New Article From Old School About Buying Or Leasing A Truck

Topic 20161 | Page 6

Page 6 of 13 Previous Page Next Page Go To Page:
Brett Aquila's Comment
member avatar
Now the guy runs 300 trucks, 224 he owns and 80 are owner ops

But size does not necessarily equate to profits. You could turn any business on the planet over to monkeys and they can produce revenues. But can they do it at a profitable rate?

Facebook had 300 million users before they turned a profit for the first time.

Amazon has billions in revenues every year and produces a lot of cash flow, but barely makes any profit at all, and sometimes they produce no profits.

Now those companies grew that way by design. A lot of companies do that. But just keep in mind that nothing equates to profits, except profits.

Oh I'm positive there have been and are successful lease operators

Everyone throws that word "successful" around but how do you define it? Not losing the truck? Making less than a company driver but having more "freedoms"? Making 10% more than a company driver but giving up all of their personal life?

Everyone keeps hearing that people have been successful but without a clear understanding of what that means it's just a marketing statement, really.

It reminds me of all of those signs you see going across the desert Southwest for the gift shops "10% Off!", "50% Off!"

Off of what? Your former prices? Your competitor's prices? The price of olives in Italy? Those same signs have been there for 30+ years. Makes me laugh.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Steak Eater's Comment
member avatar

Per the article:

"The best scenario that I could come up with was that I was going to make about $40,000 a year, and that was if I could consistently haul freight at 1.75/mile. I might be able to make a little bit more than that, but basically I was breaking even at 1.75/mile and paying myself a $40,000 salary - there really were no profits left after that.

Now when I projected that out to somewhere in the five or six year distance and I would be needing to either do some major overhauls to my truck, or try to buy a new one, guess where that money would have to come from? Out of my annual salary that I had been making of $40,000 for the past year!"

Disclaimer : I recognize a new driver (the focus of this site) is foolish to contemplate a lease purchase or outright purchase of their own truck. Given the lease rates I see thrown around (nearly $1k per week) there's very little chance anyone can be successful from a mathematical perspective. And I agree with Brett, having extra debt, responsibilities, and associated grief and worries to only make the same as you would by being an employee and allowing another to shoulder those risks makes little sense unless there's room for substantial growth relatively quickly.

That being said, Old School, Im curious about your comparison analysis as it would relate to an owner operator. If your analysis took gross revenue and deducted reasonable expenses and arrived at an excess of $40k per year for driver salary and truck replacement, I'm curious as to how any trucking company could be profitable with the same numbers. Even if I assume a company has significant leverage with suppliers with regard to expenses, that still wouldn't seem to be enough to cover driver salary and truck replacement costs.

I know this is pretty far out into the weeds for this site, but I'm curious as to what the difference would be that would allow a company to purchase a truck and pay a driver to run it profitably (even minimally) but not allow a driver to purchase a truck and at least break even (meaning, cover expenses, salary and truck replacement without excess profit).

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

Cornelius A.'s Comment
member avatar

Well the way he runs his business is very profitable because I see his financials I wont use his business motto as an example if it was not profitable. He concentrates on getting dedicated contracts with major companies.... its not about the size but the cleverness of his business plan

double-quotes-start.png

Now the guy runs 300 trucks, 224 he owns and 80 are owner ops

double-quotes-end.png

But size does not necessarily equate to profits. You could turn any business on the planet over to monkeys and they can produce revenues. But can they do it at a profitable rate?

Facebook had 300 million users before they turned a profit for the first time.

Amazon has billions in revenues every year and produces a lot of cash flow, but barely makes any profit at all, and sometimes they produce no profits.

Now those companies grew that way by design. A lot of companies do that. But just keep in mind that nothing equates to profits, except profits.

double-quotes-start.png

Oh I'm positive there have been and are successful lease operators

double-quotes-end.png

Everyone throws that word "successful" around but how do you define it? Not losing the truck? Making less than a company driver but having more "freedoms"? Making 10% more than a company driver but giving up all of their personal life?

Everyone keeps hearing that people have been successful but without a clear understanding of what that means it's just a marketing statement, really.

It reminds me of all of those signs you see going across the desert Southwest for the gift shops "10% Off!", "50% Off!"

Off of what? Your former prices? Your competitor's prices? The price of olives in Italy? Those same signs have been there for 30+ years. Makes me laugh.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
G-Town's Comment
member avatar

Cornelius wrote:

He concentrates on getting dedicated contracts with major companies.... its not about the size but the cleverness of his business plan

Okay, all the BIGS do that and are successful at it. Very profitable though...? My definition; very profitable is 40% GPM. Rather unheard of in any commodity type business. Please explain what is so clever about his business plan that makes it very profitable. Curious, that's all.

Brett Aquila's Comment
member avatar

Cornelius wrote:

double-quotes-start.png

He concentrates on getting dedicated contracts with major companies.... its not about the size but the cleverness of his business plan

double-quotes-end.png

Okay, all the BIGS do that and are successful at it. Very profitable though...? My definition; very profitable is 40% GPM. Rather unheard of in any commodity type business. Please explain what is so clever about his business plan that makes it very profitable. Curious, that's all.

I had actually written a reply which had said the same thing, but didn't send it cuz I had to rush to something else. Getting dedicated contracts with major companies is what every company strives to do.

See, one of the hardest parts about making a decent profit in trucking is that every idea has been tried a million times buy a million people, and every one of those ideas is being done right now. How many different ways can you haul the same freight from the same customers on the same highways using the same trucks burning the same fuel under the same set of laws?

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Pat M.'s Comment
member avatar

Just 6 months into owning my own truck and some replies are laughable. Especially the one about reapair costs on older trucks.

3 u joints and carrier bearing $300 Steering box $700 Broken torque arm bolts $200 Front shocks $150 Air governor $28 Steer tires $1200 That's all folks. I have spent other money upgrading a few things but I did not have to do those. Those were elective.

By the end of this gig the truck will be paid off, just purchased 3 flatbed trailers $20,000. Going to add another truck soon.

I have just about enough saved to replace anything on the truck.

The first year or two YOU must make sacrifices to stock the pantry. If that means you personally take less home then that is how it is.

While I agree leasing a new truck is a bad idea, asking for numbers needs to wait until after the pantry is stocked around the 3-5 year mark.

Since I am on a dedicated run here is my breakdown

Gross 2511 Carrier -376 Fuel -600 Insurance -90

= $1445 per load

I get 2 loads in every 5 days. There are some other minor expenses and I don't live in Chicago or any other expensive place.

Even at a very conservative $500 profit per load (I don't pay myself $945 per load), that is 19.9%, not the 3% you like to quote.

I will say that all the repairs except one I have done myself. General run of the mill trucking may be that way but you cannot make blanket statements about all trucking.

Have a friend that is running for $2 a mile loaded and empty and is having issues because of his truck payment and repairs. He has warranty and a 2014 truck but between the down time and 5k in repair costs it almost put hhim under. When I bought the steers, it stung but I did not hesitate and ask myself if I can get by longer. Tires were just wearing funny.

If you have a family to support then stay company, if you are single then you can do but it will take sacrifice on your part.

I tell people that the truck will eventually feed itself but you have to stock the pantry first.

Old School, respect your opinion but from my understanding you hauled your own freight. Big difference over contract or spot market.

Brett, your 3% profit margin you like to spout off all tyhe time is an average. All that means to me is some make more and some make less.

I have learned from observation of others that you should be able to profit 20-30k per truck per year after ALL expenses. That is right around the 10% mark.

As far as my numbers, until I finish the third year they are irrelevant.

Dedicated Run:

A driver or carrier who transports cargo between regular, prescribed routes. Normally it means a driver will be dedicated to working for one particular customer like Walmart or Home Depot and they will only haul freight for that customer. You'll often hear drivers say something like, "I'm on the Walmart dedicated account."

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Old School's Comment
member avatar

Pat, I hope you know we are all pulling for ya!

If you can do 10% over and above your salary that's great, but you indicate that you are paying yourself very conservatively. That's smart, but doesn't give you a true number in that profit column.

Pat M.'s Comment
member avatar

Pat, I hope you know we are all pulling for ya!

If you can do 10% over and above your salary that's great, but you indicate that you are paying yourself very conservatively. That's smart, but doesn't give you a true number in that profit column.

That is why I sated the first few years are irrelevant. You need 3- 5 years to get more accurate numbers.

Brett Aquila's Comment
member avatar
That is why I sated the first few years are irrelevant.

I wouldn't say that. Part of the reality when assessing the situation means that you'd be making $60,000 per year of pure profit as an experienced company driver, correct? So anything you make in profits below that number would be considered a loss overall. Making $30,000 in profit your first year would amount to a $30,000 loss for you personally. That has to be considered in the final tally.

You sound like you're ready to sacrifice some big money for a few years to get this built up. It's going to take quite a few more years after that of truly fantastic success to get back to where you would have been all those years as a company driver, not to mention of course the ungodly amounts of extra work and time you've had to put in to make that happen over the years. That's one heck of a mountain to climb. And I know what's that's like. I run a business and I climb mountains.

smile.gifsmile.gif

It sounds like you're using old equipment and doing the work yourself? I'm assuming that means engines with older emissions standards? Would a change in the emissions laws like they've done in California throw a gigantic wrench into the plans? What does that situation look like for you? I'm certain you've considered it.

See, that's the scary part about running a business. All it takes is one change in the laws, one change in technology, one serious injury, or one big competitor that steps in and targets you and suddenly you have a very serious crisis on your hands. Being in business is always a very risky and tenuous proposition. It's going to be one hell of a tough grind but we certainly wish you the best!

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Cornelius A.'s Comment
member avatar

And just to be on record I think I have always be an advocate of new drivers to stay with the big guys for at least 2 years before trying to venture out because I see the trials and tribulations that drivers without 2 years of CDL go through when they try to venture out early. The insurance rates are a killer on them...... which is why I will always advocate stay with the big guys for a minimum of 2 years before starting to to think about anything else.... anyways seeing

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.
Page 6 of 13 Previous Page Next Page Go To Page:

New Reply:

New! Check out our help videos for a better understanding of our forum features

Bold
Italic
Underline
Quote
Photo
Link
Smiley
Links On TruckingTruth


example: TruckingTruth Homepage



example: http://www.truckingtruth.com
Submit
Cancel
Upload New Photo
Please enter a caption of one sentence or less:

Click on any of the buttons below to insert a link to that section of TruckingTruth:

Getting Started In Trucking High Road Training Program Company-Sponsored Training Programs Apply For Company-Sponsored Training Truck Driver's Career Guide Choosing A School Choosing A Company Truck Driving Schools Truck Driving Jobs Apply For Truck Driving Jobs DOT Physical Drug Testing Items To Pack Pre-Hire Letters CDL Practice Tests Trucking Company Reviews Brett's Book Leasing A Truck Pre-Trip Inspection Learn The Logbook Rules Sleep Apnea
Done
Done

0 characters so far - 5,500 maximum allowed.
Submit Preview

Preview:

Submit
Cancel

This topic has the following tags:

Leasing A Truck Owner Operator
Click on any of the buttons above to view topics with that tag, or you can view a list of all forum tags here.

Join Us!

We have an awesome set of tools that will help you understand the trucking industry and prepare for a great start to your trucking career. Not only that, but everything we offer here at TruckingTruth is 100% free - no strings attached! Sign up now and get instant access to our member's section:
High Road Training Program Logo
  • The High Road Training Program
  • The High Road Article Series
  • The Friendliest Trucker's Forum Ever!
  • Email Updates When New Articles Are Posted

Apply For Paid CDL Training Through TruckingTruth

Did you know you can fill out one quick form here on TruckingTruth and apply to several companies at once for paid CDL training? Seriously! The application only takes one minute. You will speak with recruiters today. There is no obligation whatsoever. Learn more and apply here:

Apply For Paid CDL Training

About Us

TruckingTruth was founded by Brett Aquila (that's me!), a 15 year truck driving veteran, in January 2007. After 15 years on the road I wanted to help people understand the trucking industry and everything that came with the career and lifestyle of an over the road trucker. We'll help you make the right choices and prepare for a great start to your trucking career.

Read More

Becoming A Truck Driver

Becoming A Truck Driver is a dream we've all pondered at some point in our lives. We've all wondered if the adventure and challenges of life on the open road would suit us better than the ordinary day to day lives we've always known. At TruckingTruth we'll help you decide if trucking is right for you and help you get your career off to a great start.

Learn More