No experience but getting Authority

Thanks for the responses guys. Gman I will likely drive for a while but would hope to put a driver behind the wheel within the first year. I might approach a sibling about driving team for some regional runs to start out. I'm in WY currently but would likely relocate back to the Salt Lake City area to start the trucking operation. Do any of you know what rates are like pulling out of SLC and the surrounding areas? To start I'd be looking at runs to/from AZ, CO, NV, NM, ID, MT, OR etc. I have a young family so regular home time is essential. While being away from home will suck - at the same time I feel I need the driving experience to effectively manage an operation like this.

Red, I'm pleasantly surprised by your estimated net per truck. Since reading your post I've done some more research and I suppose it is not an unreasonable estimate. What I'm coming up with is lower but my business plan is ultra conservative. I suppose the hardest part of putting together the business plan is estimating revenue numbers. Honestly I have no idea what a reasonable average CPM would be. I've heard people hauling lanes for well below a buck a mile and other lanes well above two bucks a mile. I'm clueless. Do you guys have any ideas as to where I can research the CPM numbers for certain lanes and for what type of trailer?

Again thanks for your posts. Red I'm one of those guys that respects the fact that you had the balls to step out of the corporate world. Right now the life I live is comfortable.... 9 to 5, decent wage, benefits, etc etc. It's gonna take some balls to do what you did and execute this thing. If I go belly up I will fall back into accounting and there won't be too much damage done (hopefully).

 

Some loadboards have a feature which shows average rates and number of trucks that have been reported. You will usually need to have authority in order to subscribe. If you know someone who has their authority you may be able to log in on their account.

 

Yet another lemons into lemonade deal this week. The service call got us safe to deliver the cargo on the truck and return to the shop without further mishap.

Before that I ran out Sunday to check on the reefer and found I'd miscalculated fuel consumption by about 5 freaking minutes. Box temp was still way below freezing so it had just run out. I had already filled a 5 gal can on the way out just in case and just in case happened. And yes, the little primer pump works really well even when it's hot enough to raise a nice burn/blister on your pumping finger, not that I'd have any direct knowledge of that LOL. Only 200-250 pumps will teach you to read a clock and not dilly-dally when it's time to go.

Soo... back to the shop yesterday. Noticing the service manager at the shop reaching for his latex gloves after I described the condition of the trailer brakes, I suggested we leave the tractor "while we're in there" and get that pesky hesitation problem looked at. They called today -pretty much a complete 2 axle brake overhaul from the s-cams out. Ouch. Good news: next DOT that looks under the trailer for a good long while will certainly "discover no violations" and no wheels will gain freedom.

The safety briefing was done in the parking lot of the shop before checking in. The shop has a nice clean paved lot and lots of room to crawl around under stuff without getting too nasty. I went over the brake operation in detail and exactly what he needed to be looking at, preferably on a post trip inspection when he was just around the corner from the receiver to unload if something doesn't look right, and/or has at least 10 hours to kill on a break to wait on a service truck. Yeah there I go thinking again LOL. We unhooked the trailer and put the stink-eye on the truck brakes and chassis while we were at it. My son's two previous employers either A> (first one) fixed everything in-house before he could see what it looked like broken or B> (last one) had such crappy equipment the bad stuff just blended in. Everything's black and greasy, good to go. Truck driving school had some good diagrams but of course no real issues to see on trucks that are pre-tripped 50 times a day 6 days a week. So now he knows first hand what to look for and what the consequences might be if he misses something.

The engine hesitation (D60) issue turned out to be a thermostat problem. A little north of $400 and that's all better now. The parts I was thinking about throwing at that would have run at least half that and not fixed anything, so I feel pretty good about letting the pros handle it. Apparently one or both t-stats were keeping the engine temp just at the threshold where the ecm would derate. Enough time at low power or a throttle release and re-apply would lose one degree and bring it back to full power. For a few minutes then it would do it again. Not enough to cause an overheat indication on the temp gauge or idiot lights. I seriously would never have guessed that one in a million years.

Three days downtime in the middle of the week and a big chunk of change dropped sucks. However, another pile of known quantities achieved and an even more reliable rig as a result.

The interesting part about this latest episode is that I've reconsidered my shopping preferences on an additional truck. I had been thinking of going a little newer and a little less mileage on both truck and trailer. Now I'm seeing the value of reconditioning less expensive, but just as capable equipment. I figure I've ended up putting out similar money. At the end I know what I'm working with and less mystery about what the previous owner did or didn't do.

I've also narrowed down what I will do when I pursue a second driver. I had thought I'd be flexible about location, given the area we cover. No longer. An additional truck will be based and serviced right here at the same yard. I'll continue to do my own inspections on a regular basis and have trusted, regular shop help and road service nearby when needed. This axle seal thing would have been ugly if I hadn't caught it. Not that I don't trust someone else to inspect. 10 years as a professional mechanic gained me an eye for bad stuff that others tend to overlook.

At the end of the day, the original issue that got me under the trailer Saturday was not a problem. The plumped out air spring was just a different, but compatible one someone had stuck in there. The shop reports no issues, run it. One in a row LOL.

 

For average cpm I would say almost everyone has a true cost per mile of around 1.60-1.85 with different factors adjusting the final result a little. I have heard of people who THINK they can run for a dollar a mile but if you say the average truck gets around 5mpg and run the numbers on fuel alone it is almost 70CPM and for anyone with good business sense can tell you it takes more than fuel to run a truck.

 

I guess I am a different kinda of O/O. I look at my CPM (currently at $1.15 with reduced fuel prices and better MPG) without my compensation. Being a business owner I pay myself last. So the profits after true operating expenses are mine. My household expenses are such that I can live on $.20/mile. I won't run for that and make sure that I have several months worth of fixed truck expenses and household expenses in the bank and look to build that to a year worth.

 

By the time you add 0.40 CPM Driver Wages, 0.12 CPM Income Taxes/Social Security and 0.07 CPM Return On Investment you are at 1.74 CPM. Even if you leave out ROI, you are still at 1.67 CPM. If your profit goes higher your Tax/SS CPM will increase too.

I have come to realize that lease operators may have a lower operating cost but it is because they run 150,000 - 165,000 miles a year. When they do this, fuel makes up 47% of their cost instead of the 35% of someone running 110,000 miles. In addition, they put 40 -50% more wear on their equipment.

 

Time for another update. Since I have plenty of time to do one LOL. More on that later.

The past two weeks has been another test of our mettle. And wallet. Call this yet another cautionary tale for those that are thinking of rolling the dice with a tight budget.

Rewind back to Labor Day weekend. Coming into that, we had been running hard with some good paying, back-to-back loads following the last repair stop (trailer brake overhaul, thermostats, and egr sensor totalling $2,400). My son wanted to run thru the weekend and make some money. That didn't materialize, but I did get him loaded into Houston (family/friends there) to unload Saturday. Then scored a load out Monday night. So not a total bust on a holiday weekend. That's when the fun started.

Monday night I get a call telling me an a/c hose popped. OK nothing critical. We'll forego the PM that's due and route direct back to home for repairs with PM at once. Everything was fine until Tuesday morning at 05:00 (9 hours later). Batteries are dead and the truck won't jumpstart. Parked 100' from the door and can't deliver. Since the a/c was out, he didn't idle the truck and shut it off to wait for his door. Christ. Can't win for losing. $700+ road service call including 3 new batteries and we're back in business. Get the truck empty and I send him off to a t/s to get some rest while I find a load.

I'll skip a hustle with a bad TQL broker. He's on my list now. Enough said.

Later in the afternoon I scored a great one - good pay, tolerable deadhead, and delivers 8 mi away from our regular repair shop. Picks up at 22:00 and I send him over there about 17:30. At 20:00 he's calling with charging system inop, and still an hour away from the pickup. Apparently the a/c compressor locked up and burned the belt off. I was able to direct him to a suitable no-name t/s in the middle of nowhere, LA. and he actaully made it without further incident. Two calls and I got a road service guy that knew what he was doing to come out. He rigged a belt to drive the alternator and bypass the a/c and tensioner (just over $200). My son made the pickup on time and brought it in. More drama than a daytime soap.

He got the load delivered Thursday morning and we checked the truck in. In addition to unfking the a/c system, I ordered major PM service on the truck and the reefer, along with a few minor issues that kept getting forgotten (seal some stone chips on the windshields, rain cap on the exhaust, check/adj 5th wheel, etc). Major PM on the truck included changing trans and both axle lubes, plus overhead. Major on the reefer included overhead on that too.

I was expecting to hear it would be ready late today. Instead, they discovered the fan clutch on the truck isn't locking. IMO, that may have been what was setting the coolant temp high codes that they attempted to fix with thermostats last time. I'll take it up with them when I go to settle the bill. In any event, that will add $640+labor and another day to an already four digit repair order.

So think about this before you complain about people that offer advice that sounds like doom & gloom. I know enough about heavy equipment to know that what I've been through is not that extraordinary. It's just that the old timers dealt with it long enough ago to forget the dirty details (or that they had to walk 10 miles to call for service on a 5¢ pay phone LOL), or the newer guys just didn't take the time to spell it out or want to admit it.

Recap for the sake of it. Nearly $1,000 in road service calls just to get back to the shop for nearly a week of downtime and another $1,000 worth of repairs in addition to the major PM on the truck and reefer that would have been needed anyway.

 

And that's not all. There's been some business progress amidst the mechanical mayhem.

I've finally had some time to get new entrant audit ready, since the truck is in the shop and I'm not dealing with those pesky customers. I maanged to knock out a few things finally:

- Found and adapted a drug/alcohol policy
- Found and adapted a passenger policy
- Got my DQFs squared away and complete
- Created a DQF review process and checklist
- Published a new hire process and checklist
- Created an accident log and process
- Read up on a few key sections in the green book that I need to act familiar with

OK.. you're probably thinking "WTF? are you just now doing this?" Don't get the wrong idea. I did have most of the elements and probably could have done fair to OK on a spot check. However, I had just not sat down and gone thru the OOIDA checklist line by line.

Here's my sage advice: There's an awful lot of detail that you would likely struggle with if you attempted to do it at the last minute, or heaven forbid, had an unannounced visit from the DOT following an accident. Do it now if you haven't already. If you're thinking about getting your authority, do this before you start. Seriously - don't just think you got it until you prove it with a dry run when you're not under pressure.

Another related business topic: to incorporate or not. I decided to launch as a partnership (me and wife, with a joint tax return it's functionally equivalent to sole proprietor) and if things went ok, incorporate later. So.. fast forward 6 months and we're pretty much on plan. We've incorporated. Yay! Well sort of.

Changing business type with a trucking business that's in operation is about like changing the paint on an aircraft in flight. FMCSA has been as unresponsive as they ever were. That alone is the key to every bit of paperwork that must be done to conclude the business change. We're now 2 weeks past the target date to change over everything. Consequently, other things I have planned are on hold until this is complete. Oh yeah, I forgot to mention. This change requires a new TID number from the IRS and a completely new set of accounting records. Yay again! I get to do all that over!

More sage advice: If you think you want to go LLC or INC, do it now. Even if you have to delay your start up to afford the extra fees or get the additional paperwork from your sec of state, it's far better than doing it while you're trying to run your business.

So in summary, I'm relieved to have the audit readiness monkey off my back. I've been worried about that and now feel much more prepared. On the incorporation, it hasn't worked like I expected, but it's not a crisis. I have had to be very diligent in calling, faxing, and nagging people to do stuff and my patience is getting thin. The good news is that all of this has improved my feel of control and confidence with this business venture, having had to deal with everything the hard way.

 

Red, having heard all this already it still made me cringe.

When looking to start I had the same advice from someone on Inc/LLC before rahter than after. Talking with various people it was cheaper for me to put a GL policy in place that I would want anyways rather than pay the state a fee every year for the LLC.

Keep fighting brother. I hear by year 5 it gets better.

 

Yep. Never saw that coming in a million years. By the time I was calling the second service truck, I needed to wash my mouth out with soap before I accidentally put clean food in there or kissed my wife.

The good news is: it could've been much worse.

Clearly a decision that needs to be carefully considered before applying for authority and starting to operate. More than I did apparently LOL. In addition to liability (on paper really) the corporate form opens some doors (funding options, investment, differentiation of personal and business assets) and closes others (intermingling personal funds with the business, more complex tax prep, more administrative detail).

LOL. Until then, I'll do my best to be the lighthouse and serve as a warning to others.