Lease Vs. Company...

Hey Everyone, It seems this website is dedicated to slamming the idea of being an owner/operator or leasing. Everybody talks about leasing through the company, but why does nobody talk about leasing through a dealership, or...here's an idea, PAY CASH FOR THE TRUCK! That would reduce a lot of your monthly expenses right there, and all of my investing has always been focused on cash flow: Home rental, automated trading strategies, etc.

Has anyone done a detailed breakdown of these methods? I'm an equity trader, so I'd like to think I'm financially educated, especially with risk:reward, budgeting, etc. Leasing or even purchasing is an option I'd like to consider in the future. My fiancee has a dual degree in business and finance, and I myself in quant and stat modeling, so suffice to say, we are good with numbers. I'm not trying to brag, just inform anyone who may read this post that I'm not a (OH! MY OWN TRUCK WITH NO DOWN PAYMENT OR CREDIT CHECK!?) Thanks in advance for your help.

Best Regards, Jason E.

Hey Jason. Welcome to Trucking Truth. To answer your questions about why this site is against company leasing is probably because these companies that hire rookies tend to make the deal seem so sweet to these new guys and if you know the numbers, it's a very risky proposition for new drivers. That's at least in part why we discourage it. Many, many here are new to trucking and learning the profession and being a business owner at the same time is, as you know, not a risk worth taking.

You ask ...

...why does nobody talk about leasing through a dealership, or...here's an idea, PAY CASH FOR THE TRUCK!

-Jason

Paying cash would probably be the only way I'd get into tractor ownership and for me, that would take a few years of savings. However, even if I had the cash today, I still wouldn't want the burden of business management right now. I just want to get good at driving.

Since you're interested in the idea, it would be great if you shared what you've learned. It sounds like you have valuable information from which the rest of us could learn. Please, do tell!

-mountain girl

Jason,

Do you really think the ability to crunch numbers is the one thing that makes a person successful in any business? If so, you and your wife need to sue whatever college handed out a "dual degree" because they failed to add real world economics to the program. There are so many factors that go into this business model that I would scream run from any idea of becoming an owner operator , even if you bought the truck out right.

I drive for a company, however, I do so with a business mentality. I actually tracked fuel costs, tolls, scales and whatever else I could put numbers to. Let me tell you, the average profit margin is 3%. My tally at the end of my year of tracking, without the burden of a truck and insurance payment, didn`t even get me to that number.

I would look at the regulatory picture of the trucking industry as a model for what is yet to come as it pertains to investments before asking why now and future truckers who come to this site are discouraged from becoming an owner operator straight out of the gate. A little common and business sense.

The truth may sting, but it saves one from a lot of pain later.

Jason,

Do you really think the ability to crunch numbers is the one thing that makes a person successful in any business? If so, you and your wife need to sue whatever college handed out a "dual degree" because they failed to add real world economics to the program. There are so many factors that go into this business model that I would scream run from any idea of becoming an owner operator , even if you bought the truck out right.

I drive for a company, however, I do so with a business mentality. I actually tracked fuel costs, tolls, scales and whatever else I could put numbers to. Let me tell you, the average profit margin is 3%. My tally at the end of my year of tracking, without the burden of a truck and insurance payment, didn`t even get me to that number.

I would look at the regulatory picture of the trucking industry as a model for what is yet to come as it pertains to investments before asking why now and future truckers who come to this site are discouraged from becoming an owner operator straight out of the gate. A little common and business sense.

The truth may sting, but it saves one from a lot of pain later.

First off, I'll pretend you aren't arrogant enough to actually insult my intelligence with what little you know about me. Nobody said anything about "crunching numbers". A calculator can do that, so don't put words in my mouth. Would you care to share this analysis with us? I'm going to assume you have this all mapped out in a detailed excel sheet or something of the sort? I'm also going to HOPE that you did this for longer than a year, because as you know there are many micro/macro economic (real world) factors that can influence these numbers with such a short time-span (i.e. Fuel). Yes, I do believe being able to work with numbers is essential in any business. If you can't so much as count change, you can't run a business.

Hey Jason. Welcome to Trucking Truth. To answer your questions about why this site is against company leasing is probably because these companies that hire rookies tend to make the deal seem so sweet to these new guys and if you know the numbers, it's a very risky proposition for new drivers. That's at least in part why we discourage it. Many, many here are new to trucking and learning the profession and being a business owner at the same time is, as you know, not a risk worth taking.

You ask ...

...why does nobody talk about leasing through a dealership, or...here's an idea, PAY CASH FOR THE TRUCK!

-Jason

Paying cash would probably be the only way I'd get into tractor ownership and for me, that would take a few years of savings. However, even if I had the cash today, I still wouldn't want the burden of business management right now. I just want to get good at driving.

Since you're interested in the idea, it would be great if you shared what you've learned. It sounds like you have valuable information from which the rest of us could learn. Please, do tell!

-mountain girl

I'm definitely planning on doing some deep analysis into the subject, but I'll have to setup some sort of survey and collect data from a lot of truckers. Probably about 5,000. So, when/if I ever have the time to figure out this hurdle, I can start to think about the analysis and what we can compare between company/lease/purchase.

Hey Everyone, It seems this website is dedicated to slamming the idea of being an owner/operator or leasing. Everybody talks about leasing through the company, but why does nobody talk about leasing through a dealership, or...here's an idea, PAY CASH FOR THE TRUCK! That would reduce a lot of your monthly expenses right there, and all of my investing has always been focused on cash flow: Home rental, automated trading strategies, etc.

Jason, are you for real?

First off your comment about this web site is so off based and ridiculous that I just don't even know what to say. You are either so short sighted that you can't see the obvious, or you're just one really foolish investor.

I've been a business owner/operator for thirty years - have owned lots of trucks. Nobody - NOBODY - would consider a big rig as an investment from an investors point of view. I can't understand why in the world you would think you need to collect data from about 5,000 truckers when the data is readily available to you (that is if you really knew what you were doing).

I just loved your ideal about paying cash for the truck! Anyone who has put in the time and effort to accumulate that kind of cash would be a simpleton indeed to throw it at the wind by putting it into a Big Rig for "cash flow" purposes.

I'm gonna hold my tongue, and hopefully spare you some embarrassment, but Rolling thunder was far from arrogant, you just don't get it and I doubt we can convince you. I'm sure you are well educated, but somewhere along the way you missed out on real life experience. The only entities or persons you will find who are investing in Big Rigs are the people who simply have to have them to conduct the real business they are making money with, and that is the logistics of moving freight. Why do you think so many of these investors are aggressively seeking out people to lease their trucks? That is the part of their business that is draining them - they need someone to help them out with that part of their business model - and you might just be the man who could do it.

I haven't talked to an owner/operator yet that "makes a lot of money." They handle a lot of money, but don't get to keep much of it. At least in the last 30 years. It was different before. Even if you buy the equipment outright, you've still got to work so long to make that money back. So, whether you make payments or not you've still got a hole there that needs filling. That's layman terms for us ignorant folk.

Now, if money wasn't an issue, heck yeah I'd buy me a truck and trailer today. Drive it when I want. So what if I net under 500 for every 2500 I gross. And, that's not including overhead such as maintenance, permits, and taxes.

Every trucker I have talked to, on the CB, at the truck stop, online, you name it, that is or has been an owner operator , has said for the last 30 years it hasn't been worth it.

I'll be an O/O some day. When I have a fat stash of cash and don't have to worry about paying the bills. It's kind of my goal. If it wasn't for 9-11 and two well-timed divorces (that's irony), I'd be a millionaire today driving a nice truck going to truck shows and working on my own terms. But it wouldn't have been the trucking industry that got me there, it would have been the 15 years I spent in business management coupled with stocks splitting twice a year, before 9-11 and a couple greedy ex-wives shocked me into this reality.

Jason, if you're so good with numbers then you should go pay cash for a $110,000 truck, lease on to a company, and see how your numbers turn out in a commodity service industry with 3% profit margins. Personally my business experience tells me you don't jump into a business where:

1) There's no way to differentiate yourself from the competition

2) Your upside is to make 3% more than you would as a company employee doing the same job

3) The capital expenditures are high

4) The litigation risk is high

5) You have no experience in the industry.

That's how I begin my risk/reward analysis when it comes to starting a business.

Not only that, but commercial trucking has been around for about 100 years and the industry has been de-regulated for about 35 years. Literally millions of people have done the analysis and tried everything in the world they can think of to excel in this industry. But hey....maybe nobody ever thought of paying cash for a truck and "reducing their monthly expenses" as you put it? You would reduce your finance costs that way but you better have at least that much in free cash to keep the business going. You're going to need it. And you'll never, ever come close to getting that money back out of the business if you wanted to exit because you're "investing" in heavily depreciating assets. What would be the exit strategy?

If all you had to do was buy some trucks and haul freight to make great money we'd all be doing it. It's a commodity service in a cut-throat industry with razor thin profit margins and terrible economics. If you want to invest in trucking, stick with stocks. Let the real pros run the trucking companies while you sit back and collect on your investment. That's the best opportunity you'll ever find to make money in trucking.

Jason, if you're so good with numbers then you should go pay cash for a $110,000 truck, lease on to a company, and see how your numbers turn out in a commodity service industry with 3% profit margins. Personally my business experience tells me you don't jump into a business where:

1) There's no way to differentiate yourself from the competition

2) Your upside is to make 3% more than you would as a company employee doing the same job

3) The capital expenditures are high

4) The litigation risk is high

5) You have no experience in the industry.

That's how I begin my risk/reward analysis when it comes to starting a business.

Not only that, but commercial trucking has been around for about 100 years and the industry has been de-regulated for about 35 years. Literally millions of people have done the analysis and tried everything in the world they can think of to excel in this industry. But hey....maybe nobody ever thought of paying cash for a truck and "reducing their monthly expenses" as you put it? You would reduce your finance costs that way but you better have at least that much in free cash to keep the business going. You're going to need it. And you'll never, ever come close to getting that money back out of the business if you wanted to exit because you're "investing" in heavily depreciating assets. What would be the exit strategy?

If all you had to do was buy some trucks and haul freight to make great money we'd all be doing it. It's a commodity service in a cut-throat industry with razor thin profit margins and terrible economics. If you want to invest in trucking, stick with stocks. Let the real pros run the trucking companies while you sit back and collect on your investment. That's the best opportunity you'll ever find to make money in trucking.

Brett's points applied to me. I foolishly tried to start a business in IT consulting and it was almost impossible to differentiate myself, IT is now mostly a commodity and it's a race to the lowest price, and finally it's extremely risky. Dealing with people's data is a lot like dealing with their freight except, generally speaking, data doesn't kill people unless it's medical data. I wish I had these counterpoints when I was considering being an entrepreneur.

Money, much like drugs, can be dangerously addictive and alluring. I have a Ph.D. from the Wil E. Coyote School of Hard Knocks. I'd rather live simply, well below my means, and love life. I've made good money in IT and had a lot of toys but, let's me be honest, life was still miserable. I feel happier than I've been in years with my decision to give company driving a good, solid go and treat it as an adventure.

Jason, no one intended to insult your intelligence. Try looking at it from an angle of wisdom. The experts are dissuading you from O/O because they care and don't want you to get tripped up in the high probability of financial ruin and legal trouble. Just in IT alone, I hit financial ruin. I made the mistake of wearing blinders when people were telling me not to start an IT business. If the long time truckers on here didn't care, they would say nothing, or worse yet, tempt you into a trap. The O/Os that do well have industry experience, are savvy, and able to buck the general trend.

Jason,

Do you really think the ability to crunch numbers is the one thing that makes a person successful in any business? If so, you and your wife need to sue whatever college handed out a "dual degree" because they failed to add real world economics to the program. There are so many factors that go into this business model that I would scream run from any idea of becoming an owner operator , even if you bought the truck out right.

I drive for a company, however, I do so with a business mentality. I actually tracked fuel costs, tolls, scales and whatever else I could put numbers to. Let me tell you, the average profit margin is 3%. My tally at the end of my year of tracking, without the burden of a truck and insurance payment, didn`t even get me to that number.

I would look at the regulatory picture of the trucking industry as a model for what is yet to come as it pertains to investments before asking why now and future truckers who come to this site are discouraged from becoming an owner operator straight out of the gate. A little common and business sense.

The truth may sting, but it saves one from a lot of pain later.

First off, I'll pretend you aren't arrogant enough to actually insult my intelligence with what little you know about me. Nobody said anything about "crunching numbers". A calculator can do that, so don't put words in my mouth. Would you care to share this analysis with us? I'm going to assume you have this all mapped out in a detailed excel sheet or something of the sort? I'm also going to HOPE that you did this for longer than a year, because as you know there are many micro/macro economic (real world) factors that can influence these numbers with such a short time-span (i.e. Fuel). Yes, I do believe being able to work with numbers is essential in any business. If you can't so much as count change, you can't run a business.

Jason, I am far from arrogant. In fact, I am thankful for everything that I have accumulated so far. I believe telling the truth is not a form of insulting anyone's intelligence.

Why no longer than a year? I have been doing this for 14 months. That aside, I tracked my "expenses" on a quarterly basis, tallied it up and that was that. No more time was needed to see what a nightmare being an owner operator would be. The "micro and macro" factors that affect revenue are so prevalent and random, I really don`t think there can be a model spreadsheet that would lay it out over any given amount of time.

But hey, it`s your money.