A Husband And Wife Trucking Journey

Topic 19008 | Page 9

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Larry K.'s Comment
member avatar

Old School - My question at this point would be where the massive discrepancy is coming from then. Obviously truck pmt, insurance, and trailer lease are fixed. Fuel economy should be conservative in comparison to real world numbers we’ve experienced over the past year, as should the cost per gallon (if it went up to $5 per gallon that would add $0.21 per mile). As I’m covering the items we’d be responsible for upon leasing onto our chosen company this would imply that I should be figuring $0.90 cpm for maintenance or that there is a major hidden cost I’m completely overlooking. Any hints for me?

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Larry K.'s Comment
member avatar

Also, if a trucking company were to say their average cpm were $1.70, wouldn’t that include driver pay/benefits, training expenses, plus the permits/licenses/tolls that our company would be covering?

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Old School's Comment
member avatar

Figure what you are going to pay yourself into that number. You are a business now, and that is part of your expenses. Of course your quarterly taxes on income need to go into that number too. What about health insurance? That's an expense. As the owner, you've absolutely got to think differently now. The depreciation of the truck is actually an expense that needs to be calculated in there. I'm just hitting some obvious things to me.

I would recommend before you ever take this plunge, that you find an accountant who has other trucking clients and get him to help you with some financial projections. After all, they will know what you can expect. The rates in freight are pretty amazing right now, but it's only temporary. This business has mean averages that always come into play.

It sounds like you're going to be leasing on with a friend. Have you considered why your friend hasn't expanded and added a bunch of trucks on their own? After all, they've convinced you there's lots of money to be made here. I wonder why they want you to take on all the risks? Why don't they just buy another truck and hire you and your wife to run it for them?

Think about that seriously Larry. This is a really tough business. Everybody seems to be able to "pencil out" big money, but it seldom happens that way.

Larry K.'s Comment
member avatar

Old School - Well, I certainly appreciate where you’re coming from. My wife and I did however run a very successful business for eight years which we relinquished only due to regulation primarily (part of it was the market getting flooded and the subsequent decreasing profit margin that made the regulations not worth it). When I calculate our true gross pay as company drivers, and compare that to anticipated gross as owners, I obviously have to account for the company paid portion of our benefits as well. Taxes are a part of life that have to be calculated no matter what. The real question is am I missing some completely hidden cost of operating the truck? The rest is just running another business. Don’t get me wrong, I’m not anticipating getting rich. I do however anticipate that we should be able to achieve about a 63% increase in our overall income after all is said and done.

Old School's Comment
member avatar

Okay Larry, I'm glad you understand business. Think about these issues. In three years a good team operation will put 600,000 plus miles on a truck. How many years will it take to pay for the truck, and at what point do you plan on replacing it? You'll have to always be keeping the necessary assets up to keep that money flow going.

You quit one business due to regulations and a flooded market. Think about what you're getting into. I'm not trying to be sarcastic or aggressive. I just want to make sure you're thinking this through.

Now this is interesting...

Don’t get me wrong, I’m not anticipating getting rich. I do however anticipate that we should be able to achieve about a 63% increase in our overall income after all is said and done.

A 63% increase is huge!

Have you considered the average profit margins of the publicly traded trucking companies? With billions in revenues they squeeze out 5% profits in good years. For my simple way of thinking that means you will be beating all the best and brightest in this business if you can even increase your overall income by 10%, as the owner. I think to expect a 63% increase makes no sense. It doesn't compute when you compare it to the national averages.

Pulling an extra 63% out of a remaining 5% is like a magician pulling a rabbit out of a hat. It's an illusion - it's not realistic. Larry, I'm not the smartest guy in the world, but I can't see you coming up with an extra 63%. This is a commodities business, and it's got some tight margins. Honestly, I'm not trying to throw water on you, I just want to make sure you are really thinking realistically, because few people do when they decide to go all in as owner/ops. It becomes an emotion based decision for many. I don't think that's the case with you, but I also don't think your numbers are realistic.

Again, I recommend you start consulting with an accountant who is experienced with other independent truckers. I think that would help you more than anything else at this point.

Raelene M.'s Comment
member avatar

Larry,

Thank you so much for journaling so much of your wife and your adventures. I found your posts at about 6 this evening and have been reading them out loud to my husband. We are both “kicking the tires” of getting our CDLsand team drive.

Can you ask your wife a couple of questions for me, 1. What did she find to be the biggest challenge AFTER the training period? 2. What is the most challenging now? , and 3. For someone being in the same boat as her (except I have stick shift experience), what would piece of advice would she give other wives getting into team trucking with their spouses?

Larry, keep writing! And we would like to contact you and your wife as we journey through our new phase too.

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.
Larry K.'s Comment
member avatar

Old School - I genuinely and honestly appreciate your attempt to help and I very much enjoy your posts on this site. Unfortunately, some of your financial comparisons would imply that the business end of things may not be your particular forte. To liken the 5% profit margins of a major trucking company, operating a large fleet of trucks, to the profit margins attainable by a single owner-op driving his/her own truck is comparing apples to oranges. If a company driver is making $0.50 per mile and he manages to pull a profit $0.55 as an owner-op, after all expenses are said and done, he has increased his personal income by 10% (benefits being left out of this to make the numbers simple). I assure you he has neither pulled off a miracle nor is he “beating all the best and brightest” from the publicly traded trucking companies! Let me give you an example. When we first upgraded to drivers I believe they had us starting at $0.46 cpm. Now a couple months back I was at the Petro in Sparks, NV getting a CB peaked and tuned and there was a fairly GQ looking older gentleman, an owner-op, with a beautiful cherried out truck there getting his new Mack-daddy CB installed. Got to talking to him for over an hour about his truck and what he did for a living (specifically, aside from just being a truck driver). Turns out he’s been leased on to an entertainment transport company for the past decade (gave me the name and all the info). He began telling me stories about working the last three Presidential inaugurations, parking on the National Mall and dealing with Secret Service. He told me about being on tour with Reba Mcentire and Madonna (he can’t stand Madonna but loved that she paid an additional $1.00 per mile). Moral of this story? He drives an average of 1,600 miles per week at a minimum rate, to the truck, of $5.00 per mile! So let’s just say hypothetically that his truck expenses we’re running him a whopping $2.00 per mile (which would be nuts). That guys gross profit to the truck ($3.00 per mile) was over 6 times what we started at.

Now our trainer, who celebrated 20 years with the company recently, was making over $0.80 per mile (I believe it was $0.84 to be exact) as a company driver training husband/wife teams. (Saw his pay stubs at one point.) His per mile gross as a trainer would have represented an income increase of at least 74% over our starting wage.

The point? I don’t pretend for a moment to have it all figured out. Not even remotely close! That being said if you’re trying to convince me that an owner-op can’t pull a profit of at least at least $0.85 to $1.00 cpm , I’d have two things to say to that. One would be that I’ve met numerous owner-ops that I know are doing a heck of a lot better than that. The second would be...watch me, because I know those are attainable numbers.

Incidentally, regarding the truck. We’d be on a 39 month loan which we’d pay off in 24 months. We’d do so with a pre-established maintenance budget plus a minimum of $1,400 per month going into that maintenance budget (closer to $2k per month if we run the same miles we’re currently running). Truck is a used truck. We ran 212,000 miles in our first year so, based upon those kind of miles, we’re figuring replacing the truck between the 2 and 3 year mark. Figuring the truck at $0 value at that point. If we managed to keep it rolling for the full 3 years we’d really be stylin!

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Larry K.'s Comment
member avatar

Raelene,

Glad you’re enjoying. To be perfectly honest my wife absolutely hates the whole vlogging and blogging thing which is why she’s never chimed in here. She spends enough time behind the wheel that the last thing she wants to do is talk about it in her free time and she can’t even fathom why I want to! LOL! (Initially I wanted to do a video “vlog” on YouTube but if I pointed a camera at my wife in the truck she’d throw the dang thing out the window.) The answers to your questions are pretty easy though as she’s answered these same questions to numerous women in person. 1 and 2 are essentially the same. Her biggest challenges are without a doubt A) getting enough sleep on the road, and B) being away from home/friends/family as much as we are. Those were her issues from the moment we began training and remain the same to this day. As far as driving with your husband she’d say “you better like him!”. We’ve been attached at the hip for years and honestly we spend less time together on the road in the truck than we ever did running our own business. Even at that she wants to kill me at least 90% of the time! (And we get along a LOT better than many other husband/wife teams we’ve encountered!)

HOS:

Hours Of Service

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

Larry...you Sir clearly are listening to the wrong people. If what you say is true, and it’s not, we’d all be Lease OPs. Me, Rainy, Old School...and many others on here. We’re not. And although I cannot speak for the others, I’ll never set foot into heavy truck ownership. It’s a pure commodity business that requires economies of scale I have no interest in building.

And as far as Old School not having a forte’ for business, you might be well served to read his Profile before sticking your proverbial foot in your mouth. “Wow” is all I’m gonna say on that...

There are several articles in the blog section addressing the money-pit you are about to jump into. Start by clicking this one...

Leasing A Truck

The only part of your most recent reply I agree with is; the point you made about not being close to having “this” figured out. Hyping a possible 63% pay increase totally supports your point.

I have said this to others in your spot...pay yourself and your wife no more than 6% more than a decent company driver CPM out of the revenue your truck generates. Look at your numbers after a year...review them with a competent accountant familiar with truck ownership.

The L/Os and O/Os I know? The honest ones will tell you after it’s all said and done, they are putting in their pocket no more than a 6-10% increase above what a top performing company driver.

Until you know our business really, really well...jumping into a leasing arrangement is a huge mistake.

Good luck.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Old School's Comment
member avatar
Unfortunately, some of your financial comparisons would imply that the business end of things may not be your particular forte.

Okay, I did what I could.

I’ve met numerous owner-ops that I know are doing a heck of a lot better than that. The second would be...watch me, because I know those are attainable numbers.

Larry, I'm obviously not going to be able to "watch you." Nor do I need to. I've actually seen how this plays out in most cases.

I didn't think your decision was emotionally motivated but now that you're talking about all the owner/ops you've talked with and their "beautiful cherried out trucks" I'm convinced otherwise. I have no problem with your becoming owner/operators, I just wanted to sound an alarm in the face of your unmerited enthusiasm. I have every bit of motivation and resources to be an owner/operator myself, but I've quite consistently chosen to be a good solid company driver. I consider it to be the most practical choice from an economic standpoint.

Like I said earlier...

I know you're going to do what you think is best for you and your wife.

I certainly hope the best for you guys, you certainly have the potential to do great at this endeavor. Unfortunately, potential meets reality on a daily basis out here. I enjoyed the discussion with you, and only hope I encouraged you to dig a little deeper into your numbers. All that glitters is not gold.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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