Owner-Operator Vs. Company Driver: Comparing Pros & Cons
Should you make your way in the trucking industry as an owner-operator or as a company driver? Learn some of the pros and cons of each.
As vocational aspirations go, being your own boss is a classic. The newly self-employed quickly realize it’s also a myth. The business owner trades one boss for many, with every customer asserting some control over schedules and income. Still, in the trucking industry, lots of company drivers dream of becoming owner-operators.
You can’t say being an owner-operator is “better” or “worse” than being a company driver. They’re just different. Comparing experiences of the owner-operator vs. company driver, there are benefits and drawbacks on both sides. The right choice for you depends on your personal and financial goals; what you like about the trucking industry; your tolerance for business risk; and about a million other factors.
If you’re a driver in someone else’s fleet, here’s what you need to know about the pros and cons of owner-operator businesses. And if you’re an owner-operator dreaming of escape from the stresses of proprietorship, we’ve also included a snapshot of life as a company driver. Look within, make some goals, and pick the employment model that works for you. Either way, you’ll find yourself behind the wheel.
Pros And Cons Of Being A Company Driver
As a company driver, you’re an employee of someone else’s business. That means fewer headaches but also less control. Here are some of the benefits and drawbacks of hauling freight as a company driver.
Company Driver Benefits
You get a guaranteed paycheck.
Whether you’re making good time or broken down on the side of the road, company drivers get paid (some jobs pay by the mile, to be sure, but you can also find carriers who offer conventional salaries). Even if the business isn’t profitable this year, the company driver gets a consistent paycheck. Employees avoid the financial stress that owner-operators sometimes face.
You don’t have to chase down work.
A big part of any fleet owner or owner-operator’s job is finding work. That’s easier than ever, thanks to load boards, spot trucking, and broker networks—but it requires a lot of forecasting and future planning. Company drivers just get in the truck and go where they’re directed. Again, it’s less stressful than running the business.
You may get benefits: paid vacation time, health insurance, sick leave, and more.
If an owner-operator isn’t on the road, they don’t get paid. Company drivers can take paid time off. Given the industry’s shortage of truck drivers, which continues as we publish, many fleet owners are offering attractive benefit packages in an effort to draw the best drivers in the industry. That means paid vacation and, often, good health insurance (no small perk).
Your work schedule can be predictable.
Many carriers offer their drivers set schedules; maybe you only drive Monday through Friday, and you’re home every weekend. An owner-operator may have to take the work that’s available. As a company driver with the right employer, you can find a working schedule that works for you.
Company Driver Drawbacks
You don’t share the fruits of business success.
A steady paycheck is nice, but it doesn’t reflect the full value you create with your work. When you drive for someone else, you make more money than you take home. (If you don’t, you probably won’t have that job for long.) So even if you bring in huge profits, your paycheck stays the same—while your boss pockets the difference.
Someone else dictates your schedule.
Earlier, we presented a predictable schedule as a benefit. It is. But a predictable schedule isn’t the same thing as working (or not working) whenever you want. Owner-operators have more freedom in this department.
You have to follow company rules.
Every carrier has different rules for their drivers. Some don’t allow pets or ride-along partners, which can complicate insurance. Most don’t allow you to decorate your rig any which way. As a company driver, you’re bound by the procedures and protocols set forth by your employer. If you find a great match with a company, that’s not a problem—but if you disagree with a rule, it can be grating.
Pros And Cons Of Owner-Operator Businesses
An owner-operator is an entrepreneur. You’re running a business, handling everything from management to the day-to-day task of hauling freight. Despite the name, owner-operators don’t necessarily own their trucks outright; you could always lease. The defining factor of this trucking model is that you’re operating a carrier business, typically starting with one employee: yourself. Here are some of the benefits and drawbacks of being an owner-operator.
You practice your craft fully.
You’re driving the routes, taking care of your equipment, negotiating rates, and building relationships with shippers and brokers. The owner-operator knows the industry inside and out. You fully inhabit road-based logistics and everything that goes with it, from the breakdowns to the beautiful sunrises; tricky weather to spring breezes; and sales calls to payments. We’re listing this as a pro—but if what you really love is driving, and the rest is a distraction, this could be a drawback.
You create your own schedule.
If you don’t feel like driving, you don’t have to drive (assuming you’re not breaking a contract, of course.) Prefer to drive three days a week and spend the rest at home? If you can afford it, you can do it. Owner operators have a lot more power over their work schedules than company drivers do.
You make all the decisions about how to run your business.
Want to put a sticker on your truck, or paint flames along the side of the cab? As an owner-operator, you’re free to do so. You can decide if you want to travel with a partner (animal or human). You can brand your company however you’d like. Company drivers don’t get to make these choices. Owner-operators do.
You keep 100% of your profits.
We always frame self-employment as “being your own boss.” You could just as easily say you’re your own employee. And as an employee, you can pay yourself a salary. If there’s a surplus at the end of the year, you can reinvest it or take a hefty dividend; your money, your choice.
You’re responsible for 100% of the losses.
Company drivers don’t have to worry about the bottom line. They’ll get paid regardless. As an owner-operator, bad years hit your personal finances. That’s the dark end of entrepreneurship’s “risk vs. reward” spectrum.
While you have power over your schedule, cash flow needs might lead to unexpected work.
Even if you only want to drive three days a week, financial considerations can force you into less standard working hours. If you need the money, you may end up driving more than you’d planned—and the loads you need to keep cash flowing could have you driving evenings, weekends, or on days you were hoping to take off. A boss won’t tell you when to work, but the market might.
You have to handle business compliance as well as driver compliance.
Whether you’re a company driver or an owner-operator, you must comply with safety regulations set forth by the Federal Motor Carrier Safety Administration (FMCSA). That includes regular drug and alcohol testing, remaining alert behind the wheel, and following hours of service rules (while tracking hours on the truck’s electronic logging devices [ELD]). But owner-operators have to handle business compliance, too. They must keep driver qualification files (DQFs) on themselves or other drivers, if they hire. They must register the vehicle, file taxes, sign up for a drug and alcohol consortium, and on, and on. The paperwork is endless.
Is it better to be an owner-operator or a company driver?
That’s the question, and there’s no easy answer. The choice between company driver vs. owner-operator starts with yourself. To make a plan for progressing in the trucking industry, ask a few more questions:
- Do you just love driving, or are you also interested in business management?
- Are you willing to learn how to create business plans and budgets and marketing initiatives?
- Does your home life give you flexibility to work odd hours?
- Are you looking for a business opportunity or just a steady paycheck?
- Do you have $15,000 or so to invest in an owner-operator business?
The answers can help you decide which path to take. Either way, the good news is that you’re not stuck—you can pivot from company driver to owner-operator and back again. It might make sense to start as a company driver, save up some capital, and eventually buy your own truck. Then you can launch your owner-operator business and see how you like it.
Confronting A Key Challenge For Owner-Operators
If you do become an owner-operator, you may struggle with a quirk of the industry: Brokers and shippers often take weeks—or even months—to pay your invoices.
That can create cash flow problems, and since your truck runs on fuel, cash flow is essential for business survival. The solution to cash flow problems in the trucking industry is a financial tool called invoice factoring. Factoring companies pay your invoices today, then collect from the brokers or shippers who hired you.
Bobtail is a factoring service built to streamline carrier funding. Unlike legacy factoring companies, we don’t charge hidden fees; you pay a single, low factoring fee between 1.99% and 2.99%, depending on business size. We don’t impose volume requirements, so you can factor one invoice and take the next payment straight from the shipper. We don’t even make you sign a contract. You just open the app, upload load details, and get funded. Sign up for a free, 7-day trial to experience Bobtail today.