And besides, in trucking you can’t just get a truck paid for and keep it for long. With the constantly-revised emissions standards you’re going to have to put new engines in it from time to time – very expensive engines – or you’re going to have to buy a new truck and the payments start all over again and you’re making less than a company employee.

Not going bankrupt is not the same as being successful in my book. To me, you have to make way, way more than a simple company employee to consider yourself a successful business owner. You have to make enough money to make the extra work, financial risk, and the burden of being tied down to a business worth doing.

And almost any company that has a lease program will allow drivers to lease either straight out of school, or within 6 months or so. In my opinion, pushing someone to become a lease driver straight out of school is a blatantly dirty tactic because they know a ton of brand new drivers are not going to make it as lease drivers. It’s a blatant attempt to turn a profit off of your own employee’s misfortune. It’s frustrating to see.

Definitely stay away from leasing or buying a truck.

I haven’t gone into trucking yet. I haven’t even taken a class, but I am noticing a trend in trucking toward owner/lease-operator. Where companies might hire you to as company driver for a certain amount of time, and then push you toward a lease/owner-operator. Just visit the websites of any trucking company and you will see it. Also, if you are looking for a job, some companies are only hiring owner/lease-operators.
Is this a new phenominon, or has it always been around? Also, has the trend moved toward putting drivers into a lease with less and less driving time?

Dave

As far as your numbers go, if you’re pocketing a profit of 64k on 200k in revenues each year, that means you have an profit margin of about 33%. Not too shabby considering the average profit margin for the trucking industry is under 3%. So somehow you’re making 11 times the profit that the average person is making in the trucking industry. So if the average company is making 3% and you’re making 33%, why isn’t anyone moving in on your gig to take it from you? Tell me – what’s your secret? How do you make so much more profit than the rest of the industry? And if you’re making that much money, why don’t you have 10 trucks, or 1000 trucks?

Why is that every owner-operator or lease driver I talk to has all of these outlandish numbers that make no sense? Either their fuel costs equate to paying $1 per gallon when fuel is actually $4 per gallon, or they have a 33% profit margin when the industry average is 3%, or something outlandish like that. It’s never anything that borders on making sense. I hear these stories from time to time about guys who are doing awesome at it, and yet I can never get one single clear answer as to how they’re actually managing to do it. What makes you different? What’s your niche? What’s your business model that sets you apart from the rest of the trucking companies in the nation? If I believed your numbers I would go out tomorrow and buy 10 trucks. I would hire 10 drivers, pay them each $45k per year, and I’d pocket 20k per truck per year and be a millionaire in a few years and disappear to my own island in the Caribbean. Why aren’t you doing that if there’s so much money in it?

Just because you may think owning a big rig is cool and Krispy Kreme donuts are delicious does not make either one a good business to be in – but obviously you’re not aware of that and you’re not about to waste your time learning about something you know nothing about by listening to someone who did it for almost 20 years. So go on and buy yourself that truck and a KK franchise and let me know how you do.

Good news brother! Krispy Kreme never went out of business. They have been through a few hard time over the years, but they remain a strong entity. They have concentrated more on the markets that they do well in an expanded into territories they think they can do well in.

I live in Atlanta which is the birthplace of the Krispy Kreme donut and I still love the “Hot Donuts Now” sign whenever it is lit.

I am not sure what fact finding you did in 2008, but it is inconsistencies like this that make me wonder how much truth there is in the rest of what you wrote about in this post. Is it possible the other people who write in saying they are doing well in trucking actually are enjoying a profitable O/O business?

I am an outsider and a freelance writer who is just learning abnout the business of trucking for some work I am doing. While I am not sure about the truth or inconsistencies of what you wrote, it seems to me that when you are being so scathing in your opinion about the facts, you should make sure that all of your facts are correct.

I am sure there is some truth to what you are saying, but getting it wrong about Krispy Kreme makes me wonder what else you got wrong. After all, you are someone who does not want the O/O life for himself and you tend to look down your nose at those who do want that life. You throw out any recognition of those who say they are doing well.

I wish you all the success in your blog and I hope you are able to get great writers who will contribute outsanding content to what you have here. One thing you might want to pass down to them from yoru thrown on high is to make sure that they know what they are talking about before putting it out for public consumption. Anything else is blowing out so much useless hot air.

Keep up the great work!
Brian

I totally understand your concerns – you feel like you have no other options than to become an owner operator or not have a job at all – so naturally you’re hoping I’m wrong and that you can indeed do well owning your own truck. Well, I’m not going to tell you that without a CDL you’ll have no problem finding work driving for someone else – that’s simply not true at all. But I think the question you have to ask yourself is this – “If owning a truck is profitable, why doesn’t the company want to own the trucks themselves? Why do they want me to buy my own truck instead?” That question is the same for any business – why would someone encourage you to get into business for yourself if it’s so profitable for them? Why would they encourage competition and cut their own throats?

To go along with that – the company you’re working for lost the contract to a company that’s going to use owner-operators to haul the freight. Doesn’t that make you suspicious? Doesn’t that make you wonder why your company couldn’t compete on price for that contract but someone who is going to force you to buy your own trucks can do it cheaper? The answer is probably simple – the new company priced the freight so low that they know they can’t make a profit hauling it with their own trucks. But if they can keep a steady stream of owner operators coming through the doors, then they can probably pull it off. Even if you guys haul their freight for a month or two and quit because you’re not making any money – they can just bring in new owner-operators and keep rolling. They don’t need to pay you enough money that you can make a profit – they just need to keep new owner-operators coming through the door. And what happens to this new company if they can’t keep enough guys coming through? Not much. They may lose the contract, but it’s not their money that’s being spent to pay the insurance, fuel, truck payments, and upkeep on the trucks – it’s yours. They’re just a freight broker at that point – they get the freight, pass it on to you, and a take a cut for themselves. If the whole thing eventually collapses, at least they made money while they were at it – no skin off their backs. Then they just move on somewhere else and do it again. It’s a viable and common business model in trucking – it’s happening all over the country right now.

Don’t let your fear of not having a job push you into believing things that simply aren’t true or don’t add up. If something doesn’t seem right – it probably isn’t. If I could buy a truck and make great money hauling freight – I’d buy a million of em and fill em with drivers. But I damn sure wouldn’t encourage anyone else to do it – I’m makin a killin – why would I encourage more competition?

I hope you’ll continue to research this issue before jumping into it. There’s a lot going on with your company and that situation that should be throwing red flags in your mind like crazy. Don’t ignore those red flags. You can ignore your instincts and your common sense, but reality will catch up sooner or later and you can’t ignore being broke when the bills come due.

I appreciate your honesty and I understand your concerns. I’m glad you spoke up – it will give a lot of people the opportunity to learn from the points we’re both trying to make.

Take care.

Brett Aquila

Thanks for the opportunity Brett,

Robert

Good question. That point is likely the reason a lot of people feel they can do it – “Well a lot of people are doing it – it must be working”. Financing can keep you afloat in a unprofitable business for quite some time – or supplement your income if it’s falling short, to allow you to pay your bills. Look at the numbers for the percentage of owner operators out there over the past 30 years – there’s been a steady decline. That’s the free market telling you that it’s working less and less as time goes on – and under the current rules and regulations will continue to do so.

As far as the owner operators that are currently out there – the question is, how long have they been doing it? The turnover in trucking is incredibly high and the number of people who become owner operators each year is very high. How long are they surviving, that’s the question. It’s easy to find new people that don’t understand what owning your own business is all about, especially in trucking. They don’t understand what a commodity-type business is, and the ramifications of attempting to start one. They basically use wishful thinking and their perceived sense of pride in owning a truck as their main reasons for going for it.

In a book I read about starting a business, it stated “Don’t buy yourself a job” – in other words, don’t start a business and find yourself taking a huge amount of risk, putting in an incredible number of hours, and taking on tons and tons of headaches when in the end, you could have simply gotten a job doing the same thing and eliminated the extra hours, the extra headaches, and all the risk of starting your own business – while still making just as much, if not more, money.

Owning a truck fits that idea perfectly. As I’ve mentioned before, take a look at the financial releases of the publicly traded trucking companies over a 5 year period – most of them barely break even, if they do that good. Look at the number of trucking companies that file bankruptcy every year – including large, well-established, experienced carriers.

I have two simple questions – first, what is it that you will offer or be able to do that the thousands and thousands of bankrupt companies and owner-operators each year could not do, or could not offer? And secondly, what do you believe will be the high reward that must accompany any high risk you take to justify the venture?

In the comments above you’ll notice Greg said, “I can’t agree with you . Trucking has been good for us.Put my girl through collage with no loan’s for her or I to pay back.” – so I asked for a few specifics to let us know what his secret is and why he did so well when almost everyone else fails? And just how good was he doing? Well, I’m incredibly shocked to see there were no specifics offered – as always – just an empty claim of success. I’ve heard so many of those I lost count years ago – but never any numbers, any proof, or any advice of any sort to back it up. It’s always the same – just a quick “I’m doing great!” – as they run the other way before you can ask them any specifics.

It simply makes no sense to try being an owner-operator – not logically, not financially. Understanding exactly what a commodity-type business is and the ramifications of starting one is key to understanding why you should not attempt to start a trucking business.

Getting the monkey off your back – that’s easy! Weigh the pro’s and con’s of owning your own truck. The number one perception that people get is that they will now have control. They can haul what they want, when they want, and if they want. Ok, say you’re leased onto a company – which you’re likely going to be or you’ll have nobody to get freight from and no volume discounts to cover expenses. So this company has piles of freight to haul, and maybe 40% of it is “desirable” based on a number of factors, the rest is not. Are you only going to accept the loads you deem “desirable”? Will everybody else do the same? If so, who is gonna haul the rest of it? You see, ALL the freight has to get hauled. If you start refusing loads, the company you’re leased to is going to start taking away miles and letting you sit. You don’t cooperate with them, they don’t cooperate with you. Who do you think has more to lose?

The idea of having control is an illusion – you have to cooperate and go with the flow. You take the good loads with the bad – just like company drivers do. You can’t park your truck and take a few weeks off, neither. Oh, you COULD, but of course your truck would be repo’d by the time you got back because you’re totally broke and can’t make payments. So control is an illusion. You become a slave to that truck. And good luck running solo and getting the miles you need to make your payments. Most owner-op companies are moving toward having their own CDL schools so that they can make money from training the students and then put those students in the owner-operator’s trucks and pay them very little for several months. Why? Because that’s the only way most owner-ops can stay afloat – a very, very low-paid team driver along with them.

What if you decide you’re burned out and want to take a few months off from the road. A company driver can do it – no problem. I’d quit a company, relax for a couple months, and then either go back on with the same company or find a new one. Jobs are easy to come by for experienced drivers with a good record. You gonna do that with your own truck? Just make those huge payments without any revenues coming in? Nope.

The truth is, as an owner-op you have far less control of your life. You can’t just haul the freight you’d like to – it all has to get hauled. You can’t just work when you want to, the payments are HUGE and they can’t be put on hold – that truck MUST keep rolling. So I ask you, what’s the advantage to it? Pride? Bragging rights? Cuz it sure isn’t the money you’ll be making, the free time you’ll have, or the control you’ll have over the freight you haul. The downside is absolutely huge, the upside is nill.

You’re a business man – so I’m assuming you understand what a commodity is? Something that people will only pay the lowest price for – gasoline, oil, vegetables, airline tickets, etc. Trucking is a commodity business – the lowest price wins. It’s very, very rare that a company can offer services that other companies can not – and even when they do, it’s a very short time before the others copy them. I once spoke with a retired top executive from General Electric who was giving a business seminar. He said ( I paraphrase ) “You don’t want to be in a commodity-type business because only the low-cost provider wins, and everyone else loses. And even the winner usually only wins because they’re breaking even and the rest are not.”

How many trucking companies are actually profitable on a consistent basis? Almost none. Even the best lose a lot of money in slow years. How many airlines are profitable on a consistent basis? Almost none. Most of them only survive through regular bankruptcies every 5 or 10 years. Well, there’s millions of trucks on the road and hundreds of thousands of planes in the air. Is that because everyone is making a ton of money? Absolutely not.

Hey, believe me – I’m not one that likes to take someone’s dream and toss it in the flames. But I’d rather do that then see people jump into the fire themselves with their bank account in-hand and watch them fry.