Owner Operator Contracts: Everything You Need to Know
Owner operator contracts require finding clients that meet your criteria, which isn't always possible, but signing on a few who do meet most of your criteria is a step forward if you're willing to work hard. 3 min read
Owner operator contracts require finding clients that meet your criteria, which isn't always possible, but signing on a few who do meet most of your criteria is a step forward if you're willing to work hard.
Getting and Keeping Contracts
- Part of being successful with your business is the ability to negotiate contracts directly with clients and retaining those clients when confronted with competitors.
- One way to avoid losing a contract is by providing the best service, which includes not being late, having reliable equipment, protecting the product, and providing one-on-one communication to ensure that everyone is on the same page.
- The trucking industry is a competitive area, and to survive, you must be capable of outbidding the competition to get continuous work.
- To win a trucking contract requires that you know the costs. This includes calculating the mileage cost to know how many miles a trip will take when working up the contract.
- Determine the daily cost. Do this by dividing the total number of miles stated in the contract by an average of the number of miles you are able to drive in a day. This gives you the number of days it will take to complete the contract.
- Write a bid proposal outlining your safety record, your over-the-road experience, performance record, and a statement of commitment, which could help secure the contract.
- Include in the bid proposal the price you estimate for fuel cost as well as the amount you are charging for your labor.
- Do not undersell yourself to the client when working up a bid proposal as the fees earned pays your salary plus provides money for your on-going business operations.
- Once you've completed all the calculations for the job, submit the price to the client for their consideration.
- The proposal is your way of outlining the specifics of the contract. It is designed to highlight your strengths as an owner, outline the job, and end with a fair price.
- Do not fall into the habit of overbidding. Doing so can cost you a potential contract.
- Underbidding, on the other hand, can lead a company into bankruptcy.
Tips for Generating Clients
- Finding new clients is not the easiest job and keeping them for the long haul is equally difficult.
- It's important to make an effort to always leave clients happy.
- Always go the extra mile when it's necessary.
- Remember how difficult it was to attract new clients and treat clients with respect.
- Clients may have 30 to 60 days to pay your invoice. With this in mind, be prepared as your cash flow can run dry while waiting for client payments.
- It takes patience to be a successful owner-operator.
Tips When Becoming a Leased Owner Operator
- Two things to consider when choosing to become a leased owner-operator are the company you lease to and truck maintenance. Both are important for your business to be successful.
- It's best to not purchase your work truck from a trucking company and provide hauling for them at the same time.
- Many of these companies are set up to be profitable to the company and not to the owner-operator.
- Look for companies that have a long-standing relationship with their drivers.
- Work with companies that allow you to choose the freight rate and the type of load. This is a plus in allowing you the flexibility you need to run a successful business.
- As an owner operator, your truck and your services will be in demand.
- Make sure the load delivery date is compatible with your schedule.
- It's important as an independent driver to keep maintenance and overhead as low as possible.
- New businesses need reliable drivers. This means they are active in their pursuit of new customers. While a company just starting out may not get the most lucrative freight shipments at first, it is to your advantage to get your foot in the door as they are building their reputation and business. As they obtain contracts, you may benefit from having the work contracted to you.
- Stay up-to-date on the industry. Read publications and learn as much as possible about the trucking business while you transition into the position of self-employment.
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