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Being in control of your own destiny, is a very attractive proposition for most

people.

The self-employed (contract) owner driver is one of Australia’s most popular

careers. Your success is very much in your own control.

Before you enter into this career or upgrade your current utility, van or truck,

it is extremely important that you research the position and accurately estimate the

income you will generate and the expenses you will incur.

You want to be making a good profit, not just driving to survive. Poor costing

of your contract will directly affect your personal income.

Ebook Summary

You want to become an owner driver, but need some help in understanding what to do.

Owner drivers range from being a courier, driving a utility or van all the way through to a long haul prime mover driver.

Regardless of where you fit in, it is critically important that you understand what costs you will incur, what income you will generate and what your ultimate actual take home income will be.

This e-book is designed to give you a guide into your new career. Before entering into the Owner Driver world, it would be prudent to have an accountant help you with a cash-flow forecast to give you a true picture of what your income will be. He will also advise on adequate insurance protection for your business and yourself.

1 Research

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The owner driver market is very extensive. Australia as a nation, has a high dependence on road transport for the delivery of goods. The advent on online sales has created an additional market for the courier style owner driver.

Step one in planning your future as an owner driver, is to choose what type of owner driver you desire to be.

The most common owner driver – lowest cost to enter the industry, after a learning period, incomes can be quite attractive.

The failure rate of couriers is quite high in the first 12 months. Income can be at a lower level while inexperienced.

2 Types

Courier

Removalist’s are a special breed of owner driver. The occupation calls for a fitter style person, due to the ongoing requirements of lifting heavier type objects.

Removalist

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The safest and best method of making your owner driver career successful is to obtain a long term contract.

You will need however to understand the terms and conditions set on you and ensure that the items relating to payment are clear cut, time frames of payment are clearly set out and termination clauses allow you adequate time to find an alternate contract.Included in your reviewing contracts, you should also look into the strength of the company you will work for. How long they have been in business and what their reputation is, in regards payments to contractors and dealings with contractors.

Remember, if a contract looks too good to be true, then it probably is.If you are unsure have your solicitor look at the contract.

3 Contract

Machinery (Concrete Mixers etc.)

Very Lucrative Contracts, but the costs for these vehicles is always at the

high end.

Maintenance costs can be high as vehicles work hard.

Contracts are not easy to find.

Australia runs on the back of long haul transport. The remuneration is high, but so are the costs. When considering the prospect of being a long haul con-tractor, you must also seriously consider the effect on your family life and the risks it poses to your general health.

When costing your contract, you should compare with what’s available to you as an employee. Unless you are making a lot more as a contractor, the risk involved isn’t worth it.

Long Haul

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What is buying an existing contract really worth? – In reality very little. Con-tracts for most types of Owner Driver are readily available provided you have a vehicle that meets the contract offerer’s specifications.Why would you buy an existing contract, which will mean you are paying extra for “goodwill”? – In some cases you may decide that the evidence of current work, particularly if it’s a territory based contract better meets your needs.

When purchasing an existing contract, make sure your accountant validates the quality of financial figures presented to you. He will advise you of any costly omissions and work out an accurate cash-flow forecast for you.

Common mistakes made when buying existing contracts include

4 Buying Existing Business or New Contract

The contract is loose by nature, the guarantee of future work is not what you were told it would be.

The seller does not have accountant confirmed financial figures to back up their assertion of profits or business value...

The seller failed to adequately insure himself or the business assets, and or failed to maintain the vehicle correctly, therefore financials show an exaggerated profit.

The seller over values the truck or vehicle being purchased and will not allow the purchase without the truck or vehicle being part of the transaction.

The purchaser has not researched the true value of the vehicle being sold with the contract.

You as a purchaser haven’t completed your own accurate cash-flow projection to validate sellers profit assertions.

Purchasers fail to have the truck or vehicle being purchased mechanically and structurally inspected.

Goodwill is paid when no genuine goodwill value exists.

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Over 90% of people who choose to become an owner driver, will need to organise a Finance Agreement for their vehicle of choice.

There are a number of options available, but your personal circumstances will dictate the avenue’s that are available to you.

5 Finance

For Utilities and Vans no deposit finance for owner drivers is quite common. These finance contracts are normally for values under $35,000, meaning that the risk to any financier is not that great.

No deposit finance for new businesses is more difficult to obtain, but if you are prepared to pay a little bit more, a number of options are avail-able.

Once your vehicle finance amount gets above $50,000, no deposit is less common. To obtain no deposit, it is probable that you will need to own some property and/or have a good proven credit history at a similar level to what you want to borrow.

No Deposit

A common method of avoiding paying a cash deposit is to offer additional security in lieu of cash. If you own any asset of reasonable value (car, truck, trailer etc.) lenders on the second tier (i.e. not banks) will take these as additional security to reduce their loss risk.

Can be categorised into 3 levels.

a. Banks (e.g. ANZ, Westpac & St George)and Large Finance Companies (e.g. Esanda, Capital Finance & Macquarie Leasing)

b. Finance Companies Second Tier. Rates are higher but readily lend to owner drivers (e.g. Leasewise & Morris Finance)

c. Rental Type Companies. For lower values, agreements are rentals

Additional Security

Financiers

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over reduced periods (e.g. 12 months) Payments are higher, but with good payment conduct, agreements can be refinanced at term end with a tier 1 or tier 2 lender.

If you are looking for Utility or Van finance approval has a reasonable chance particularly if you have a reasonable size deposit.

If you have bad credit and you want a larger more costly truck, your chances of success are not great. Any lender would be looking at a no risk loan. The deposit required will be high.

Bad Credit

These rules are the secret to higher value truck loans.This is where you need to seek the assistance of an experienced finance brokerage such as Harley Finance (http://harleyfinance.com.au) or Phone 1300 859 890.

99% of all applicants will not adequately cover these 7 rules. Your Finance Brokers job is to highlight the rules you cover and create a picture to any prospective lender that your character etc. gives them confidence you will meet the rest.

For Owner Drivers we are getting a financier to accept our version of your future income and prosperity and that you as a borrower and business owner have researched and verified that your business is a long term success story.

So what are the 7 Golden Rules?

a. Appropriate Vehicle – The vehicle must be suited to the work pro-posed, including fittings such as tail gates, winches etc. The price of the vehicle and the amount to be borrowed need to be match the profile of the applicant. (e.g. if you have never had a loan before, the amount a lender will give you will be less than someone with a well-established good credit history

b. Experience – A high emphasis is placed on experience, due primarily

7 Golden Rules.

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to the failure rate of new start Owner Drivers. The attraction of being your own boss and driving all day (particularly if you enjoy driving). This attrac-tion quickly wears off with things like income less than anticipated, traffic congestion, long hours & irregular workflow.

c. Work Contract – A work contract is a must, particularly for the new driver, the funder must have confidence that you will be able to meet your payment commitments for the period of the loan or finance agreement.

d. Credit History – Poor credit history doesn’t necessarily mean you won’t get approved, but it certainly means you will incur a higher interest rate than someone with good credit.

e. Business Plan – Being an Owner Driver is a career not a job, if you cannot show you have thought this purchase through properly, your loan or finance application will almost certainly be declined. At Harley Finance we assist all our clients with business plans and cash-flow projections.

f. Fall Back Position – Bad luck happens. Lenders like to see that if some-thing goes wrong, you will still be able to meet your commitments. Home equity and savings are the primary focus for lenders.

g. Risk (Potential Loss) – Only a consideration when all of the above have been dealt with. There is an old saying in finance “cash is king” A good deposit in many cases will overcome weaknesses in other areas men-tioned above.

The sole benefit of adding your vehicle purchase to your home loan is minimal payments. This is because you are paying the vehicle off for a period up to 25 years.

The disadvantages are

a. Your ability to borrow against your home or to purchase a new home are greatly reduced as you need to pay out the tuck as well.

b. Your truck isn’t going to last 25 years, so you will still owe a lot on it

Adding your vehicle finance to your home loan

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when you have to sell it.

c. It will give you a false profit for your business.

If you need to put your vehicle onto your home loan to make it financially viable, then the contract you are considering is not a good contract.

In summary. If you want Owner Driver or Truck Finance and you are new to the business, your bank probably won’t understand. We call it the “blank look” An experienced Finance Broker is your best chance of success.

Adequate Insurance coverage for the owner driver is often the first thing omitted or cancelled when profits are not what was hoped. This is a very dan-gerous strategy.

You must remember that if you can’t drive you won’t get paid. All of us believe, especially when younger that we are “bullet proof” and nothing will happen to us. Unfortunately in to many cases this isn’t the case.

As a minimum every owner driver should have themselves and their vehicle adequately insured. Which includes

6 Insurance

Personal Insurance – Income Protection Insurance is designed to ensure your business does not fail in the event of any unforeseen illness or injury. Typically the insurance covers 78% to 80% of your income.

You aren’t going to get rich from it but it will ensure all your financial commitments are met and you and your family can continue to live adequately until you are well again.

Public Liability –protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or 'pure economic' loss resulting from your negligence.

Vehicle Insurance – Your Vehicle is your businesses primary asset, it must be insured for its replacement value, in the event of accident and being

written off. If you have no vehicle you have no business.

Cargo Insurance - In many cases the organisation you contract too, will cover insuarance over your cargo. You must check this, if they donot speak to an Insurance Broker. Cargo can be very valuable, if you aren't insured, it could wipe you out.

A specialist Transport Industry Broker such as All Australian Transport Insurance can assist you will the best insurance policies available to you. You can speak to the proprietor Scott Shepherd on 0450 958 445.

This is relative primarily to the long haul type vehicle, but can also be relevant to any older truck or vehicle.

Rebuilds and Major maintenance have two very important points to remember.

a. Your vehicle may be off the road for a long period. You need to schedule this work in your contract low periods.

b. The cost will be high, you should have been putting away a few dollars every week in your budget for when this work is due.

Rebuilds and major maintenance

Warranty

Your Vehicle is your life. You need to plan for your scheduled maintenance, both the cost and the time you will be off the road.

Other Things You May Need to Consider.

A common problem with being an owner driver is finding the time for adequate rest to ensure that your health is always near 100%

Be very careful if you are buying a used truck or vehicle. The seller may offer you a warranty on the vehicle. Many of these warranties are valueless. Read any warranty carefully before purchasing. They can be quite expensive and be a total waste of money.

7 Vehicle Maintenance

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9 Holidays

For your own well-being and to ensure you provide your contract custodian high quality service you need to budget for and allow for adequate holiday time. This holiday time should include at least one break per year of a minimum of 2 weeks.

Either schedule your holidays in the quiet periods or plan in advance for a relief driver.

If you do your research you will find good contracts available.

Before you do anything make sure you cost things accurately. If you leave things out you won’t make money. Consider the effect of your family, loved ones on your health.

Get professional help. See your accountant to help you cost. See an experienced Finance Broker to give your finance application it’s best chance of success and get an specialist Insurance Broker to get you and your assets insured correctly.

Keep your vehicle well maintained and ensure you take your breaks.

Summary

Truck Finance

Truck Finance

98 Relief Drivers

If you are a long haul owner driver or a busy short haul owner driver you need to have access.

Reliable Relief Drivers or an agency that can subcontract your work in case on sickness or injury.