are many different areas an owner-driver can source work for their vehicle, it is always advisable to try and sub-contract to large haulage companies to get your bread and butter money.
Try to establish a contract with any work you do for haulage companies, this is because if you take their goods to Tilbury Docks for example and they expect you to drive back empty, you could easily increase your earning by acquiring back loads which utilize your time and vehicle earning potential.
There are many resources to get back loads here are a few for you to check out:
Try to establish a pricing structure that works for your business, there are different ways you can charge customers for the work you do such as price per mile, price by weight, or you can even negotiate a price per hour if you should get held up at the docks for hours waiting to unload.
A simple formula is to quote a price which includes all costs including fuel, and then have a percentage profit margin that you charge. This way there are no surprises down the line and it is how most owner-drivers operate.
Starting a trucking business can seem daunting at first but it is how you understand the processes and how much each stage will cost you, that will have a big part in how your business grows or how much money you can potentially lose.
The one thing to remember is that every job carries a risk so the more informed decisions you make when starting out in business the more likely you will be in a position to turn a profit and grow your business.
We hope you found this article “How to start a trucking business as an owner driver in the UK” useful, and good luck with any future jobs as an owner driver in the UK.