Thinking about starting a trucking business or loaning startup capital

The title pretty much says it all in a nutshell.

I'm up in ND in the Bakken. For those unfamiliar with the Bakken, it is the oilfield that has made the US the new "Saudi Arabia" of sorts. There has been a lot of activity up here and when I first came up two years ago I wanted to get a truck up and running. That "ambition" has definitely been put on the back burner and almost forgotten about. I've spent my first year investing my money in stocks, 401K, Roth IRA, HSA... you name it. I basically put no dent in my credit card debt. Then I had a brief "material" phase.... summed up as guns and ammo. Now sick of seeing my cards stay essentially the same a good chunk of last year and this year is devoted to credit card debt and retirement vehicles (ROth, 401k, HSA).

So what I'm trying to say is I have some money but not the recommended amount that is quoted in a few posts. (3-6 months of various operating costs) I understand there is great risk but there is also great reward. I'm curious if these numbers make sense (what my friend/excoworker has said and some which we both tentativey agree on) , some info on understanding how to fund the corp for various expenses, some other stuff.

Trucks:
Basically looking at two at the moment.

• 2007 Peterbuilt 389 - 750,000 miles ($34k from dealer)
• 2000 Freightliner Classic - Rebuilt everything, basically no miles on rebuild ($20k cash from owner) - Preferred as mechanical costs should be limited

Cargo: Gravel ~$180/run 10+ runs per day. Trailer not owned.

Entity: Currently thinking LLC. In reference to funding this... I know corps are funded through stock purchases. I'm thinking LLC is the same but not sure. If not I would go with a full fledged corp.

Future Jobs: My 'buddy' is a talker for sure and has found contacts for multiple potential jobs ranging from gov't work year-round for many years, agri-hauling, frac sand, water... even crude.

My Issues/Concerns and Similar Stuff:
I will continue to use the word 'friend' to refer to this person. I don't feel he is trying to screw me over in any sense I think he lacks some .... perhaps, realistic expectations. He is eager to go, sees the opportunities here, has run his own business before, feels there is a limited time for the particular things he's looking at now.... and has little money.

I have some money... and some credit. Liquid cash ~15,000. Other assets... maybe ~$40,000 but I prefer to leave these alone. Credit ~$19,000. My roll would be to either loan money and receive P+I and a 10% stake in his to-be company -OR- I setup the company, own the truck, have all the liability and still get 10%. This is where I am confused. The split is actually 25% 75%, but of the 75%, 10% is mine.... with gravel.

He wants to be a partner no matter what. In the loan scenario I get a "thank you" of sorts with the company stake. If I own the company... well I'm not leaving my job as it is funding everything. He'll be driving. He would like to do the paperwork as well... as there is "so much of it his wife needs to help me fill it out everyday." I don't get that statement. I had to hand in my ticket and fuel receipts and complete my log for the short while I drove. Perhaps it is what happens "behind the scenes"? IDK. Right now he's just a driver so I don't see what else he would be doing... or why his paperwork takes so much effort everyday.

When I sat with him recently we discussed numbers again as it had been some time and I didn't quite recall the specifics of what he had thought. I thought he had said 10% and turns out this was correct but I wanted an understanding how he would be making 25% and I would be making 10%. Where is the other money going? This is the split, mostly he, came up with:

​

• 
  [*=1]25% - Driver
  [*=1]75% - Company
  • 
    [*=1]10% - Me
    [*=1]20% - Fuel (His daily was 16% of the tickets. We up'ed it for 'easy' math)
    [*=1]05% - Very very basic maintenance (no major mechanical problems)
    [*=1]05% - Insurance
    [*=1]25% - Taxes
    [*=1]10% - ??? Leftover?

So of that 10%, 2.5%-5% for factoring. Maybe fuel won't be 20%? Let's say since initially he'll stay on gravel as an "O/O" of sorts to his employer and no longer be an employee. There was another cost... 5% to the company he's currently driving for, for jobs provided. So we're somewhere between 0%-5% "free" money to grow business with. But wait!!! My friend because he is doing all this "paperwork" wants the remainder, that ??? 10% above. This makes little sense, especially for ONE truck. Granted I don't have much free time (~2hrs/day) but that seems plenty for one truck... am I missing something? Aside from that not making sense, the driver with 25%-35% compensation and the owner with 10% does not make sense. But, realistically what is the split?

I don't understand insurance being so high. Perhaps I didn't look into all forms of insurance I would need but I did a hypothetical with a Progressive agent in the wee hours of the morning 2 years ago before I had my driving job. Getting my own policy was my "ace-in-the-hole" because I had no experience... So I thought anyway. I wanted to know what the costs would be. We went through the numbers for a new 2012 tractor unit and Dragon tanker... 120bbl I believe, with $1 million coverage.... ~$5500/yr. My buddy said $10,000 deposit + ~$700/mo!!!

And for funding his portion of the company.... when he truly wanted to be on the business side and not driving anymore. I asked how he was going to purchase shares with no real change in income (let's not include the 10% leftovers, if I did it would be a change). his response was, "I could sell them for $1!!!! My company had little value!" Even I understand the value of a share should be something like net worth divided by # of shares. I'm sure it's a little more complicated factoring in cash flows, but if I just bought a $34k tractor with $10k down the value of my portion of the truck is more then $1.

So am I going to jump in the deep end? No. I want to be educated somewhat before I make a decision. I know it is a risky one. For my situation (tractor unit, gravel jobs, I own, he drives) what are realistic numbers? Was he even close? I used to be a commercial fisherman. The math is very simple: 50% boat, 20-30% captain, 20-30% deck, all off net. What was presented to me...

Thanks

(Doing a quick Excel Sheet using above numbers)
[TABLE="class: grid, width: 500, align: left"]
[TR]
[TD][/TD]
[TD]Per Day[/TD]
[TD]Per Week[/TD]
[TD]Per Year (30 weeks)[/TD]
[/TR]
[TR]
[TD]Driver[/TD]
[TD]$450[/TD]
[TD]$3,150[/TD]
[TD]$94,500[/TD]
[/TR]
[TR]
[TD]Me[/TD]
[TD]$180[/TD]
[TD]$1,260[/TD]
[TD]$37,800[/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]$360[/TD]
[TD]$2,520[/TD]
[TD]$75,600[/TD]
[/TR]
[TR]
[TD]Maint.[/TD]
[TD]$90[/TD]
[TD]$630[/TD]
[TD]$18,900[/TD]
[/TR]
[TR]
[TD]Ins.[/TD]
[TD]$90[/TD]
[TD]$630[/TD]
[TD]$18,900[/TD]
[/TR]
[TR]
[TD]Taxes[/TD]
[TD]$450[/TD]
[TD]$3,150[/TD]
[TD]$94,500[/TD]
[/TR]
[TR]
[TD]Other/Free[/TD]
[TD]$180[/TD]
[TD]$1,260[/TD]
[TD]$37,800[/TD]
[/TR]
[/TABLE]

 

Thank you very much for everyone's input. It is greatly appreciated.

Thank you. I thought the insurance seemed a bit high @ ~$18.5K for the year. If I read what you are saying correctly. It is better to be an O/O until you can save up enough to get 5 trucks? Yes I agree about repairs just had no idea where it should be. Thx. And yes, had that feeling also.

Yup, I know. Came here to get some honest opinions and links to resources so I can make a somewhat educated decision if I decide to pursue it. As for receivables go, factoring.

I can't remember my tickets and fuel receipts when I drove. That was for a brief time in 2012. I did drive Devil's Lake, hauling dirt from the pits. My roundtrip was 12 miles and I could do 18-20 runs per day. As for the numbers he gave me they are also working on a longer term project. That is where they came from. Can't remember if it is the Minot airport... AFB or something else. It wasn't brought up when we last spoke. As another poster mentioned it all depends on the type of road (hence speed/gear selection), how far you go, etc.

I need more money LOL.