Owner Operator

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Jrod's Comment
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And remember; your competition will be every large trucking company and every other Owner Operator.

Good luck!

It's only about 500,000 (Half a Million!) other companies and owner operators you will be bidding against for the work. There is a trucking company for every 500-600 adults in the United States.

Some of the bigger companies are willing to work with razor thin profits (on top of the already razor thin profit avg) and sometimes, even at a loss to keep the trucks moving.

If you approach it like its different than any other start up company, you'll be sorry. Finance it yourself, have a business plan, plan your finances, register your business name, get all of your licenses & permits, choose your accounting system, have a team behind you (legal, financial, marketing, managment) or go real masochistic and go 100% solo...

I don't want to discourage anyone who has a dream - just making sure people are aware of the amount of blood, sweat, tears and luck that it take to actually thrive VS struggling to stay alive.

Owner Operator:

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

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

G-Town's Comment
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Jrod...

Please define "thriving" as it pertains to O/O and or L/O.

I've yet to meet a thriving O/O.

I'm fairly sure you know this but we focus on helping newbies and rookies getting a good start in a truck driving career.

With that in mind, where do your last two posts fit-in with that?

Brian G.'s Comment
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While I am not an expert on trucking.... I do have alot of experience in commercial printing and business. I want to bring up a couple of points for you to think about:

1) You need a niche. Maybe you have a client who doesn't want to own trucks and will pay you to haul glow in the dark genetically modified grapefruit from California where they are grown in a microclimate to Austin where they sell for $99/pound in Whole Paycheck Foods. They will pay you $5 a mile to haul as much of this as you can manage for as long as you are willing to do it. Nice work if you can get it. If you have a niche and can figure out how to exploit it you will make money. This applies in any business. In trucking I see it in folks who do wide/oversize loads, flatbed gets a bit of niche, reefer has some niche, hazmat tanker is a niche. I'm sure there are others..... Dry van is not a niche. Not that I can see.

2) If you do not have a niche you are a commodity. As a commodity you are competing with people who have scale and capital. If you are bidding and Big Monster Trucking Company is bidding you are probably in trouble. They have $1 Zillion dollars of OPM and 450,000 trucks. OPM = Other People's Money. You have FPM and 1 truck. They can do stupid things and make money down the road. If you do stupid things you won't eat this month. Btw - I used Big Monster Trucking Company for illustrative purposes.

The four kinds of money. Just in case you don't know what FPM/OPM and it's cousins are.

1 - Your money on you. You want the best price and the best product. aka FPM or First Person Money. 2- Your money on someone else. Price matters, quality does not. 3- Someone else's money on you. What's price got to do with it? Quality is the only measure of devotion. :) 4- Someone else's money on someone else. - Where Congress lives and where publicly traded companies get money.

Back to part 2 for a moment. This is best thought of us as the "race to the bottom." In printing we joke about customers you have to pay for the right to do their work and then send them a thank you gift with your payment for them allowing you to print their rush, custom, pain in the ass job.

I thought of a couple of other things that are worth considering and that I didn't see in the thread.

Are you starting a business or making a job? Both are okay, but be clear on what you want and have. A business makes money when you are not there. It takes capital and good people making a fair wage who give a damn. A job makes money when you are there and doesn't when you are not. I think an OO 1 truck show is a job. Yes, you get more control, but if you are sick or get hurt, you are not making money. Disability insurance can provide a safety net if you can afford it.

Lastly.... thin margins are okay if you have volume. Visa gets 2.5% of most transactions but is wildly and sickly profitable. Grocery stores are rumored to run 1% margins. 3% for the big companies is also taking into account the market distortion forces that they benefit from. When you have XXXX trucks you buy XXXXX tires and you get a better price than someone who buys XX tires and has X trucks. That's the downside. The upside is you are small and can be nimble. Big companies have big management that likes big dollars. As a small operator you won't have huge expenses from people who don't produce revenue. That's a positive. You just have to figure out your appetite for risk, your ability to drive revenue, and figure out how you can win... or if you can win.

HAZMAT:

Hazardous Materials

Explosive, flammable, poisonous or otherwise potentially dangerous cargo. Large amounts of especially hazardous cargo are required to be placarded under HAZMAT regulations

Dry Van:

A trailer or truck that that requires no special attention, such as refrigeration, that hauls regular palletted, boxed, or floor-loaded freight. The most common type of trailer in trucking.

Reefer:

A refrigerated trailer.

OWI:

Operating While Intoxicated

G-Town's Comment
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Brian wrote in regards to O/O:

You just have to figure out your appetite for risk, your ability to drive revenue, and figure out how you can win... or if you can win.

Good reply overall. Brian most of the drivers that consider this have never run a business, Their decision is typically driven by emotion; shiny new truck, pride of owning something, the shallow lure of big money, and the misconception of greater freedom. They usually don't consider or understand they become married to their truck. 24x7x365, married.

To increase the risk many drivers think/believe they can succeed without the benefit of experience and knowledge, NOT experts in their field like you were in printing. We have examples of drivers leasing with only three months of experience...might as well jump into an empty pool blindfolded. Foolish.

So as I suggested to JRod; define "thriving".

The top performing drivers in this forum are thriving; 70-80+k per year. As a top performing O/O or L/O it's possible to make 5-7% more than that. That's if you are really good, know what you are doing and running the wheels off your truck. However I don't consider that thriving. Some might, but factor in the greater risk, greater liability, increased aggravation, and increased amount of work, to me, it's just not worth it.

Two links from the TT blog:

Leasing a Truck

The RIght Time to Become an Owner Operator

Owner Operator:

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

Judge's Comment
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I own my truck, leased to a company hauling a tanker for out and back loads, worked there for two years as a company driver learning their customer base, load pay and so on. Trucking isn’t just a job, it’s a way of life, you’re stuck with a truck more than anything or anyone else. I have been in a truck for 18 years, pulling everything from a flatbed to hopper, auger trailers and now tankers/isotanks. When it’s your truck, it eats before you do, repairs/fuel upkeep. A lot of the ones outspend their means, thinking they have to drive a brand new truck, and have a $2500+ truck payment per month, ($625+ per week)plus tags/insurance ends up around $3200/month or more. My payment is $1046.43/month or $261.61/week on a three year note, still 2 more to go. 13 Pete 587 But no matter how down you are, back goes out, pneumonia, or any unseen illness or problems that arise, that payment is there and goes on. While you do make more, you spend more, an egr valve for the isx Cummins is $1295+$650 to be put on by someone with a computer because it has to be programmed or truck derates to 5 mph. You worked that week for an egr valve. I made $16 after fuel/breakdown that week, but I work and keep my money for an unexpected expense, and just use enough to eat in and pay house things, I basically work for the truck and to have something to eat. I bought shocks, all cab too, and spent last Saturday putting them on to save $400 to pay someone else, although it’s tax deductible when they work on it, you work on it for free, well to save the $400 you’d pay someone else. Bobtail/occupational insurance is $138/week It’s a heck of a life, and if you don’t outspend your means, you might make it, if you’re with a good company that has good freight rates.

Bobtail:

"Bobtailing" means you are driving a tractor without a trailer attached.

Rob's Comment
member avatar

Great post judge. Thank you for laying out the numbers the way you did. Many people are lured in seeing the ads "200k a year!" But don't understand the repairs as well as payments and insurance. Also that the week you were down due to egr and fuel you only came out $16 ahead. Also goes to show that sometimes in order to save money and survive you're going to do some repairs on your own.

Brian G.'s Comment
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Good reply overall. Brian most of the drivers that consider this have never run a business, Their decision is typically driven by emotion; shiny new truck, pride of owning something, the shallow lure of big money, and the misconception of greater freedom. They usually don't consider or understand they become married to their truck. 24x7x365, married.

Thank you.

I'm reminded of a joke I once heard.... it's not funny in business though.

When it comes to breakfast, the chicken is involved. The pig is committed.

The funny thing about owning a business is that everyone thinks it's vacations, luxury, and jet setting. It's more like wake up at 7am, work for a few hours in the home office, go to the shop for the day, then come home, eat dinner, and work until 11pm.

You can take any day off that you don't want to make money.

A holiday is simply an unpaid vacation.

Brian G.'s Comment
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Those ought to be qualified by 200K in revenue with 150K in expenses. I wandered into a video on YouTube where a guy was going through his O/O L/P P&L (Profit and Loss or Income and Expenses). He was showing this really awesome topline number.... but only netting $12K before taxes and after expenses for 90 days of work.

You can comfortably assume that taxes will eat 30% of that. So he made $9K for 90 days. That's $3k/mo or $750 a week. It seems like you could work hard and earn more than that driving for someone else and let them worry about mechanical breakdowns, tires, etc.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

Judge's Comment
member avatar

Now I'm home and on the big computer, I'll give you an insight on expenses, this year expenses, I change oil once a month/10-12k miles (fuel, oil changes, breakdowns/Maintence, then I'll add truck payment that isn't included not including small change I round up) Jan $6250, +truck payment $7296.43 Feb $5975 + Truck $7021.43 March $6100+truck $7146.43. $21,464.29 for 3 months. Net=29,754.78-expense left is $8290.49. Divide this by 3 months $2,763.50 divide by 4 weeks $690.87/week. This is after the so called, "ducks fly away" Now you have you House payments/lights and so on. I try to stay around $4000 gross/week, doesn't always happen, but after your expenses at a $4000 Gross, I Net around $2700 not counting Taxes, that you are now responsible for, you can pay Quarterly, or yearly with a penalty, but you keep your money in case you need it for expense later. The good part of being an owner operator , as I see, you can drive a company truck, but you'll never own it. If you run 70+ mph, remember for every mile per over 60, you're blowing profit out the stack by 0.1 mpg so the difference between 7+or - mpg at 60 or 6 +or- at 70, and at $3/gallon so that's 15 more gallon or $45 per that 600 mile estimate/day you wasted. I usually split the difference and run at 65, mine stays around 6.5-6.3 depending on wind/road asphalt or concrete (yes that matters)

Owner Operator:

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

OWI:

Operating While Intoxicated

Brett Aquila's Comment
member avatar
The good part of being an owner operator , as I see, you can drive a company truck, but you'll never own it.

Unfortunately the truck is a depreciating asset. By the time you own the truck it isn't worth much to sell and it costs too much in maintenance to continue driving. It's kind of like owning a sinking boat.

Owner Operator:

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

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