So You Want To Start Your Own Trucking Company?

Topic 26943 | Page 1

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DaveW's Comment
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The mission of Trucking Truth is to help prospective new drivers make important decisions about starting their driving careers – like, which training/licensing method is best, and which are the best companies to begin driving for, among others. And, while many independent-minded new drivers initially believe they would be happier going on their own as owner-operators, Trucking Truth generally discourages new drivers from taking that route.

So you want to start your own trucking company?

Old School's Comment
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Thanks Dave! That's a great article. I recently had one of our drivers on this dedicated fleet I'm on come to me for some advice. He knew a couple of our drivers decided to lease a truck. (Actually four of them decided to lease, but only two of them made it past three months) My first question for him was, "What's your motivation for wanting to be a lease operator?" He replied, "I want to start making that big money!"

We had a lengthy discussion which culminated with me not feeling sure I actually convinced him it wasn't that great of an idea. It didn't seem to phase him that fifty percent of the four guys we were familiar with had failed in less than three months. He was confident he was smarter than those "Bozos." So, I eventually asked him how much he was making as a company driver.

He was disappointed that he was only making 60 grand. Of course I immediately asked how much he thought he'd be making as a lease operator. He fired off this bold number of 180,000 dollars a year. "Wow," I say, "Where did you get that number?" "That's what George told me he was making," he quickly replied. My response was that I doubted George was making more than 60 grand, and then I explained that number which George so proudly threw at him was strictly a revenue number.

I told him to go back to George with some very specific questions which I laid out for him. Just the other day he found me and told me I was dead on with my figures. In fact, George's accountant seemed to think he made 52,000 dollars. Of course George marked that up to "all the tax write-offs he gets now." Haha! My friend thanked me for taking the time to help him understand it, and has decided for now that he's not going to take the risks involved and possibly end up earning less than he was now.

I can tell he's still not completely convinced, but like most of us he'll probably learn life's most well learned lessons the hard way.

SAP:

Substance Abuse Professional

The Substance Abuse Professional (SAP) is a person who evaluates employees who have violated a DOT drug and alcohol program regulation and makes recommendations concerning education, treatment, follow-up testing, and aftercare.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Rick S.'s Comment
member avatar

Another thing not mentioned in the article: FLOAT.

As in - most accounts-payable are "Net 30", and the time and expense that comes with having to CHASE YOUR MONEY.

Many O/O's choose to use "factors" - that is, people who will essentially pay off your BOL's, for a 10% fee. Usually only from "approved brokers or shippers". There's also CHARGEBACKS, BOL's that end up NOT PAYING - which results in your factor taking the $$ they advanced you BACK. Most factors will require you to be EXCLUSIVE TO THEM (no "multiple factoring companies") which means you can only take loads that THEY APPROVE (which are loads they have a high confidence will ACTUALLY PAY THEM). So knock another 10% of that gross revenue fee. It's a VICIOUS WORLD out there - between competition, shady brokers. And if you think you get used/abused by shippers as a company driver for a major company - O/O's end up even lower on the totem pole.

Also find the $1.85CPM from brokered loads might be a "little high". Spot rates from brokers are running a bunch lower now (haven't been on the load/brokerage boards in awhile). A lot of the rates are dependent on location. And many "slow lanes" are significantly less. You will NOT SEE $1.85 coming out of S. Florida - and many folks won't even come INTO S.Fla without a rate over $2.00 - so they can just turn around and deadhead out.

As far as a "rookie", just buying a setup and jumping in - most insurers will only insurer a "new guy" with INTRASTATE insurance for year one - which means NO OTR. Even that was incredibly expensive (upwards of $15K).

I did EXTENSIVE RESEARCH a few years ago at the possibility of purchasing a setup and getting on the road as an independent. Even with FULL CAPITALIZATION (as in $200K liquid) and a business plan approved my my accountant and attorney - the risk to reward ratio just DIDN'T JUSTIFY THE EXPENSE.

It's called: BUYING A JOB - and not a good paying one. The "return on investment" was so low, I would be better off putting my $$ in a CD or money market account...

For every GOOD REASON someone thinks they want to go O/O, there are THREE that say you shouldn't. Not to say that there aren't O/O's that aren't making a decent living (and I know a few) - but these are SEASONED VETERANS, not newcomers.

Rick

Deadhead:

To drive with an empty trailer. After delivering your load you will deadhead to a shipper to pick up your next load.

Shipper:

The customer who is shipping the freight. This is where the driver will pick up a load and then deliver it to the receiver or consignee.

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.

Intrastate:

The act of purchasers and sellers transacting business while keeping all transactions in a single state, without crossing state lines to do so.

CPM:

Cents Per Mile

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

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.

Old School's Comment
member avatar

I forgot to point out here that I walked this fellow through some tips on how he can substantially increase his pay as a company driver. He was skeptical because, "I'm already running my ass off," he said. After some discussion he discovered I was turning considerably more miles than he, and you could sense his bewilderment. He even said, "I don't get it. You're a lot older than me. I'm wearing myself out. How do you find the hours to do that many miles?"

I did my best to inspire him. Time will tell if he starts to lay hold of the concepts. But success is not defined by your title as "owner." It is more often defined by your drive, your initiative, and your understanding of how to put yourself where you want to be.

Brett Aquila's Comment
member avatar

Any business owner will tell you that the biggest misconception people have about business owners is that they're all just fat-cats riding the gravy train, relaxing, and getting rich. Because the business owner is the boss, they do whatever they want to do, and don't do anything they don't want to do.

That's hysterical! It's the furthest thing from the truth for 99% of business owners.

Do you really know the facts about small businesses? How about some of these facts:

  • 85% of small businesses are not profitable
  • 90% of small businesses fail within the first 3 years
  • Many small businesses that fail were actually profitable but ceased operations because they ran out of operating capital (cash)

There's an irony in becoming a business owner that's similar to gold mining; somehow people become convinced they'll get rich doing it, even though nearly everyone that tries it goes broke. That's in large part because almost everyone sees themselves as being above average, even though by definition that's impossible.

I'm glad most people don't take that same approach to the success they might have if they tried jumping off a building.

Also, keep in mind that the profit margin numbers of 3% - 7% for the largest, most successful carriers in 2018 happened in one of the best years in the history of trucking. Freight volumes and freight rates were utterly fantastic. So those profit numbers are the best possible scenario. Wait until you see what they were for 2019. It will be a very different story for most companies.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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