Owner Operator

Topic 27296 | Page 2

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Bobcat_Bob's Comment
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My advise if you really and truly want to own a truck, buy it put RV plates on it get a 5th wheel RV to pull and see the country.

Trying to make a business out of trucking is extremely difficult when I ran the numbers I would make less than I do now and that was if everything went well. With rates being down it will be extremely difficult to make any money let alone to make the risk worth it.

Banks's Comment
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When you buy a truck, you're buying a business. When people buy/start a business it's for one of these reasons:

1) they plan on selling it later for a profit.

2) the business can make bunches of money you wouldn't make otherwise

3) you can live a life that being an employee won't allow for

Buying a truck doesn't provide anything being a company driver wouldn't provide. You'll never sell the truck for money.

There's a small possibility you can make more money, but you forego other benefits like health insurance, retirement plans, paid vacation time etc. One breakdown has the potential to put you out of business.

The lifestyle is exactly the same. Being a company driver gives you the opportunity to run different lanes and haul different types of freight.

ChrisEMT's Comment
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While I can agree with Brett that borrowing money has never been cheaper than it is today, and that debt used properly is the #1 driver of economic growth... My point is, what happens when freight drops for 4-6 weeks in a short period of time and you still have a truck payment and other expenses to pay, and there are too many bills at the end of the money? That is why I suggested to buy your at least your first truck in full (or at least almost in full) so you are not stuck with a large weekly payment if you take a week off, have a short freight week, or goodness forbid, you get into an accident or have mechanical issues like a blown engine or transmission, which could easily be $15 - 25K plus the time your truck is down to be repaired.

I would say buy your truck outright and get a business line of credit for everyday things like maintenance, with a maintenance account to replace the engine and transmission. Then, once you get the experience and contacts with brokers, etc, and network with people and prove yourself to shippers and receivers to the point they request you and a select few drivers (I had that happen to me on my dedicated account as a company driver), and then you get lower insurance premiums and a better handle with what your potential is, then go out and finance a new(er) truck that is optioned the way you want....

I had spoke with people I got my CDL with, and some were very successful L/O's after they got their time in as a company driver, and finished several leases, and I also know drivers who became L/O and O/O who failed miserably for several reasons, mainly because of lack of experience, money, contacts, and "business savvy" for lack of a better term, and had to turn their truck in and went back to being a company driver...

And Brett, and everyone else here gives good advice on the industry, and how to be successful. Just remember, becoming a L/O or O/O is a big commitment.... Just be sure you have your ducks in a row, your I's crossed and T's dotted before jumping into it....

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.

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.

DOT:

Department Of Transportation

A department of the federal executive branch responsible for the national highways and for railroad and airline safety. It also manages Amtrak, the national railroad system, and the Coast Guard.

State and Federal DOT Officers are responsible for commercial vehicle enforcement. "The truck police" you could call them.

OWI:

Operating While Intoxicated

Brett Aquila's Comment
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I would say buy your truck outright and get a business line of credit for everyday things

You might reduce the interest you pay by a trivial amount with this structure, but you create a much scarier problem; you're now depending on the bank to provide your cash for operations. What happens if you have very little cash of your own and suddenly the bank cancels or reduces your line of credit? Then what?

Also, keep in mind that the percentage of the credit you're using will affect your credit rating. So if they give you a $10,000 line of credit and you're using $9,000 of it you're going to see a significant drop in your credit score. Now your credit score can be improved again by paying off that line of credit, but you have no cash to do that with.

What happens if you use your line of credit and you still need more cash? Your existing credit is maxed out and your credit score is significantly lower than it was, making it more difficult to get additional financing.

Hang onto your cash!!! I'm telling ya, no one ever regrets sitting on a pile of their own cash.

ChrisEMT's Comment
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Brett, that is why I suggest what was suggested to me, keeping at least $25k in the bank for the major expenses (engine, transmission, major problems that arise)... What is easier to pay off quicker, maintenance through your maintenance account (charging it, then paying it off with your maintenance account reimbursement) or having to go to a bank and ask for the money to pay for something huge in the 10's of thousands of dollars? and I don't know of any every day maintenance that would tie up 90% of your credit line.... Unless routine maintenance, 60 day and required annual DOT inspections have increased 10 fold and made out of gold. And if it takes more than a couple of days to get the money from your maintenance account and send in a check to pay the bill before the statement comes out, there is a problem. even if you pay 90% of the bill every month, you shouldn't be anywhere near 90% of your credit limit, and you will build credit, show regular payments, and get credit line increases....

And your last sentence is what I have been saying, hang onto your cash... Make sure you have at least $25k in the bank for major expenses.... And by buying your truck outright, you don't have a truck payment (and you can make a truck "payment" to yourself so you can put a large down payment on a new truck) to lower your expenses.

DOT:

Department Of Transportation

A department of the federal executive branch responsible for the national highways and for railroad and airline safety. It also manages Amtrak, the national railroad system, and the Coast Guard.

State and Federal DOT Officers are responsible for commercial vehicle enforcement. "The truck police" you could call them.

Chad D.'s Comment
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Thank you for this post. All the replies on here were very very useful and enlightening

Brett Aquila's Comment
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And your last sentence is what I have been saying, hang onto your cash... Make sure you have at least $25k in the bank for major expenses.... And by buying your truck outright, you don't have a truck payment

Ok so think about your financial situation. You have enough money to pay cash for a truck and you're going to set aside $25,000 for major expenses? How much cash do you have, son? I would suggest that you should keep doing whatever allowed you to accumulate over $100,000 in cash. It's working! Keep doing it!

If you've racked up that much in savings as an employee somewhere, then the last thing you need to do is buy a truck and start a business. You already have it made. Buying a truck will burn through years of savings and won't allow you to make any more money than you were making when you saved up that kind of money in the first place.

Rob T.'s Comment
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Seen a truck with this name in Ames IA.

0093731001577726299.jpg if hes making so much money why would he call it nickle and dime? It's a long nose 2013 pete.

Cornelius A.'s Comment
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What i can say is that most of my successful trucking customers are into the expedited side of things where they run 26k lbs or less trucks.... they gross around $5k per week , 13% goes to the dispatching company and the rest goes towards all the expenses that comesm with trucking , from looking at their financials their take home is around 2k a week

$

Brett Aquila's Comment
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from looking at their financials their take home is around 2k a week

And by that do you mean their tax forms, specifically the line that says, "Net income after all deductions" - that's the only number that matters. Everything else is just a fantasy.

I also find it impossible to believe they're bringing home $100,000 in net profits. Don't worry though, I've found every big number impossible to believe because not one person in 26 years in this industry has ever shown me the real number.

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