How to become an owner-operator

27 November 2011
By admin

Being in business as an owner-operator is the most popular way to run a commercial vehicle in the UK. According to the Department for Transport 44% (41,300) of the 95,000 O-licences held in the UK are for one vehicle.

Setting up in business as an owner-operator is not cheap. An investigation by Commercial Motor last year discovered that the initial outlay to drive a commercial vehicle on the road as a business is £31,151.

CM estimates you would be working for an average wage of £4,740 for eight weeks of driving. We also estimates that any owner-operator will need to cover their own costs for eight weeks based on 60 day invoice terms from customers.

Expense - Cost
HGV Licence - £1,500
Driver CPC - £600
Three months of vehicle renta - £4,700
O-Licence application - £250
O-Licence issue fee - £391
Vehicle insurance (six months) - £2,110
Breakdown/ repair costs - £530
Miscellaneous overheads - £1,800
Fuel (eight weeks estimated usage) - £6,430
Minimum financial standing - £8,100
Total outlay - £26,411
Wages (average for eight weeks driving) - £4,740
Total Expenditure - £31,151

Source: Road Haulage Association and Freight Transport Association. Figures accurate as of July 2010.

Driver’s licensing
The first thing you would need is an HGV drivers licence – the average cost is between £1,000 and £1,500. Driver CPC training costs from £120 to £35 a day on a public course. You need to complete five days to meet the 35 hours required total. This could total anything from £175 to £600.

O-licensing
An application for any type of O-licence, be it restricted, standard national or standard international is £250 but that is before you take into account the licence issue fee of £391 (which has to be renewed every five years at £391 a time).

Anyone setting up as an owner-operator in business also needs £8,100 as proof of financial standing. If you want to run and additional vehicle the applicant must have a further £4,500 per vehicle in the bank too. A restricted O-licence holder must prove it has £3,100 per vehicle in the bank.

You can apply for an O-licence via the VOSA website and a full guide to O-licensing is available via Business Link.

Miscellaneous costs include:

Insurance (six months could cost up to £2,110)
Money to pay for services and repairs (approximately £530 would just about cover any outlay in the first eight weeks, according to Road Haulage Association estimates)
Overheads (such as renting a site to park your truck, could set you back some £1,800 for the first eight weeks).

Fuel
The base estimate for running a 44 tonne artic is: gross milage of 70,900 miles per annum, or 1,400 miles per week. Therefore the first eight weeks of operation, using an economy rate of 57.4 pence per mile, fuel costs are £6,430.