How to Create an Owner-Operator Business Plan
To be an owner-operator, you need to think more like an entrepreneur. This means you need a plan for how you will grow your trucking business. Before you ever put 18 rubber wheels to pavement hauling goods, you need a clear plan. Having a business plan can help you to secure a loan. It builds trust with lenders and shows exactly how you plan to move forward.
Your plan should include an executive summary, financial goals, compliance with FMCSA, and strategies to grow your business. Some owner operators only want to run their own truck. Others want to run a large fleet. Decide which one you want to do ahead of time.
Keep reading as we explore how you should outline each step in the owner operator truck driver business plan. Having a plan will also facilitate owner operator business ideas that you may not have thought about.
What Lenders Evaluate in a Business Plan for Truckers
When you work as an owner-operator, most lenders will evaluate you based on a few key things like:
Proof of Contracts: Your lenders will want to see contracts set up with manufacturers, corporate clients, and logistics aggregators.
Cashflow Buffer: Before a bank will loan to you, they may want to see that you have a cashflow buffer set aside to cover you in the event of freight dips or trucks that need to go through repairs before you can settle an invoice with a client.
Collateral and Equity: Lenders typically like to see equity because they can use it for collateral security in the event that your trucking business goes bellyup.
Now that you see what lenders look for in your business plan, let’s take a look at how to set up an owner driver business plan.
Step 1: Write Your Executive Summary
The Executive Summary sums up the plan in a simple and quick-read format. Your lender should be able to read the Executive Summary and understand the overview of your trucking company. Don’t exceed one page or 250 words. Keep it brief for busy lenders who may lose interest if you make it too long.
Things to put in the Executive Summary include:
Business name
Service you plan to offer (regional, OTR, specialized freight)
Intended market
Financial projections
Goals (short term & long term)
Startup funding needed
Related article: Owner-Operator Expenses: The Costs That Determine Your Profit
Step 2: Description of Your Company
You want to highlight how you plan to structure your business because the IRS will tax you depending on the business structure. Sole proprietorship, LLC, corporation, and partnership are all business structures. Each one has its advantages and disadvantages, so you want to speak with your tax advisor about what’s most favorable for you.
Location for where your trucking business is located is another thing you need to highlight. You will also use this section to talk about your experience in trucking and finally, highlight how you plan to build your business over time.
Step 3: Services You Plan to Offer
Use this section of your business plan to outline the specific types of trucking services you will offer to customers. As a side note, the trucking industry is diverse, so you want to get as specific as possible. What freight do you mainly plan on hauling? The most common types of freight include:
Reefer
Dry van
Hazmat
Flatbed
Local & regional delivery
You highlight this because the niche determines your profit margins and the customers you plan to serve. While flatbed and hazmat pay more, your insurance rates go up. You also need to pay even more attention to compliance.
Step 4: Conduct a Market Analysis
You want to use legitimate sources (FMCSA, ATA, DAT Freight report, etc.) when you conduct a market analysis because it will make your business plan look more credible to lenders. A good market analysis will include things like:
Industry overview and trends
Target market
Competitor analysis
Demand and lane analysis
Pricing and regulatory environment
Step 5: Write About Your Compliance
Compliance matters because you don’t want to pay unnecessary fines. When you work as an owner-operator, you need to follow the standards set by your brokers and your shippers. Beware as well of how if you work with a carrier who doesn’t follow compliance standards, or they have a less-than-desirable safety record, you could be putting your whole business at risk.
Inside this section, you need to include the following:
DOT number
MC authority
IFTA
IRP
Drug and alcohol testing
Insurance
HOS
You won’t be allowed to operate if you don’t have the things listed above for compliance, and it’s important to include these things in your business plan.
Step 6: Acquiring Customers
Unlike when you work as a company driver, your owner operator business plan needs to include how you plan to get customers. There are multiple ways of doing this. Your plan should include how you will attract them, but it should also highlight how you plan to keep them.
Some ways that owner operators get customers include:
Cold calling
Networking
Load boards
Social media
Direct contracts
Strategy for your target market matters as well because how you plan to acquire customers will make a difference here. For example, are you planning to work with a big corporation that needs high-volume freight, or will you be working with companies that need regular deliveries?
The details here matter because your customer acquisition method will depend on who you’re targeting.
Step 7: Write Your Financial Projections
The financial section is one of the most essential parts of creating a business plan because a business exists to make money. If you can’t show a credible way of doing it, you won’t secure a loan. You can also use this when referencing your business plan to see if you’re on target.
Some of the things you need to put in the Financial Projections section include:
Startup costs
Operating costs
Revenue
Profit margins
You want to include the Financial Projections in your business plan for at least three years. The reason being that it shows lenders that you have quantitative proof of viability.
Step 8: Operations
With your operations, you need to detail a few things to give the lender an idea of how you plan to work. Some of the things to include are:
Work hours
Self-dispatching or an employee dispatcher?
Scheduling maintenance
Record keeping
Growth plan
Related article: How to Become an Owner Operator: A Practical Start-to-Finish Guide
Step 9: Organization and Administration
You might only have a single truck, and you just want to run that one truck, but you need to highlight in your business plan what the structure looks like. If you want to hire company drivers who will work for you, you need to highlight what your recruitment plan looks like.
Having this in your business plan provides proof that there will be someone who leads your operations. This section proves that you have the ability to execute on what you say. You should also mention your plan for staying compliant with the hiring standards set out by the FMCSA. Due to regulations, it can be trickier than simply hiring someone.
Step 10: Goals
You want to highlight your short-term and long-term goals. Great business plans look beyond the first year. They create a system that you plan to follow throughout the life of this business and how you plan to run it.
Let’s look at how you can set up goals for your business plan. First, you might ask yourself if you plan to enter new markets, or if you plan to expand your trucking fleet. How many new trucks do you want by the end of five years? You might also ask if you will use social media as a marketing tool for your business. What are your goals with it?
Consider if you will target a single freight or diversify to improve your earning potential. You want to set up long-term goals because it shows lenders that you plan to do more than simply survive. You want to set the foundations for a solid and lasting business.
Join the Owner Operator Network
At Trucker Social, we have a network of owner operators who have written business plans before, and they can give you advice about how to do it. Besides helping you to secure a loan, a business plan serves as your strategic roadmap. You can use it to create a step-by-step plan for executing on your goals to run your company. It makes it easier to see everything you need, and it can ensure that you stay aligned internally.
If you’d like to connect with other experienced owner operators who can help you to succeed in this business, sign up for your FREE profile at Trucker Social.
