With so many owner-operators in attendance at the Mid-America Trucking Show in Louisville last week, Equinox Business Solutions took advantage of the opportunity to host a panel discussion on the biggest financial mistakes owner-operators make. Each of the panel members offered their thoughts on that, and some other financial-related tips.
Jeff Garra, director of fleet experience for Panther Premium Logistics, said the one of the biggest mistakes he sees are owner-operators who are able to set their own schedule and book their own loads who then forget about ensuring they have proper cash flow.
“People don’t ask their checkbook if they can take time off,” he said, “and then they go on vacation for two weeks and get behind on their fixed expenses.”
Garra said they can take vacation but be sure they have their expenses covered. He also said to watch which loads you select, watch your checkbook, know and understand your fixed and variable expenses.
While many owner-operators enter into lease agreements, Mark Rosinski, vice president of national accounts for Engs Commercial Finance, said to consider the following questions:
- Is the lease affordable?
- What are the terms?
- Can I cash flow the payment?
- What are my options at the end of the lease? What is the cost to buy the truck?
- Can I get out of the lease?
- What penalties or charges are there when I turn in the truck?
“There’s a lot to take in, but you definitely need to do your homework,” Rosinski said. “There are some good lease options out there, but there are some I cringe at, so do your homework.”
For those that are struggling with bad credit, Rosinski noted it’s a challenge to repair credit scores, but it starts with making minimum monthly payments and making those payments on time. He also suggested owner-operators work to develop a maintenance reserve to pay for repairs as needed.
David King, vice president of business development for the National Association of Independent Truckers, took a different approach and noted that the biggest financial mistake he sees is a trucker not taking care of themselves.
“My whole wealth is tied up in my ability to work, and if I can’t work, I can’t earn a living,” he said, advising the audience to find affordable health insurance. He suggested looking around for insurance as there are affordable plans available that can help. One approach is to consider a “health care ministry” as a cheap option. A health care sharing ministry is an organization that facilitates sharing of health care costs among individual members, in the United States, who have common ethical or religious beliefs, according to a description on Wikipedia. Associations are another option, King added.
“I think the most frightening thing from my perspective is someone who gets the flu and what should have been a 2- or 3-day illness becomes a 2- to 3-week illness,” he said. “You can’t afford to take three weeks off from work.”
King concluded by also suggesting owner-operators look into worker’s compensation plans, downtime insurance coverage (this can provide cash for expenses or even a rental when your vehicle is out of service for repairs), and to know your deductibles.
“You need an insurance pro who knows what you do,” he said. “We’ve seen clients who know someone from church who has 3 trucking clients and doesn’t know what questions to ask. … The time to ask about your insurance is not when you’re trying to file a claim.”
Colton Lawrence, CEO of Equinox, advised owner-operators to surround themselves with experts.
“Running my business, I surround myself with a team,” he said. “The best and most successful business owners surround themselves with people smarter than them. The biggest mistake owner-operators make is they don’t surround themselves with smart people.”
Garra added one final tip: provide the best customer service.
“If you go into a shipper and are rude, you are probably going to be treated the same way and not get invited back,” he said. “That is not a way to grow your business.”
Be positive, be upbeat, and be professional, he said.