not too simple, if the high paying loads aren't there, then you take cheaper loads to make your truck payment. that's why it's better to own your truck. so, do most ppl have 30-40,000 (Tractor and trailer)lying around?

 

Thanks Yes, putting aside money for these items is really the best idea, as GMAN also pointed out. Of course, you might get unlucky and blow an engine two days after the warranty expires. Life happens. But if a person spends less than they make and saves up for contingencies, you will stand a better chance of succeeding, and you will preserve your sanity as well.

But nothing gurantees success, and I know that from personal experience. :!:

 

Interesting that ATA estimates $800 per month, which is $9,600 per year and you have experienced $10,000 per year which is virtually the same number. The two sort of confirm each other.

I wish more were done to spread the word among truckers considering becoming an O/O as to real world expenses they can expect. Just the opposite seems to happen. Trucking companies try to make drivers think they can run at .88 per mile and make BIG profits.

 

When a driver is used to making $0.30/mile and is all of a sudden is offered $0.88/mile he may not be thinking about what his expenses will run. He actually has no clue what it takes to run a truck. Some only look at fuel as their operating costs. When you look at truck payments and all the other expenses involved with operating a truck, there is no way anyone can make money at that rate. I think the problem is that most who get into these situations know nothing about business. They don't know how to break expenses down to see if something is profitable or not. It would be good if those who consider buying a truck had a course in business management specializing in running a truck or being an owner operator. These companies who offer these cheap rates don't really want people to know what it really costs to run a truck. If a driver brings in $2,000 or $3,000 per week, they think that is what they are making. That isn't the case. Just because you bring in a lot of money doesn't necessarily mean that you are profitable. But try and convince some of these people that and make them believe it.

 

That's a great post Gman, very true.
Do you guys think it's mostly the younger guys that get fooled by the money or do you see older guys as well not knowing how to run a business?

I know I learned a few lessons in business the hard way cause I started young and didn't know all the cost or all the paperwork involved.

It's funny cause you could take Gmans post and apply it to probably every business.

If I'm pricing a job for a homeowner (which is rare anymore I try to stay away from that) I tell them straight that I don't compete with unlicensed guys working out of their pick up. It's amazing how many guys work to cheap.

 

jnk, that's the whole point. If you're having to take cheap loads just to pay your bills then there's something wrong with your business plan. Either you're undercapitalized or you're not making enough profit. Of course rates are going to fluctuate but this has to be taken into consideration in your business plan. This means that during the busy season you'd better be hauling for rates that are good enough to make up for the slow season. If all an O/O is doing is making enough to pay his bills then, even if he's paying himself, he's actually hauling at a loss. In order to break even he also needs to be making enough to offset depreciation and unrealized maintenance expenses. So every load that just covers fuel, truck payment, insurance, driver pay, etc. still puts him further in the hole. Why wear your equipment out when it's not making you a return?

GMAN, I think we agree for the most part. However, even is somebody commits their own money it's still borrowing, just from yourself. A proper business plan takes that into consideration. I do agree that everyone's operating costs will differ, although I don't think that they differ to the degree that many people think. Someone that starts with a 3 year old truck is certainly going to have a lower payment than someone who buys new. But what will the difference in maintenance costs be? In addition, the person buying new will recoup some of that difference in terms of depreciation write-off. And third, all things being equal, the newer truck will always have a higher value. So while there appears to be a significant difference at the outset, there are several mitigating factors in actuality. And again, the business plan comes into play. If someone that pulls a dryvan spends as much on equipment as a heavy-hauler then that's poor business planning. The rates will never justify the expenditure.

 

This has got to be one of the best threads I've read in a while. I've been thinking alot about becoming an O/O since I came back to trucking 3 years ago. I honestly believe that it is the only way that I'll ever be happy doing this job(OTR that is, doing LTL right now, but not impressed with it). But it is really a slap in the face when I study GMAN, The Rev. , SteveBooths, and now Paul Mcgraw's posts and realize how much I don't know or understand about truley being an O/O.

I've been thinking about going back to knight for 2 or 3 years, giving up my apartment and paying off my car, which is the only debt I have left, and saving $40 to $60k to flat out buy a trk and trl, or pay off enough to really keep my payments down low.

Is there any literature specifically for a beginning O/O, or classes? I've checked the local colleges and schools, but I havn't found anything Truck related. Would OOIDA be a place to start looking? Thanks guys and gals for all of your wonderfully enlightening posts. I always learn something new ever day reading them.

Have a safe trip.

Chris

 

scythe08, OOIDA has a good cost calculator that I think is open to anyone, also the forums have some good info on them, I don't think as much as this one but still a good scource. I joined a while back, it's 45 bucks for a year. You'll need to join to access the forums. Read all the forums you can and sift through the BS, their is alot of information.
Here's some literature
http://www.truckersbookstore.com/index.htm
Here's a class, I believe I checked them out but it was some time ago, they seemed legit but check them out for yourself as well.
http://www.fbts.net/FREIGHT%20BROKER...%20DETAILS.htm
Good luck to ya!

 

No worries, unless you get into major expenses, there should be little difference in a new or older truck in basic maintenance costs providing the older truck has been properly maintained. Tires, oil changes, etc., will cost the same whether the truck is new or used. There are some maintenance issues that might need to be addressed such as king pins, etc., Replacement of king pins would cost less than 1 payment of a new truck. A newer truck may retain more value but a used truck will retain more of it's cost than a newer truck. For instance, a new truck which costs $120,000 may only be worth $50,000 in 3 years. A $20,000 truck may still be worth $12,000 in 3 years. Even if you had to replace the engine on the used truck, you will still have spent less and be able to get more out of your investment with the used truck than new.

And Chris, there really isn't much in the way of classroom training concerning becoming an owner operator. I have thought that would be a good subject for having a seminar. OOIDA has had a class for potential or current owner operators, near their offices in Missouri. I don't know anything about them, but you could contact them through their website www.ooida.com, or give them a call at 800-715-9369.

 

It takes between .75 and $1.00 pm to run a truck these days depending on how you run, whos driving, etc. If you dont know this either you dont know your bottom line or you havent been at this long enough to know you wont be at this for long. With fuel at $2.47/g and fleet avg fuel mlg at 5.6 mpg its costing .44/mile just in fuel. I know a lot of O/O's get way better than 5.6 but figure at this number which can be high if you hire a driver. Also you are going to pay your self or someone to drive for more than .32cpm, so .44 + .32 = .75cpm thats just fuel and driver pay! We do hear enough BS on the CB, if we dont know the difference. Com' on!