Start up cost$

Discussion in 'Ask An Owner Operator' started by " OPTIMUS PRIME ", Dec 11, 2011.

  1. " OPTIMUS PRIME "

    " OPTIMUS PRIME " Light Load Member

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    I'm not going against you here, its fine I will wait and double my maintenance account.
     
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  3. RedForeman

    RedForeman Momentum Conservationist

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    I think when you get out there and start spending actual dollars you will discover a lot of your assumptions were off. Therefore, you need more cushion or a big stack of back up funding. You can't possibly know what you don't know, nor can anyone here give you a true thumbs up or down on your numbers for your operation.

    I built up a spreadsheet model based on many threads already posted here. It was still off by thousands. Why is that? It's because I run my business my way, not the same as every other person posting a start up estimate does.

    That said, you obviously cannot plan for every possible outcome. And your tolerance for risk will define what number you must reach before starting. I'm not really clear on how your start up cost summary lines up, or exactly what is "actual road costs." With that, here are some comments on what I think I do understand from your OP.

    +100 on what blackw900 said. You can plan on dropping $1,000 bucks minimum every time you enter a repair order that isn't just a PM. Plan on having at least $10k earmarked for reconditioning your equipment once you move it. No way to predict exactly what will constitute that $10k, but spend it you will. A $20k repair budget the first year is sensible and not overstated at all.

    The warranty deal will work like this. You will get the repairs done and pay for them since you cannot afford to sit & wait for the claim to be approved and paid out. In the mean time, the warranty company will ultimately find every reason under the sun not to pay even part of your claim. Time is on their side and they already got their money at the time of sale. Weeks and then months will go by. Eventually it will cost you more to pursue the claim than to just suck it up and absorb the repair cost.

    When you think about breakdowns or repairs, you really have to count those twice. For example, I just recently went through three back-to-back shop visits over a 2.5 week period. The repairs came in just under $5k. That was bad enough. However, the hidden cost was the zero revenue for 2.5 weeks that the truck sat in the shop. Monthly bills kept coming in even though there were no invoices getting cut. That adds up to around $10k revenue lost, above and beyond the cost of repairs. Of course, the driver wasn't making any miles, nor was any meaningful fuel being burnt. However, the monthly bills kept coming with no delay.

    On fuel: My single driver operation burns average $500 fuel per day per truck if I'm keeping the loads stacked up. Your estimate would run my two trucks right at 12 days. You said you were doing teams, so that will burn up 2x faster.

    A reefer trailer for $9k? I suppose. I have two. Both ran about $14k all in, after necessary reconditioning. I did way better on the second one after learning what not to do the first time. I've seen sub-$10k reefers and they're scary looking. Good luck with those.

    You posted only a down payment on your truck, not the value of the truck. That right there is worrisome regardless of everything else. It suggests you're going with Lone Mountain or the like for a finance deal that will include a $1,500-2,000 payment each month. Not saying that's necessarily a wrong thing to do, but you can get into a similar truck (as-in a similar cost of reconditioning and repairs) for around $20-25k cash. That extra $10k you certainly will spend on either one will be easier to stomach on the one you aren't carrying another $1,500 note on as well.

    Bottom line, you can expect to need about $60-70k to put one truck on the road. You can slice and dice it with spreadsheets all you want, but that is what it will take. You can wait to fund it with all cash, or you can leverage credit where it makes sense. Just keep an eye on what that credit is doing to your fixed cost of operation and how you will manage that debt during the inevitable slow period.
     
  4. blackw900

    blackw900 The Grandfather of Flatbed

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    I've been quietly paying attention to your posts since you started on this board....You're a smart guy.
    The reason that I even bothered to reply to you is because you seem like you're bright enough to make it and you have a pretty sound plan of attack...
    The fact that you understand what we're saying to you proves that you are willing to learn and not just thinking that buying a truck is a quick way to earn more money when in fact it can and often is a quick way into a quagmire of serious debt!

    Kudos to you and good luck!
     
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  5. milskired

    milskired Road Train Member

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    I talked to a fellow driver about 6 weeks ago that works for the company I do. He told me he has 45K saved to buy his own truck and do his own thing and he said it only took him about 18 months to save that. I told him to wait another year to year and a half and then start looking into it. I told him you can never have to much start up money, and I told him that finding the right equipment is the biggest key to success. I told him to read around on here seeing as people like W900, G/man, and the many others can give very good info and awesome advice on these kinds of things. But all in all I told him if you have 80K saved and your truck cost 30 of it you can have a very nice maintenance fund set aside because murphy's law applies to us all.
     
  6. kw600

    kw600 Road Train Member

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    A friend of mine who had been driving for a few years as an o/o said he wanted to do his own thing after being fed up with low miles..he said he'd drive two more years, save up and get his own authority, I didn't think two years was enough time but sure enough he had saved plenty, he now has about 8 trucks and is doing pretty well, moral of the story if you think you have enough, think again and look into the details especially with fluxuating fuel costs now a days.
     
  7. " OPTIMUS PRIME "

    " OPTIMUS PRIME " Light Load Member

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    True indeed. The good thing about this is I can simply go back to the drawing board and save some more$$$. I'm not on the side of the road stuck somewhere with this face.:biggrin_2553::biggrin_2553::biggrin_2553:


    I can wait, I don't have a problem waiting to save more money. What I do have a problem with is failing.

    I work a decent local job now I make $1500 week (gross) and home everynight. Not to bad considering what I've came from. My wife makes about $45k at her job, so it should be fairly easy to save without any bills. We are in the process of renting our home out and living in the basement of a friends house in order to save more money. I don't have a problem living in basement, car, I would live in a tent if I had to and wife doesn't care as long as we are together. But I do have a problem FAILING!
     
  8. kw600

    kw600 Road Train Member

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    I can wait, I don't have a problem waiting to save more money. What I do have a problem with is failing.

    I work a decent local job now I make $1500 week (gross) and home everynight. Not to bad considering what I've came from. My wife makes about $45k at her job, so it should be fairly easy to save without any bills. We are in the process of renting our home out and living in the basement of a friends house in order to save more money. I don't have a problem living in basement, car, I would live in a tent if I had to and wife doesn't care as long as we are together. But I do have a problem FAILING!
    [/QUOTE]


    As do I, I have a lot of people hoping I fail, that's just the type of people they are, those who want to see you fail and hate seeing you be successful. This encourages me even more to work harder and be smarter.:biggrin_25520: if you have a good company and your making money, good for you wish you the best of luck but I hate when people are rude and would love to see someone else fail, :biggrin_25510:
     
  9. jmcclelland2004

    jmcclelland2004 Light Load Member

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    Well from my limited experience I would say that paying cash for a cheaper truck is not necessarily a bad idea. Expect about 2 months of fixed costs while running around and getting paperwork in order before you can start making money. Not having truck and trailer payments can really help. As well your insurance costs can be much lower due to being able to go with "liability only". However the key to running a used truck is listening to it. If you think something is going wrong with it there probably is something wrong. So it will be a good idea to keep constant checks on it. As far as startup costs it is true that you can never have to much. 20k does sound like a fairly high number however to be fair in the past 5 months or so we have spent about 17 between our truck and trailer and we have a dry van so only one diesel engine to keep up. The only thing I could say is if you feel comfortable starting with 5-10 that could work however it is going to be crucial to build that fund as quickly as possible and hope that repairs space themselves out enough to be manageable. Also count on anywhere from 1500-2500 in just permits and taxes and whatnot.
     
  10. Hanadarko

    Hanadarko Independent Owner/Operator

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    Dude, you and I spoke in GREAT DETAIL about all of this, umm maybe back in Feb 2011?
    I shared my EXACT costs with you and told you all of this back then.
    We exchanged many emails/PMs...


    Didn't you keep any of it? :biggrin_25520:


    $20K in the truck maintenance fund. Nothing less.
    In fact, if you have $20k in that fund, consider yourself BROKE. That's the only way to do it.....

    Your a bit low on the insurance estimates for a driver 'starting out', but I know I told you that.

    Yea, MC, IRP, UCR, 2290 = Additional startup/yearly $$.
    I know we discussed this and I told you realistic actual numbers...

    Good to see you back online though :biggrin_2559:
     
  11. milskired

    milskired Road Train Member

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    Yeah just dont be that guy that comes up to me in a truck stop whining about how your truck broke down and you dont have any money for fuel so you expect me to give it to you. I hurt there feelings every time when I let them know I lost my sympathy card back in Afghanistan. I get some picture worthy faces and looks when that is said. I just laugh at them.
     
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