A Lease Purchase program works by allowing you to take the first steps toward owning your equipment. However, certain responsibilities and costs must be considered before signing a lease agreement. First and most important – you will need to be ready to operate as a business owner! Without this mentality, you will struggle to be successful. We prepared some key considerations for when you’re entering a Lease Purchase program:
- Your Plan
- Your Business Structure
- Start-Up Cost
- Your Finances
It is important to have an overall goal from the beginning. Picture yourself trying to hit something without a target in front of you – impossible, right? Well, that’s just like starting a business without a plan. We recommend that you write your plan down; that way, you can periodically go over it to see how close you are to accomplishing it. For example, imagine your earnings in the next six months or a way to visualize your business growth up to a year ahead! If you feel like you’re stuck, you can always reach us via [email protected] to get a bit of advice or check our other tips on how to become successful as an owner-operator.
Your Business Structure
Owner-operators have a great deal of flexibility and independence, but they are also SOLELY RESPONSIBLE for the business side of their operations. Company drivers never have to worry about day-to-day operations other than operating their semitruck. By becoming your own boss, you must assume more responsibility. It starts with the conception of how you want your business to be structured and operated. The structure plays an important role when running a business. It determines your taxes, paperwork, registration, and more. There are different types of business structures, like:
- Sole Proprietor
- Limited Liability Company
- Limited Liability Partnership
You’d probably lean towards becoming a sole proprietor, but each one of these structures has its own advantages and disadvantages, so we recommend you do proper research and use the one that you believe is the best for your business.
Even with the low to no-money-down Lease-Purchase programs like those offered through Super Ego, there are still startup costs involved that should be considered. For example:
- Personal expenses for up to 3 months
- Airfare and hotel accommodation for orientation
- Tools, equipment
- Initial Fees (registration and escrow)
Lease-Purchase is the least capital-required way to start a trucking company, but there are still some start-up costs involved and you have to take them into account. Our recruiters will explain everything in detail, but you have to understand that in most walk away Lease-Purchase programs, the carrier assumes most of the risk while giving the contractor the option to walk away with no liability if no balance is owed due to the operation of the equipment. This gives contractors limited funds to get up and running, with minimal cost. So even though most of the cost was absorbed by the carrier that acquired the equipment, you will still have deductions in the first months of your lease-purchase contract, that you have to TAKE INTO ACCOUNT. This leads us to:
It’s advised that when conducting business, your personal and business finances should be separated, and before starting any business, the health of your personal finances should be strongly evaluated. Realistically speaking, it’s advisable to have some start-up capital and in the first few months to a year of working as an owner-operator, you should be mostly focused on building your business cash reserves and not your pockets. Your finances should be healthy enough to allow your business to grow and focus on the initial goal/plan you set for yourself.
With all this in mind, make sure you are ready to start a Lease purchase program and contact us if you need any guidance!