Our Sponsors:
Ramp Publishing Group sponsors health kiosks for drivers
Does your company have a driver retention budget?
Quote of the Day
"Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall."
-- Stephen R. Covey
Knowledge Truly is Power
By Angela Bruskotter
It’s a good time to be an owner-operator. The trucking industry recognizes that owner-operators are the ultimate capacity development tool, and fleets are doing everything they can to attract and retain quality owner-operators including sign-on bonuses, pay increases and fuel surcharges along with quality of life improvements. However, what they are really creating is the idea that there is always greener grass somewhere else. As owner-operators are bombarded with recruiting ads and posters promising more revenue and better opportunities at other carriers, they are switching carriers and industry segments at an alarming rate.
Many owner-operators cite dissatisfaction with their pay or miles, too much time away from home and lack of respect as a few of the major reasons why they choose to switch carriers or quit. While the pay solutions mentioned above may work in the short-term, the pay increase or incentive is soon forgotten and dissatisfaction returns, requiring another pay increase or incentive, and the cycle continues.
The problem needs to be addressed for the long term and a major part of the solution for owner-operators is education. But before that, the first step is redefining how we look at owner-operators. Most often we see them as truck drivers that happen to own their own trucks, and, unfortunately, that is how most of them see themselves. The reality is that they are business owners who happen to drive trucks to make money. It may be a subtle distinction, but it’s an important one.
As employees, company drivers rely on their carrier to pay them, maintain their truck, train them, pay for their fuel, withhold taxes and generally control their success as a driver. Many owner-operators are purchasing or leasing their trucks without a complete understanding of the responsibilities they are assuming, and in many instances they are still looking to their carriers to provide them their "success." When they fall short of their income expectations, they jump ship, expecting a pay increase at another carrier to solve all of their problems. However, the reality is, they bring their problems with them to the new carrier, and in most instances, the pay rate increase cannot come close to offsetting the costs they incurred by switching carriers. So they often jump ship again, and the cycle continues.
Businesses fail for a variety of reasons, and the majority fail in the first one to three years, which parallels the fact that the turnover rate is higher among first-year owner-operators. Some of the top reasons small businesses fail are poor management, undercapitalization, lack of planning and starting a business for the wrong reasons. For owner-operators, add improper truck maintenance, poor understanding of their tax situation and health care issues, and it appears that the odds are stacked against owner-operators succeeding.
But the odds can be swayed back in their favor, and therefore in the favor of better retention rates at carriers, by educating owner-operators on the aspects of running a successful trucking business. Education can help address the various reasons drivers cite for leaving their carrier and prevent the common pitfalls that cause many businesses to fail, especially if they are taught before they buy their truck or before problems with their business become too overwhelming to correct.
Getting started as an owner-operator may be relatively easy, but it takes much more than a truck and a wish for more money to be a success. It takes hard work, financial responsibility and self-discipline. Most drivers who become owner-operators already know about the need to run a lot of miles while driving safely, legally and giving good customer service. But being successful is about being a smart businessperson as well.
How do you make ends meet? Exactly how much money will be needed and how will this money be spent? How much is required for truck expenses and how much for personal expenses? How much should you pay yourself for driving? How much will be left over for things like savings and retirement accounts? What about taxes?
Not only do most owner-operators not have answers to these questions, they haven't even thought to ask them. Their focus is on the prospect of more miles, more money and more freedom, and too many times owner-operators assume that if they make more money, costs and the future will take care of themselves. Unfortunately, that isn't the case.
Owner-operators are on their own. One of the biggest challenges they face is making the transition from thinking like an employee to thinking like a business owner. They are responsible for maintenance, accounting, taxes, setting financial goals and establishing their own rules of conduct. In addition, they are responsible for developing and maintaining relationships with dispatchers and customers to ensure their businesses will succeed. Most importantly, they need to understand that their carrier is now their customer. A company driver would never imagine their carrier as their customer. The owner-operator must think of the carrier this way.
Until they learn the ropes of owning their own business, they have to be more careful about managing their expenses, both business and personal. They have to develop their own business systems and set up a regular truck maintenance program. They have to plan for the hard times when the times are good. They have to set specific goals for where they want their business to go. An owner-operator who does not take control of his business will not realize the financial reward available to him from owning or leasing his own truck. And an owner-operator who is not successful will not be an asset to the carrier he is contracted to.
So how do owner-operators learn how to run a successful business? It is not something they can learn through experience because by the time they understand the lesson it will be too late. Their business will have failed, but only after they've switched carriers two, three, maybe even four times. Through education programs and ongoing consulting, owner-operators can learn that unless they've done everything possible to manage their costs and run their business efficiently, they won't be better off at a new carrier, and they'll have the added burden of making up the costs they incurred while switching.
Owner-operators can get this knowledge by working with a business services provider who offers in-depth business education programs, ongoing business consulting and educational data such as industry benchmarking comparisons. Through services such as these, owner-operators can put thousands of extra dollars in their pockets and become some of the most loyal and successful owner-operators in the business. The key is education.
We've all heard the saying, "Knowledge is power." Knowledge is also increased productivity, increased profits and increased loyalty, which in turn leads to increased retention. Being informed means people make better and more knowledgeable choices. When you run a business, knowledge truly is power.
Angela Bruskotter is responsible for marketing at American Truck Business Services (ATBS). ATBS is the largest owner-operator business services provider in the United States, providing services to owner-operators leased to fleets as well as owner-operators running on their own authority. You can contact ATBS by calling 888-640-4829 or going to www.attrucktax.com.
