Hey folks, I am in the course of making a drastic change in kife. A little about my past first and reason for the change. As a kid in high school we had a local trucking company in my small town basicaly in the dairy business. Every oppertunity I had I would ride with my buddy picking up milk during the evenings and weekends. Then when they gathered enough with the small trucks they transfer it to a large tanker and haul it to StLouis to the processing plant. I would ride with Big Al to StLouis twice a week to the dairy and thought ridding in that big old Pete was the greastest thing in the world.

After school I went to the railroad and spent a lot of time in the roundhouse where they rebuilt the big 16 cylinder engins. I always was looking over someones shoulder and asking to help as much as they would let me. Soon after that I was off to the navy and low and behold they had the big 12 and 16 cylinder diesel as emergency generators for the ships I was stationed on. Cool, spent a lot of time playing whith them also for 6 year. After the nav i went right to work at a nuclear power plant and low and behold they the same diesels for emergency. Part of my job was to operate them and maintain readings and maintenance reports on them. After 7 years of this I encounterad a bad leg inury and transferred to the traihing department which allowd me to teach the operators on Diesel operations along with all other nuclear power operations. After 7 years of training I got burnt out on the office inviorment and walked out. Yep walked away from a 100K a year job. Decided they dont own me any more. If a man is just not happy all the money in world will not make it any easier. Will I was a thrifty one while working at the plant all those years so I banked roll a nice amount. After sitting around taking the summer off I decided I wanted to go back to work and never become another at will employee. So afte thinking a bit I told the wife I am going into trucking. Here is my plan.

I got a free ride through the VA for my CDL school at a local college. I have also gotten hired by a local company that runs all local hauling coal, rock, sand, salt or what ever else comes up. I am going to work for them 1 year to get my feet wet and then once after seeing how it works I am going to buy my own truck and trailer. Ther is year round work in my area and they do have quite a few O/O driving for them. Here is where my questions start for you experienced guys.

I have enough cash to pay for a nice day cab and trailer, insurance, additional fees and about one years operating cost with worst extream needing a new rebuild. So I feel like I have a good security blanket going into the O/O business.

Here is where I am completly lost. I want to stay competive in the market, not be a low baller. So how or what is involved in figuring compensation for your work. I know you have to figure fuel, but what is all considered in additional operating expense when I place a bid for work. I know that you have to take into consideration your insurance, permits, fuel expense, but how do you add on you wear and tear on the truck like tires, maintenance, blowing a turbo, and all of the other possible expenses you could incure while operating and then on top of that there has to be a profit margin so you can pay yourself a salary.

I have seen where some O/O charge per hour plus milage, and others price it per percentage of load. Like I stated eariler I will be running all local, and plan to have several companies lined up for work but what is the best way to approach this when I start knocking on doors to get my bids in? I am a year away from this but I thought the sooner I started investigating the better. Any advice would be great.
Thanks Folks!

I think your a little confused here. As an Owner-Operator you are leased to a company, they offer you compensation for hauling their loads with your equipment. If you don't like the rate the offer you, then you just don't lease onto them. You don't make the rates or call on customers giving them bids. Now if your going independent you need your own operating authority, insurance and the whole ball of wax. Where as leasing onto a company they take care of all of it, some charge, some don't.

Thanks Slowpoke. Are you saying when I go to talk to a company the price will not be negotiable? I have read on this form some guys have trucks and they accept calls between 7 and 8 am and which ever is the best paying for that day is the ones that get the business. Like I said I am new to all of this and may indeed be confused. Not like I havent been there before.

If you are going to be running locally exclusively then your business model will have to adapt to the local situation. In order to have legal permission to haul freight you probably need some sort of operating authority and insurance. If you are staying exclusively within your home state the state laws apply, so you will have to find someone who is doing what you want to do and ask about local regulations.

In order to haul freight from state to state you need interstate operating authority. To obtain this you need proof of insurance and insurance is sometimes one of the harder things for new drivers to aquire. Once you have one year of experience insurance is easier to obtain. When you have your own authority you negotiate with shippers, usually on each load, to see how much you can squeeze out of them. You will then haul the load and bill them, they may pay you eventually.

If you would prefer you can lease your truck and yourself on to a company that has operating authority. They will find loads and handle all the paperwork and billing. Most will even pay you regardless of weather they get paid by the shipper or not.

__________________
The Road goes ever on and on
Down from the door where it began.
Now far ahead the Road has gone,
And I must follow, if I can,
Pursuing it with eager feet,
Until it joins some larger way
Where many paths and errands meet.
And whither then? I cannot say.

-- J R R Tolkien

Words of wisdom, I'd wait 2 years, work as a driver and get all the information that you can at THEIR expense. One year is not enough time. Keep to the penny records of EVERY expense like it was your own truck. Some you can't because you won't know but get as much information as possible. Knowledge is POWER!
If you are going to own the truck and trailer and form your own company you will have to find out the rates in the areas that you want to do business in. Don't go knocking on doors without that information. How to get that information, well call them get prices as if you were going to be purchasing products and service from them. Make a detailed list of their responses. Tell them you need a break down on the cost for the product and how much the delivery is. Always remember that the shippers want it hauled for the cheapest rate, dependability is a major issue with them as well You have to present yourself in a way that sets you apart from everyone else!
Get everything from days to pay, detention to who pays for the damage if they put a hole in the trailer. Be SURE to run credit checks on them and check references, basically you are a lender ( providing the service is a loan in my eyes) and need to know these things. Get everything in writing no matter WHO it is or for what. I've written all of our contracts for everything from customer bids to lease contracts. If you don't know how and most people don't, then have a lawyer do it so it's legal and binding for your state and really protects YOU
Figuring cost for fixed expenses is pretty simple. Decide how often the truck and trailer will be serviced, who's going to do the work, if you do it, your labor is NOT tax deductible. Figure the cost of tires, mounting, etc. Most people will wind up replacing the steer tires more often than the drives or trailer tires. Insurance cost, break it down, I went as far as breaking it down to each day, a little extreme but I KNOW what the cost are for each load. Then ad 5% of that cost for break downs etc.
Be sure not to OVER insure your equipment it's not worth anything more than the fair market price, that's all you'll get from the insurance company. DO get accidental disability insurance. Some states and shippers require you to have Work Comp which here in AL runs about 15% of the GROSS payroll. Yes you are an employee even if you own the company, decide how much you are going to get paid, and write yourself a check each week. Look into incorporating, I prefer LLC to to an S corp for a small business.
Keep the business and personal stuff separate. I'd incorporate, and lease the equipment to the company. Pay all the taxes quarterly without fail! That's about 25% of the gross, put it in savings and keep the interest. After a while it'll draw enough interest to almost pay the taxes. Wear and tear, I'd figure how much a payment would be on the equipment per month then break it down to a per mile cost, that's the safest way to figure wear and tear. Keep up with the prices on equipment as it changes. I use Excel and build the formulas, it's a simple way to do it. Don't forget administrative cost! so There's a million other things to consider but I don't have time to write it all. Hope this helps, Good luck.