This is a common consideration and a common question for most people just getting into trucking for the first time – and an ongoing question throughout their trucking careers. Whether to be a company driver or an owner operator – which is better?
The answer is different for different people – even then it changes as their own lives change over time.
In this article/post am I going to share my thoughts on it with you. Ultimately though, you will have to decide which is right for you right now.
Let’s begin with defining some terms. The term Owner Operator is thrown around and is used to describe all kinds of people – some are true owner operators and others are something else entirely as you will soon see.
So Let’s start with what an actual owner operator really is – in my opinion anyway.
Independent Owner Operator – Someone who owns his or her own truck and has their own authority. This means they are a motor carrier or trucking company and from an authority and regulatory standpoint just like the big boys, J. B. Hunt, Werner, Schneider and so on. They can get their own loads direct from customers/shippers and they can also use any load board, dispatch service or other resources as they see fit. They are not under the supervision or control of any other motor carrier at all. All decisions – and all responsibility are their own – as are all the risks too. Being an independent owner operator offers the greatest freedom and the most potential as an owner operator for earning the most money. Yet it also requires a level of knowledge and understanding and an ability to manage your own business that is far in excess of the other options available to you. In reality, far too many people fail at this because they do not understand even the tip of the iceberg in terms of the knowledge they need to do this right. Most of those who try it and fail, do so because of a lack of training and information leading to a lack of knowledge and its resultant improper decision-making.
Leased Owner Operator – This is a scenario where you buy your own truck – but instead of getting your own authority as above you “lease on” to another motor carrier (trucking company) and work under their authority. That means they are accepting a huge responsibility and liability for you and they will take care of most of the regulator stuff – and especially the most critical things like drug and alcohol testing, drivers qualification file, and many other regulatory and administrative functions. They will also provide access to the loads you haul. In exchange, you are limited to what you can do and are typically required to haul only loads through them, and for a lower rate than if you obtained your own loads. They have to get their cut to be profitable and stay in business – so that is common sense – or at least it ought to be. You will have less responsibility and fewer administrative headaches – but you still have many owner related decisions to make and how well you do that will determine whether you will achieve success or fail here too. You own your own truck so you can leave and go to another carrier and try it there. Some people love this arrangement and thrive in it – others hate it and eventually either fail or they move on to independent Owner Operator. Some simply go back to being a company driver.
Lease Purchase Driver – This is a dangerous place to be and a losing deal for most drivers – yet some do make it work with some companies. The deal is that you sign up for their program and once approved they will sell you a truck on a lease purchase program. That means you are renting it until it is paid for – and you own nothing at all in reality. Yet they use the terminology and call you an owner operator or contractor or independent contractor. Why? Because it is what you want to hear and it works. In other words, it is a marketing and recruiting tactic. These programs have often resulted in financial destruction for many participants and shattered dreams. They have also resulted in numerous huge class action and individual lawsuits – many of which some of the biggest carriers in the country LOST and have had to pay out millions of dollars in settlements. Often as a result of exercising company driver like control over the participants while avoiding company employee responsibilities and liabilities including those related to taxes and payroll. They have also gotten in trouble for using deception and for missing maintenance funds and escrow account funds – charging various fees and other things. The premise is that you get a truck easily and you get to “run your own business” while learning under their supervision and getting their support. Then when you complete the program you own your own truck. Sounds pretty good doesn’t it? Yet the reality is that most people will never complete the program and they take the same trucks back and put other drivers in them again and again and repeat the process. These drivers will often work far harder and longer than company drivers – because they are trying to “own ” their own business, yet many of them net less money than an average company driver makes in a week or a month. Most of these programs charge you more per WEEK than the payment would be for a month if you went and financed or even leased a truck on your own independenly. Most of these things are a BAD deal for the driver. Having said that – there are a few that do work – though still an expensive and a very hard way to do it if you ask me, but you decide for yourself. Others will rip you off nine ways from Sunday…Be careful with lease purchase programs!
Company Truck Driver – There are millions of company drivers on the road each day all over the country. They work in all kinds of niches and operate all kinds of equipment. Most drivers are company drivers. Here you have far less responsibility – from a business administration and DOT compliance point of view, but you also have the least control and a more limited earning capacity potentially. The company provides the truck, the trailer, the insurance, authority, fuel taxes, heavy highway use taxes, permits, fees, drug and alcohol testing, record keeping and on and on it goes – most of it behind the scenes and which the average driver is oblivious to even knowing what they are doing. Yet they control what loads they assign you and require you to do what they tell you to do or lose your job. You have less freedom than an owner operator and may make less money, but you also have far less responsibility and overall liability too – and you can always simply quit and move on to another carrier any time you like. If you choose a good carrier – and they are not all good either – you can make very good money and have decent benefits too. With a good carrier. Often top performing company drivers with decent motor carriers make MORE money than the typical owner operator makes. By the way – what an owner operator grosses is NOT what they net – so compare apples to apples and not to oranges. Net pay is often higher for company drivers – but you do have less freedom and less independence.
Which Is Better Company Truck Driver or Owner Operator?
That depends on you. What you want, what you know, what you are willing to learn and how hard and how smart you are willing to work – and most importantly what you then actually do.
The most freedom and the most potential profit is in being an Independent Owner Operator.
But so is the most responsibility and the most liability there too. If you want that route then you have a lot to learn if you want to be successful. In the end you have to do your own research and do some soul searching and then make a decision and pull the trigger. No one else can decide for you.
My Thoughts and Recommendations
If you are new to trucking then I recommend that you start out by becoming a company driver with a decent trucking company – but see your time there as paid training. Learn the ropes of the business as you learn how to drive a truck and do the job. Look deeper. Learn how it all works.
Take my courses and then get a free consultation with me.
After you have a few months of experience driving (9 months to a year or so) then you will be far better prepared to launch your own business as an owner operator. Whether that be as an Independent Owner Operator or as a Leased on Owner Operator.
In general, I DO NOT recommend most lease purchase programs.
They are designed to appeal to your ego and to exploit you while you work harder and make less than a company driver does. Having said that – there are a FEW decent lease purchase programs that can work if you have the right situation, the right mindset and some serious drive and determination. On the other hand – if you do have all that – then why not just go buy your own truck to begin with and then either become an independent owner operator or lease it on to a good motor carrier? Just saying…
Regardless of what you decide – you need to understand that to be successful in trucking you need to know a lot more than you are even aware of at this time. So start learning. Then Keep learning from now on. I recommend you take my courses on Udemy to begin with. They are inexpensive and you have access anywhere you can get on the internet – from a cell phone, tablet, laptop or desktop.
Then join our FREE Facebook group – Trucking Business Success and I will be happy to help you to the best of my ability. Over time I am developing more indepth courses and they will be available on our Trucking Business Success site in our Trucking Business Success Academy – so stay tuned.