Student That Is Still In School, Want To Learn About O/O Pros And Cons.

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A S.'s Comment
member avatar

I am a student currently still in school. After i graduate i plan to drive gain some experience and hopefully own and operate my own Truck. For the most part online, people either say don't do it or do it you'll make tons of cash. I have read some previous blogs posted on this site by Mr. Brett about what owner operators go through, but it seems like you have to be financially capable for the most part before you start, correct me anytime if i am wrong. I am financially capable of owning a truck, father and i will be going into business together and i will drive his truck as he is retired, so i will not be leasing or doing any kind of payments on my equipment. Id just like to know a little more about how to operate as a young owner operator without any type of financial obligations. Am I in a better position to make money because of no other financial responsibilities? I realize fuel, damages, and maintenance on the truck has a lot to do with the income, but i see these ads from big companies about what potentially i could make, not to come off as a sucker believing what i am told by these ads i am aware they are mostly to pull newbies in. Any help from experienced drivers, owner/operators would be helpful. I have not seen too many people in the same position as I, so that is the reason i am posting. I am very fortunate to have the access i have to start a business, but before i jump into it, I'd like your help and insight. Thank you all that are reading/responding in advance. - Singh

Owner Operator:

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

Brett Aquila's Comment
member avatar

Welcome aboard!

Well, regardless of your age, experience, financial obligations, or anything else there's one thing you can't do anything about...the average profit margin in the trucking industry is about 3%. It's a commodity service where only the lowest price gets the haul and that means razor thin profit margins - if any.

As someone who has either owned or helped run numerous types of businesses over the years I can tell you that the last place on Earth you want to find yourself is owning a commodity-type business. You'll pull your hair out trying to figure out how to eek out a living and keep your head above water. It's maddening. The competition is intense and every idea you come up with leads nowhere because 10 million people are either doing it or figured out it doesn't work. It's very hard to differentiate yourself.

They say the best way to wind up with a million dollars is to start with two million and buy a restaurant. The same thing applies to trucking. It's a ruthless, cut-throat industry. Even companies that have been around for decades struggle endlessly to turn any kind of a profit.

Old School's Comment
member avatar

Hello Singh, and welcome to the forum!

You'll find that we are not big proponents of being owner operators. We have several members here who once were owner operators and are quite satisfied now being company drivers. I myself owned as many as six big trucks at one time, but I was not in the trucking business. I used them in a manufacturing business to deliver and install our product to our customers.

In a nutshell here's our reasoning behind leaning toward being company drivers. The average profit margin in the industry is 3%. I'm sure you understand math, and that of course means that some are making more than that while just as many are making less than that. With the average being that low I'm sure you can also realize that means some of them are losing their shirts at this. The large carriers have a definite advantage over the independents because they can average out their expenses on maintenance and repairs over a large number of trucks which does wonders for your accounting results. So basically if you can be an average trucking operation (which might be tough as a beginner) you can expect to make 3% more than the average company driver.

Now, you will definitely take in more cash flow than a company driver, but you will be paying for fuel, maintenance, vehicle registration (that is an annual expense which can be astronomical - I was paying a little over nine hundred dollars a year per truck every year), insurance, permits, fuel taxes... I'm gonna stop here, but I want you to know that I could go on and on with the expenses that a company driver never has to even think about.

You stated that you were in a unique position in that you won't be having truck payments. That is great, but you would definitely need to be putting back money for the purchase of a newer truck one day if you want your career to last. If you are going to be making any money at all as an owner operator you will need to be running at least 120,000 miles a year, and that my friend will leave you with a worn out truck in just a few years. So you would be needing to set back at least a couple of thousand bucks a month in anticipation of that. And I haven't even mentioned setting back money in an escrow account for maintenance and unexpected expenses.

We consider it best to not expose yourself to such difficulties in your career at the beginning, and I hope I've given you a few things to think about before you take a leap with out checking how the water is first.

Singh, there are definitely people who make it as owner operators, but there are a lot of them who are just flat starving to death trying to do it. There's so much to learn before you jump in over your head. If you were to work as a company driver for maybe three years or so you would know so much more about where the good freight is and what the major freight lanes are. Even learning how to get good loads and knowing what a fair price is for the freight are lessons that you probably don't even know yet. I remember recently that a person came on our forum and was telling us their plans for going O/O. They had calculated their break even point on revenue as being 1.75 per mile for freight. (That was break even mind you - and I think they had come up with a fairly realistic figure based on my own calculations) What they didn't know was that a whole lot of freight is going for around 1.35 to 1.50 right now. This is what I mean about how the large carriers have an advantage - they can divide this stuff out across a large cross section of really great performing drivers with lesser performing folks, and across trucks that don't need too much attention and those that need more TLC, and they can make it work that way.

Not trying to burst your bubble, just want you to think about some of the things that aren't so romantic about this plunge.

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

Roadkill (aka:Guy DeCou)'s Comment
member avatar

Singh, welcome to the forum. You are in a very early stage in your trucking career, but it seems like you have already had some exposure to the trucking life as you say your dad is retired, and if I read it correctly a retired truck driver. There are a couple of facets to your post that bear some response, so I will try to give you all I know, which is not very much, but better than nothing.. rofl-3.gif Firstly, most if not all of the advice you will get on here will tell you stay as far away from being an owner/operator as possible and there are really good reasons for this. Firstly, as a rookie, you are still way too new to even begin to understand how the trucking industry works to balance trying to learn as much as you can, be a safe driver AND try to run a business, which is exactly what being an O/O is...you are running your own business. Now that being said, you say your father and you are going into business together, so if your father is an experienced driver, then the business side may not be that challenging to him, but is he going to act as your broker/bookkeeper/billing agent/collection agent/business manager,etc..??? You see where I'm going here?? There is a LOT more to trucking than just driving the truck...now, having said all that, if your father is willing to act in that capacity and all you do is drive the truck, then it MAY work..you MAY make some money in that you don't have a huge truck payment to worry about every week, but that is a BIG MAY...what happens if the truck breaks? Not only are you out of a ride until you get it fixed, you're out of pocket for the expense of fixing it..bear in mind that depending on what kind of freight you plan on hauling you may find it hard to get loads...what I mean is this...if you have an older truck, then you can forget going out west to California, UNLESS, you have it upgraded to all the emissions gear that the state requires now..and if you want to haul refrigerated and can't go to Cali, then you are going to be losing out on a HUGE chuck of freight..MY advice, and you can take this with a grain of salt, is sell the truck, put that money in the bank where it will make you more money, finish trucking school, get a job as a company driver with one of the bigger starter companies, stay for a year and learn EVERYTHING you can on someone else's dime and then start looking at what kind of future you want in trucking, but stay away from being an O/O for at least 5 years...

A S.'s Comment
member avatar

Welcome aboard!

Well, regardless of your age, experience, financial obligations, or anything else there's one thing you can't do anything about...the average profit margin in the trucking industry is about 3%. It's a commodity service where only the lowest price gets the haul and that means razor thin profit margins - if any.

As someone who has either owned or helped run numerous types of businesses over the years I can tell you that the last place on Earth you want to find yourself is owning a commodity-type business. You'll pull your hair out trying to figure out how to eek out a living and keep your head above water. It's maddening. The competition is intense and every idea you come up with leads nowhere because 10 million people are either doing it or figured out it doesn't work. It's very hard to differentiate yourself.

They say the best way to wind up with a million dollars is to start with two million and buy a restaurant. The same thing applies to trucking. It's a ruthless, cut-throat industry. Even companies that have been around for decades struggle endlessly to turn any kind of a profit.

I understand, no matter how much i prepare myself financially, i cant change the market that has already been created which is the 3%. Trying to get loads that others will do for a cheaper rate i think i would go crazy. Old school makes a very valid point, get experience and learn the industry before i jump in. Any other suggestions/tips would be very much appreciated sir thank you for your help.

A S.'s Comment
member avatar

Singh, welcome to the forum. You are in a very early stage in your trucking career, but it seems like you have already had some exposure to the trucking life as you say your dad is retired, and if I read it correctly a retired truck driver. There are a couple of facets to your post that bear some response, so I will try to give you all I know, which is not very much, but better than nothing.. rofl-3.gif Firstly, most if not all of the advice you will get on here will tell you stay as far away from being an owner/operator as possible and there are really good reasons for this. Firstly, as a rookie, you are still way too new to even begin to understand how the trucking industry works to balance trying to learn as much as you can, be a safe driver AND try to run a business, which is exactly what being an O/O is...you are running your own business. Now that being said, you say your father and you are going into business together, so if your father is an experienced driver, then the business side may not be that challenging to him, but is he going to act as your broker/bookkeeper/billing agent/collection agent/business manager,etc..??? You see where I'm going here?? There is a LOT more to trucking than just driving the truck...now, having said all that, if your father is willing to act in that capacity and all you do is drive the truck, then it MAY work..you MAY make some money in that you don't have a huge truck payment to worry about every week, but that is a BIG MAY...what happens if the truck breaks? Not only are you out of a ride until you get it fixed, you're out of pocket for the expense of fixing it..bear in mind that depending on what kind of freight you plan on hauling you may find it hard to get loads...what I mean is this...if you have an older truck, then you can forget going out west to California, UNLESS, you have it upgraded to all the emissions gear that the state requires now..and if you want to haul refrigerated and can't go to Cali, then you are going to be losing out on a HUGE chuck of freight..MY advice, and you can take this with a grain of salt, is sell the truck, put that money in the bank where it will make you more money, finish trucking school, get a job as a company driver with one of the bigger starter companies, stay for a year and learn EVERYTHING you can on someone else's dime and then start looking at what kind of future you want in trucking, but stay away from being an O/O for at least 5 years...

My apologies to you and anyone else reading this as i did not make it clear, my father is not retired from trucking he is a business owner/entrepreneur. That being said he will be doing the book keeping and accounting part of the business. You are absolutely right its a huge MAYBE of making it big, and it would not be smart to just buy a truck years old and have to do twice as much maintenance esp because i would like to drive across the country etc. I HAVE to test the water before i jump in and i thank you very much for your help.

TWIC:

Transportation Worker Identification Credential

Truck drivers who regularly pick up from or deliver to the shipping ports will often be required to carry a TWIC card.

Your TWIC is a tamper-resistant biometric card which acts as both your identification in secure areas, as well as an indicator of you having passed the necessary security clearance. TWIC cards are valid for five years. The issuance of TWIC cards is overseen by the Transportation Security Administration and the Department of Homeland Security.

A S.'s Comment
member avatar

Hello Singh, and welcome to the forum!

You'll find that we are not big proponents of being owner operators. We have several members here who once were owner operators and are quite satisfied now being company drivers. I myself owned as many as six big trucks at one time, but I was not in the trucking business. I used them in a manufacturing business to deliver and install our product to our customers.

In a nutshell here's our reasoning behind leaning toward being company drivers. The average profit margin in the industry is 3%. I'm sure you understand math, and that of course means that some are making more than that while just as many are making less than that. With the average being that low I'm sure you can also realize that means some of them are losing their shirts at this. The large carriers have a definite advantage over the independents because they can average out their expenses on maintenance and repairs over a large number of trucks which does wonders for your accounting results. So basically if you can be an average trucking operation (which might be tough as a beginner) you can expect to make 3% more than the average company driver.

Now, you will definitely take in more cash flow than a company driver, but you will be paying for fuel, maintenance, vehicle registration (that is an annual expense which can be astronomical - I was paying a little over nine hundred dollars a year per truck every year), insurance, permits, fuel taxes... I'm gonna stop here, but I want you to know that I could go on and on with the expenses that a company driver never has to even think about.

You stated that you were in a unique position in that you won't be having truck payments. That is great, but you would definitely need to be putting back money for the purchase of a newer truck one day if you want your career to last. If you are going to be making any money at all as an owner operator you will need to be running at least 120,000 miles a year, and that my friend will leave you with a worn out truck in just a few years. So you would be needing to set back at least a couple of thousand bucks a month in anticipation of that. And I haven't even mentioned setting back money in an escrow account for maintenance and unexpected expenses.

We consider it best to not expose yourself to such difficulties in your career at the beginning, and I hope I've given you a few things to think about before you take a leap with out checking how the water is first.

Singh, there are definitely people who make it as owner operators, but there are a lot of them who are just flat starving to death trying to do it. There's so much to learn before you jump in over your head. If you were to work as a company driver for maybe three years or so you would know so much more about where the good freight is and what the major freight lanes are. Even learning how to get good loads and knowing what a fair price is for the freight are lessons that you probably don't even know yet. I remember recently that a person came on our forum and was telling us their plans for going O/O. They had calculated their break even point on revenue as being 1.75 per mile for freight. (That was break even mind you - and I think they had come up with a fairly realistic figure based on my own calculations) What they didn't know was that a whole lot of freight is going for around 1.35 to 1.50 right now. This is what I mean about how the large carriers have an advantage - they can divide this stuff out across a large cross section of really great performing drivers with lesser performing folks, and across trucks that don't need too much attention and those that need more TLC, and they can make it work that way.

Not trying to burst your bubble, just want you to think about some of the things that aren't so romantic about this plunge.

Mr. Old school, i will be taking your advice along with the others suggestions to take it easy and get a feel for the industry before i make such a big decision. The damn ads make it seem so convincing with those huge numbers lol, but what better place to get help and insight than from the people that have done it for years and have the background. I thank you for pointing me in the right direction, i will be looking for a job as a company driver as soon as i am finished with school. As road kill stated, saving the money and buying newer equipment so i have more access to other loads/freight is the best idea after i have built up a year of trucking experience, good driving record, and accident free driving history. I thank you for your help sir.

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

R. Picante's Comment
member avatar

Great post I'm also a student who been thinking of becoming an O/O with Prime. My trainer is an Lease Op and we are running teams but he shows me everything. We are getting loads that are 2k even as high as 4k. Now he inform me of gas n other thing n weekly lease payments of the truck and other things. He says leasing a truck with navy federal credit union and I can cut the payments in half n put more money in my pocket. What do u guys thinks?

guyjax(Guy Hodges)'s Comment
member avatar

I have had my own truck before and here is the secret behind the big money....its all on paper.

The last year i had my truck I GROSSED $275,000 . That is before paying for anything. Now this next part should scare most people. I netted about $46,000. See the big difference between the numbers? And i got extreemly luck cause I did not have one break down. One good break down and I would have alot less than a company driver that year.

I am on target to making $40k this year now that I am a company driver. That extra $6,000 is not worth the risk or worry that comes with owning a truck.

Oh BTW the way I ran a team truck. No way a solo owner op is going to pull those number down. I out ran the odds of failure by keeping my truck rolling 24/7 as a team.

HOS:

Hours Of Service

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

Rico, here is what I think.

I just want you to think about the fact that your trainer is training because he isn't making enough money by running his own truck by himself. So may of the trainers now days are lease or owner operators, and the reason they have all turned to training is that they are basically going broke and are having to supplement their income with the training pay. They are having to use students to help them achieve more miles because they just can't legally run hard enough to keep up the payments they are strapped with.

I wish we could all be owner operators and make tons of money, but it is a fools paradise right now with the way the big players in the field can and do cut the prices for freight. This is a really tough business climate and the players in the field are doing everything they can to keep the business going their way. Over the last five to seven years the price of trucks, fuel, and maintenance have all gone up while the price for moving freight has gone down or flattened out. The average truck driver is working just as hard as ever, but he either makes less or his money has definitely gone down in it's buying power.

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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