Need some advice for a potential future owner-operator in PA

As someone who has owned several corporations I would like to offer some suggestions. I have always preferred being in business for myself. But, it is usually not a good idea to start more than one business at a time. Get one up and running smoothly and then start up the second and once that is running well, you can start the third. Any business will require more of your time than you think. There is no such thing as a successful business that doesn't require much of your time. And I have owed several businesses at the same time. Sometimes, taking it a little slower is the best way to go.

I have a friend who lives not too far from you and he is an owner operator. He leases to a carrier and seems to do well. Most carriers require at least 6-12 months of verifiable otr experience in order to lease you onto their authority. If you want to get your CDL and drive a truck, working as a company driver would be better than starting out with no knowledge or experience in this industry. The learning curve and costs can be high for those with no experience. If you choose to start out with your own authority, your first obstacle will be insurance. I think Progressive is the only insurance company that will write insurance on new authority with no experience. Most require 2-3 years experience to get a decent rate. Premiums are high on anyone with new authority.

I do like the idea that you want to get your CDL to use in your business. There will be times when you won't have a driver in your truck and if something needs to move then someone will need to be able to drive the truck.

If you plan on driving coast to coast, you will need a newer truck due to California CARB laws. I think the current cutoff is 2007. If you want to continue running the left coast under your own authority, you will need a trailer and there are some requirements on those in California. You can use loadboards to find loads, but it takes time to learn freight lanes and rates. During winter months, rates tend to drop, especially for open deck equipment. I won't do your homework on finding direct loads in Pennsylvania, but it will require using a phone or some shoe leather and knocking on doors. I would not recommend that until you get a feel for the business and rates. Most people grossly underestimate the cost of running a truck when they start out.

One other thing. It is usually a bad idea to start a business with very high debt when you have no experience in that industry. Every business has a learning curve. We have a sluggish economy. I don't think this is a good time in which to take on a lot of debt. The only reason we made it through the last depression of 2008 is due to low debt and many years of experience. Thousands lost everything that they owned.

 

Check the OOIDA website for the business end of being an owner-operator.

 

A new truck can cost $150,000. The down payment required could pay cash for an older truck. Payments on a new truck should run over $2,500/month. That is a lot of money. If you run under your own authority you will also need to add the cost of a trailer. You might be able to rent a trailer, but it will still be a cost. Nearly everyone who starts out wants to know what it will cost to operate their equipment. The truth is that the costs will be different for everyone. About the only thing that will be close is fuel. I calculate fuel costs 5 mpg when I do projections, but some trucks can get 6-7 mpg. You need to figure worst case when it comes to costs. An oil change (we usually call them pm's) can run $350-400. I change my oil around 15,000 miles. Some owners run their trucks longer between oil changes, but this frequency has worked well for me.

There is no way to predict when you will blow a tire or break down on the side of the road. So many factors come into play when it comes to maintenance. OOIDA has a spreadsheet you might find helpful. It can be downloaded from their website. www.ooida.com. It allows people to plug in their own numbers and gives one a ballpark idea of what it takes to run a truck. It isn't 100% what I would like to see in a spreadsheet, but it is a good start. Talking to owners of the newer trucks, many of them spend as much time in the shop as on the road working. Payments go on whether you are running or sitting. I have blown as many as 3 tires on a single turn. That is unusual, but it can happen. Tires can cost $600 or more on the road if you don't have a national account. I have blown new and almost new tires. You cannot predict when a tire will blow. A tire costs the same whether the truck is new or old. Potentially, older equipment may require a little more maintenance than something new. But, you don't have those big payments with an older truck. I am not suggesting you buy an older truck, you need to do what is best for you. I would not start out with a new truck. It is important to keep expenses as low as possible, especially starting out. Oil and grease are the only things that I can think of that is really at a fixed interval, at least in my situation. Most people forget about driver expenses and taxes when they start out. Even if you drive the truck yourself, there is driver expense. Another is maintenance expense. It is a good idea to set aside funds for maintenance. Trucks breakdown, whether new or old. It is only a matter of when. I think there is a link on this forum about buying your own truck and getting your authority. I don't recall the link, but you might be able to do a search and find it.

 

There is nothing wrong with owning a truck. I have owned trucks much longer than I have driven a company truck. But, without some experience you don't have any idea of what you are getting into with this business. Whether it is trucking or some other type of business, it is usually a good idea to get some hands on experience in that business before striking out on your own. There will still be a learning curve, but when you start out buying a truck with no experience you are at a great disadvantage. You better have deep pockets, because you will need it to go through the learning curve. When you drive for a company you might get a notebook or composition book and keep track of all costs and revenue associated with that truck. As a company driver you may not be able to find out the revenue, but you can do some estimates and having the actual costs in black and white. Tracking expenses for a year or two will give you a good idea of what you can expect running your own truck. Keep in mind that a large carrier might be getting some discounts on fuel, tires and repairs that you might not qualify. It is always cheaper to learn on someone else dime and on your own. When you own the truck and break down you will need the cash (or credit card in some cases) to pay for repairs. Owning a truck is great until something breaks. I once had a driver lose a transmission in Arizona. By the time I paid the tow bill ($954), repairs and for my driver to sit in a motel for several days waiting on parts, it cost me over $8,500. I had another truck lose a transmission, but managed to get the truck almost home before needing a tow. I think the final bill was about $4,000. That still had to be paid in cash, but was much less expensive than being 2,000 miles from home. Another time I dropped a couple of valves right after the engine got out of warranty. I had to pay almost $7,000 for repairs. I have also owned a truck that blew an engine. This was several years ago and the cost was about $12,000. It is more today. There are many exclusions with warranties. And, even if the repairs are covered, you are still sitting and the truck isn't making money when it is in the shop. While the truck is sitting you may need to rent a motel room and have other expenses. Even new trucks can breakdown and you cannot count on a warranty covering all of those repairs. Tow bills are not usually included in any warranty. The last time I had to replace a turbo it cost me over $2,700. Those are only warrantied for about 150,000, as I recall. The cost of the turbo did not include a tow charge.

Not everyone is cut out to be an owner operator. Nearly everyone who wants or has a CDL has the goal of getting their own truck. Many of them should not buy a truck. There is more to being an owner operator than buying a truck. Those who are successful owners are businessmen, not truck drivers. We are businessmen who happen to own trucks to run our businesses. Many never understand that concept.

It would be to your advantage to gain some actual driving experience prior to spending your money.

 

Hello
I'm new to this website. I will like to buy a truck lease it to a company and also I'm not going to be driving the truck. Is it something that I can do what are the best company to work with?
thank you

 

I am glad to hear that you plan on getting some experience before buying a truck. Running a 1 ton truck is a little different than a class 8 truck, but some people do well with a one ton.