Why Small Trucking Companies Are Often A Disaster Waiting To Happen - Article By Brett Aquila

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Junkyard Dog's Comment
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There have been so many rookies on here who gone through company training and we thought they were going to do good things. Only at the end they got suckered into the lease option. We never heard from them again. Even though they tried to justify the decision they made going against everything the veterans on here advised them to do

Brett Aquila's Comment
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Older Newbie, I appreciate your comments.

Whenever we have this discussion about the ownership side of trucking there are two strategies that people see as some kind of special exception to the rule, the path to big money:

1) Pay cash for an old truck, work on it yourself, keep your costs low. So far no one has mentioned it but 1,000 people are thinking it.

2) Specialize in something - exactly what you've said.

Unfortunately there's nothing really special about hauling oversize freight. Anyone can do it. You don't need a special license, you don't need to be a 20 year veteran of trucking - you simply need a truck capable of handling larger loads. The large carriers rarely get into little niches because there isn't enough freight to make it worth doing.

The owner operators I deal with all make money. Let me repeat that... they all make money. But...and here is the catch...they also have 200 to 400 thousand dollars wrapped up in their rigs and they have lots of years of experience.

Of course they make money. The question, of course, is how much?

Let's think about it for a minute - if they were making a killing, wouldn't there be a ton of people jumping in after them to get a piece of that big payday? Of course! That's what free market competition is all about. There are no gravy train businesses out there. If you can simply get a couple of years of regular flatbed experience under your belt, buy a bigger truck, and make a killing then of course everyone would be doing it.

The fact that every johnny-come-lately to trucking immediately thinks of this as a viable strategy for making great money shows that it's far from being any kind of secret. In fact, it's a rather obvious strategy.

there are a few people out there who are doing very well indeed and yes they own their own truck...they don't haul regular stuff and they offer services and experience that are hard to come by

This is also something very common I always here.......the ol' "I know some guys who are really doing well for themselves" but the reality is you almost certainly have seen no real proof whatsoever of the actual profits they're making. If you really want the truth there's only one place to find it - the line on their company's tax filing that says, "Net Income After All Deductions" - that's the "Jesus Number" that will tell you the true story.

Now of course every time I say this I hear all kinds of baloney. "Oh, I have other income so I can't show you that number" or "I write off all kinds of expenses that really aren't part of the business so it doesn't look like I'm making as much as I am" - all kinds of excuses or exceptions.

The one thing I have never seen in 25 years of asking for it is a copy of someone's tax filing. Somehow they're all making a killing, but not one person has ever demonstrated it to me.

UFO's, Bigfoot, and rich truckers - they all apparently exist but somehow all we ever get are grainy snapshots that might be real, might not.

Not sure what my end game is going to reveal but I do know that in the niche I'm in...there is a very lucrative future.

Ah yes.......another common statement - I don't know exactly what path I'll take but I already know I'll make a killing owning my own truck.

How do you know that? Oh, that's easy - other owner operators told me they're making a killing so I know it's true.

Hey, if a truck driver said it you know it must be true.

Everyone thinks they're the exception to the rule. Everyone thinks they've found the key to making big money owning a truck. Everyone knows someone who seems to be making a killing doing it. Yet somehow no one has ever been able to prove it. Not one single person, not one single time.

Now if you really want to know what your prospects are before diving in head first I would recommend talking to some accountants that have truck drivers as clients. I've done this myself. I've had my accountant for a number of years and I've talked to several others in the past about it. They know the truth about the kind of profits truck drivers are making.

If you dare risking friendships over it, ask some of the owner operators you know which accountants they're using. Tell them you want an accountant that has experience with this business and you're looking for recommendations. Obviously that accountant isn't going to give you names or show you anyone else's returns, but if you go there and tell him what your plans are he'll certainly be able to give you some numbers to go by.

In the end, trucking is a commodity service. Even the various niches like Hazmat or Oversize hauling have fierce competition and very little freight available. If there was a gravy train niche out there the word would spread fast, everyone would quickly jump on it, and the easy money would go away quickly. You'd be right back to square one - making the same amount of money owning your truck as a company driver makes.

....continued

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

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
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Remember, too, that owning a business doesn't just mean doing well for a year or two. You have to thrive indefinitely in one of the most cutthroat industries in the country. You'll be competing with guys who have done this for many decades. They're savvy, they have connections, they've seen it all. Are you going to jump in the ring and show them how it's done?

Then there are other considerations. What if you get sick or injured and can't drive for a few months - how will your business survive?

What if your engine grenades and you need that $25,000 rebuild that's going to take a few weeks? Where is that kind of cash going to come? Can you take that big of a hit?

What if a major competitor moves in and undercuts you by a significant amount, deciding they can take a loss for a while just to drive you out of business? What are you going to do about that?

Business is vastly more complicated and difficult than most people ever imagine. To say "there is a very lucrative future" in a business before you've even started the business shows you've been drinking the Kool Aid. The overwhelming majority of new businesses fail within a few years, yet before you've even begun you're certain it's going to be lucrative? That should scare you. It scares me.

I've been in business for 15 years myself and I've had to change my strategy and my business model numerous times. I would've been bankrupt several times already if I hadn't completely revamped my business after changes happened to the business environment that were completely unforeseeable and totally unexpected. So having that level of confidence in your business future makes me think you're drastically underestimating the challenges that lie ahead. Even after 15 years of running businesses I wouldn't be so bold as to declare my future to be lucrative. I'm too busy wondering what the next major disruption will be that forces me yet again to completely change direction or go broke.

I'm sorry Older Newbie, but you can't bring anything to the table in trucking that 10,000 other guys can't do just as well as you, regardless of what you're going to haul. God knows I would love nothing more than to find out you've made $250,000 per year in profit owning your own truck, or even a small fleet of trucks, but it simply never works out that way.

Think about this article from Overdrive Online in 2015: Record year for owner-operator income: Here are the numbers:

Owner-operators, led by independents and flatbedders, had a record year for net income, according to averages from ATBS, the nation’s largest owner-operator financial services provider. Leased operators and independents together cleared an average $56,167 during 2014. That’s 7 percent above the 2013 average, $52,406. Strong freight demand, a driver shortage and plunging diesel prices contributed to the increase.

That was the best of all time! They're averaging a little over $50,000 in profit. Take a look at the salaries of our moderators who are all company drivers. They're all making around $70,000 - $80,000.

So think about this - if you found a niche where you could make even $100,000 per year in profit, how long do you think it would take the other 750,000 owner operators and small fleets out there who are averaging $56,000/year to jump in and try to double their profits in an instant? Faster than you could sneeze.

If you decide to take the plunge then God bless you. I'd love to see you strike it rich. If you do then finally, for the first time in 25 years, I'll be able to say I know a guy who figured out the path to riches owning a small trucking company. I hope you're that guy.

Owner Operator:

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

Jeremy's Comment
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All very informative and very much like the logging industry played out as well id be lieing if i said it isnt disheartening to lose that local feel because of things like walmart target home depot lowes amazon and such but it is the future because unfortunately the dollar drives the world Ive always been self sufficient with gardening hunting fishing and mostly living that smaller town adirondack life but truth is ya still need that $ to survive.while i choose to try and buy made in america products its tough to do for everything because we priced companies right out of our own country but it seems recently the great US of A has made a bit of a comeback maybe there is hope for us small town dreamers yet. With that being said hope youre loving the adirondacks as much as i do brett i know i wouldnt trade them for anything

DAC:

Drive-A-Check Report

A truck drivers DAC report will contain detailed information about their job history of the last 10 years as a CDL driver (as required by the DOT).

It may also contain your criminal history, drug test results, DOT infractions and accident history. The program is strictly voluntary from a company standpoint, but most of the medium-to-large carriers will participate.

Most trucking companies use DAC reports as part of their hiring and background check process. It is extremely important that drivers verify that the information contained in it is correct, and have it fixed if it's not.

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.

Andrew J.'s Comment
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I got into this industry cause I thought it was a way for me to own my own business. Be an owner operator. I figured I would do a year or two of OTR company and learn the business. Roehl gave me a 18 international LT with 60000 miles on it and it has been in the shop around 5 or 6 times for different things and in the 100000 miles I’ve put on it both steers and 4 drive tires have been replaced. I also thought it would be interesting to see how much in fuel I was spending so I tracked that. It was around 1000 a week in fuel. Then I looked at the rates I would make if I stayed with my carrier or went with another one and i wasn’t making any more money than I was as a company driver. Then on top of that I would be paying additional self employment tax along with probably more for health insurance. Now I could probably “write off” a lot in depreciation but it just didn’t look like a good business plan. For me to make the same money for all the extra headache and risk to just get a little more freedom isn’t worth it. I will be a company driver for my trucking career.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Owner Operator:

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

DAC:

Drive-A-Check Report

A truck drivers DAC report will contain detailed information about their job history of the last 10 years as a CDL driver (as required by the DOT).

It may also contain your criminal history, drug test results, DOT infractions and accident history. The program is strictly voluntary from a company standpoint, but most of the medium-to-large carriers will participate.

Most trucking companies use DAC reports as part of their hiring and background check process. It is extremely important that drivers verify that the information contained in it is correct, and have it fixed if it's not.

Dean W.'s Comment
member avatar

Thank You. I am 55 and just started my truck driving career. I have operated several small businesses in the past and you have reminded me again why I do not want to own another small business. I WILL be a company driver.

That brings me to my current employment at a small carrier, maybe 50 trucks... It was a good opportunity to get started and I now have about 70,000 miles under my belt and 7 months. I am averaging around 2500 miles a week coming home every 3 weeks for 3 days. But there was a recent management shift and I have concerns that they will survive.

So I am looking for options with "large" carrier if it becomes necessary. My objective is to make $70k to $80k being home every 3 weeks or so. What large carriers should I be looking at hiring drivers in the western states?

Brett Aquila's Comment
member avatar
So I am looking for options with "large" carrier if it becomes necessary. My objective is to make $70k to $80k being home every 3 weeks or so. What large carriers should I be looking at hiring drivers in the western states?

An experienced driver who really hustles will make that kind of money running OTR at pretty much any large carrier. So it really comes down to your preferences for the type of freight you'd like to haul. There is no "best" place to work amongst the major carriers. You just have to make sure their offerings work for you and that their pay and benefits are competitive with the others.

You can look through our truck driving job listings to see which carriers hire from your area. Just scroll down that page and you'll see a box where you can enter your zip code. That'll give you a long list of companies that hire from there.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Banks's Comment
member avatar

Just from what my dad told me when he used to have a part time job as a mechanic for a independent truck shop I would never work for a small company. They had to have one truck towed out the brakes where so bad and and the owner refused to fix them, maintenance is not a pirority and you can forget about driver comfort items being fixed.

Working for a small company is something I'll never do again.

A couple of years ago, I was working for a company and I got hurt. I fell off a ladder about 6 feet flat on my butt. I was sore, but didn't think anything of it. Fast forward a couple of weeks it hurts to sit and it's nearly impossible to walk. I went to the hospital and they said it's just some internal bruising. It should be fine as long as I don't sit for long periods of time. My insurance refused to pay for it saying it's a workers comp issue. So I went that route. 2 weeks later I was terminated. They gave the reason that I turned in invoices late, which I did. I did it the entire time I worked there because the building was locked down when I got back. I didn't feel comfortable dropping cash in a box that I was responsible for. I spoke to a co-worker on my way out and he told me the owner was afraid I'd be put on light duty and he didn't want to pay me for that.

That's where the vow came from. This is guy is sitting in his little office and couldn't care less about me being hurt. Do I think the other of FedEx cares if I get hurt? No. But my direct supervisor will and he'll make sure everything is done properly so that I get any time off I need and that everything gets paid for. That's the difference. It doesn't affect his bottom line.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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