Can Hauling--Need Honest O/O Advice
#11
Member
Join Date: Aug 2007
Location: Charlotte, NC
Posts: 56
Back on the Road, OPEC is cutting production this week. Fuel will go back up and will in the long run for sure.
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Sparks Industrial Services Inc.
#12
Rookie
Join Date: Oct 2008
Posts: 9
For you experienced business owners, please hang with me here for a few - this might be some old re-hash.
An interesting thing many people tend to forget is the ROI, or Return on Investment. As an O/O, you can look at your income as coming in three parts. First is the portion that would basically compensate you as the driver. For sake of argument, you can equate this to what an experienced company driver could be making. The second portion is the owner's portion. This is the compensation you get for assuming all the joys and headaches associated with running your own business, as well as compensate you for the additional time spent running the business (finding loads, maintaining equipment, paperwork, etc). The third portion is the Return on Investment, or ROI. This is the return you get for the capital you have invested in your business, including equipment and operating capital needed to pay for fuel and other expenses until your get paid by your customer. Typically, to determine an acceptable ROI, you would estimate the amount of money you will have tied up in the business and compare what you could get on it for return elsewhere. 20%+ is probably a good target. (for comparison, investing long term in the stock market gives you 10% back with less risk than trucking). So - some assumptions: Total investment (used truck if purchased cash, working capital, other equipment) - $100,000 Desired minimum ROI - 20%, or $20,000/year Expected miles / year - 120,000 ROI/mile - .166 Amount you could make as an experience company driver - .50/mile Add ROI/mile and experienced company driver rate .50+.16 = .66/mile So - in this example - if you aren't able to clear above .66 cents/mile after ALL expenses are paid, you would be better off taking a company job paying .50/mile and investing the money elsewhere. And that doesn't even begin to address all the time and effort spent running the business. :eek: And please, before y'all start picking on my numbers, I just picked some for sake or argument - desired ROI could be 15% and total investment could be $250,000 or whatever.
#13
I would use 100,000 miles/year as a basis to do my calculations. Most owner operators will take time off from time to time. That will affect the number of miles you can drive. There is no reason to spend $100,000 for a truck and operating equipment starting out if you plan on leasing to a carrier. I would count on no more than 1/2 of that amount. And most company drivers are not going to receive $0.50/mile. I would say that most will be around $0.35-0.40/mile. With the economy in a tail spin that figure could actually go down over the next year.
#15
Rookie
Join Date: Oct 2008
Posts: 9
I would use 100,000 miles/year as a basis to do my calculations. Most owner operators will take time off from time to time. That will affect the number of miles you can drive. There is no reason to spend $100,000 for a truck and operating equipment starting out if you plan on leasing to a carrier. I would count on no more than 1/2 of that amount. And most company drivers are not going to receive $0.50/mile. I would say that most will be around $0.35-0.40/mile. With the economy in a tail spin that figure could actually go down over the next year.
I guess the entire long-winded point I was making, though, is the same one that GMAN and others have made - if you aren't making more as an O/O than as a driver, than why take on the financial risk and additional headaches?
#16
--Less 1300 per wk in fuel leaves 1676 per week. Minus 600 per week for all expenses except drivers salary which will be the 1076 per wk.
--- Ok, certainly agree that I am just working for a pay check, and as a company driver I may be able to do about the same. The big advantage here that I see is the ability to park the truck for a month out of the year or when I feel the need to do so, so I can enjoy boating and fishing or Family time. Can't really do that as a Company driver. I also hope that the above scenario is a lot better financially. Time will tell... Joe Back on the Road, I am curious as to whether you plan on paying yourself a salary when you are not running? If so, it could skew your figures.
#17
Before signing with any carrier who pays mileage you need to find how much deadhead they have to get more accurate figures. In fact, it would be a good idea to check with a carrier who pays percentage to see how much deadhead they have as well. I try to keep my deadhead at around 10%. Right now that figure is higher due to the slow down in the economy. I am deadheading more to get a better rate. It costs money to deadhead. Those miles should be accounted for when doing projections or calculating your costs. For instance, if you are running for $1.30/mile and your deadhead miles are 10% then you are actually running for $1.17/mile when you include the deadhead.
#18
Member
Thread Starter
Join Date: Oct 2004
Posts: 58
Before signing with any carrier who pays mileage you need to find how much deadhead they have to get more accurate figures. In fact, it would be a good idea to check with a carrier who pays percentage to see how much deadhead they have as well. I try to keep my deadhead at around 10%. Right now that figure is higher due to the slow down in the economy. I am deadheading more to get a better rate. It costs money to deadhead. Those miles should be accounted for when doing projections or calculating your costs. For instance, if you are running for $1.30/mile and your deadhead miles are 10% then you are actually running for $1.17/mile when you include the deadhead.
The above is certainly a good point and well taken. I have asked this question with the mileage carriers and they pay approx pay .85 deadhead I believe, could be a bit more. I was told by this particular carrier that 70 percent of the time your loaded, so 70,000 miles loaded and 30,000 miles dead-headed looking in terms of driving 100k miles. I have not asked the question to the carrier who pays percent but that will be on my agenda to do so. Thanks again for all the input both poditive and negative. Keep them coming to keep me more educated !! |
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