No Gungho O/O? - Truckers' Trucking Forum

jyhm · **^ Top** #1 11.18.2007

A lot of negative is posted about O/O

When I was in school an instructor was all gungho about O/O, said he made more money and didn't worry about fuel costs because his surcharge covered it.

A lot of people on this site say that there is not really that much money in O/O.

I can understand that independence is a big factor in becoming O/O, but why would you do the companies job for them for the same pay as a company driver at the end?

There has to be some O/O's making money out there.

Seems to me that there would have to be a definite financial advantage along with the independence in order to draw a person into O/O

jlkklj777 · **^ Top** #2 11.18.2007

Only for a niche market with a true o/o. Meaning he owns his truck trailer and operating authority. Otherwise you just get broker freight and leftovers from the company your leased to. Greatest revenue makers of today are usually over dimensional, government contractors, and special commodoties haulers such as hazmat (explosives and nuclear transporters). Most lease operators wash out and go broke after a while so be wary and at the very least take some classes on running your own business BEFORE attempting this.

NightWind · **^ Top** #3 11.18.2007

I don't view those of us that respond as being negative. Personally, I try to be factual and let whom ever is trying to decide get as much information, both good and bad so they can make a logical informed decision. That's what this site is about.

If he was making so much money then why is he an instructor now? Did you ask him that?

Quote:

Originally Posted by jyhm

A lot of negative is posted about O/O

When I was in school an instructor was all gungho about O/O, said he made more money and didn't worry about fuel costs because his surcharge covered it.

A lot of people on this site say that there is not really that much money in O/O.

I can understand that independence is a big factor in becoming O/O, but why would you do the companies job for them for the same pay as a company driver at the end?

There has to be some O/O's making money out there.

Seems to me that there would have to be a definite financial advantage along with the independence in order to draw a person into O/O

jyhm · **^ Top** #4 11.18.2007

Quote:

Originally Posted by NightWind

... If he was making so much money then why is he an instructor now? Did you ask him that?

It was because of an accident that had rendered him partially brain damaged. Said he wanted to keep working badly even though he was approaching retierment.

I myself am not even close to being able to go O/O. Not actually sure if I possess the business sense needed. I was not necessarily posting in order to figure some sort of business strategy, but more curious about the different accounts from drivers. One end I hear about how much money O/O's make, the other end I hear how much they are not.

I had a guy from jersey flat out tell me to buy my own truck so I could make more money. I lot of people tell me this because I am single. Of course buying a truck is not a possibility for me right now, and from what I have heard and read on this site about leasing, I don't think that I would do that. However, don't some people lease directly from the dealer? Would not some prefer to lease instead of own so they don't have to worry about maintaining a truck?

thank you for your responses though.

bullhaulerswife · **^ Top** #5 11.18.2007

From our standpoint, we are making money, but with that said, if we had not followed NightWinds generous advice..... we would be up the creek right now.

Its all in how you manage your funds. And how you anticipate the unexpected. Had we not done that, we'd be paying interest on ANOTHER loan, for repairs. But we stashed money away for that unexpected event that would take a lot of money to pull out of. And we are fine, because we did this.

Not everyone has the discipline to put that extra money away, and I believe that the lack of discipline is the biggest reason for failure.

jyhm · **^ Top** #6 11.18.2007

Quote:

Originally Posted by bullhaulerswife

...Not everyone has the discipline to put that extra money away, and I believe that the lack of discipline is the biggest reason for failure.

Don't they (owner operators) have escrow accounts that you put a percentage in each week/month?

If you lease/buy directly through a dealership, isn't a great portion of the maintenance covered buy warranty/lease agreement?

jlkklj777 · **^ Top** #7 11.18.2007

Yes this is true. Many put aside about .08 cpm and will have about 10 grand in this account. This wont pay for a new engine but will be enough to handle most other "problems" you might encounter. As for making lots of money sure the truck may make close to 200 grand in a year in the hands of a savvy operator who really hustles but half of that will go towards "expenses."
Some Union drivers will make close to a hundred grand WITH benefits and not have any of the hassles of actually owning a truck. An an o/o you will have little to no "free time." You will spend most of your time attempting to repair your truck yourself to save money.

bullhaulerswife · **^ Top** #8 11.18.2007

Quote:

Originally Posted by jyhm

Don't they (owner operators) have escrow accounts that you put a percentage in each week/month?

If you lease/buy directly through a dealership, isn't a great portion of the maintenance covered buy warranty/lease agreement?

Well, in our case, we don't have either. We bought the truck from another O/O. Financed through a small bank that understands the industry.

We run for a broker, loads dispatched through him, but we owe him NOTHING, he gets a percentage of the load. The only entity we owe, is the bank, for the truck payment.

I don't know about those that lease on with other companies, because we are running under our own authority.

We just had a full in frame done on the motor, and was able to pay CASH for the work. Thanks to me reading NightWinds posts and following her advice about a slush fund, we weren't caught with our pants down.

jyhm · **^ Top** #9 11.18.2007

OK, forgive the barrage of questions;

How much for truck?
How much down payment?
How much are payments?
How much money is a good amount as far as having enough for 3-6 mos expenses?

I know the sky is the limit for the last question but realistically what kind of a figure is it?

NightWind · **^ Top** #10 11.20.2007

Quote:

Originally Posted by jyhm

It was because of an accident that had rendered him partially brain damaged. Said he wanted to keep working badly even though he was approaching retierment.

I hate to hear that about any one especially a fellow driver. How ever he is wrong to advise you that there is a LOT of money to be made. It would have been better advice to explain more to you and give you some numbers to kick around than to just tell you what he did. Years ago I made above average money but I was in a niche market and had no major expenses and my equipment was paid for from the beginning, which most O/O or drivers aren't in that position from the beginning.
In some cases you can make a lot of money, in most not all cases you have to be in a niche market providing a service that isn't normally provided by the other segments of trucking or a market that there isn't as many that provide that service in your area. The down side to that is that in the instance that you have specialized equipment then it's harder to get loads, you may dead head farther, sometimes, more so than the other segments that have the basic equipment. There's a trade off in each instance. Specialty equipment cost more, the insurance can be twice as high and a multitude of other variables. It comes back to market research and planing.

I myself am not even close to being able to go O/O. Not actually sure if I possess the business sense needed. I was not necessarily posting in order to figure some sort of business strategy, but more curious about the different accounts from drivers. One end I hear about how much money O/O's make, the other end I hear how much they are not.

I had a guy from jersey flat out tell me to buy my own truck so I could make more money. I lot of people tell me this because I am single.
You wouldn't jump off a bridge because some stranger told you to, so why would you take much stock in "a guy from Jersey" advice and you probably don't even know his name. The next time someone tells you that ask them to show you their tax returns and see what happens. They aren't going to produce them and probably can't even tell you the CPM to operate their truck and business.

Of course buying a truck is not a possibility for me right now, and from what I have heard and read on this site about leasing, I don't think that I would do that.

There are GOOD leases out there that work for some people, you just have to be careful about who what and all the conditions of the lease are and keep up with the expenses and pay strict attention to your finances which is something that you should be doing anyway as a driver in order to see exactly what the expenses and revenue are so that you have as much information as possible to make a logical sound decision.
However, don't some people lease directly from the dealer?
Would not some prefer to lease instead of own so they don't have to worry about maintaining a truck? Why woudn't they have to worry about the maintenance if the trucks leased? Unless it's in the contract most lease trucks are maintained by the lessee, major breakdowns are the primary reason that the lease so that some one else has to pay for that engine thank you for your responses though.

Sure we buy or lease them from dealers and some people prefer to lease for their own reasons. Some even lease them from companies where the truck will be leased, which I don't advocate at all. There are companies out there that do nothing but lease trucks and trailers to companies and some individuals, but just like buying/ leasing a car, the trucks warranty works pretty much the same., except a truck will run out of the bumper to bumper 100,000 mile warranty in a year or less.Then they have the remaining 300,000-500,000 warranty to cover main compotes, like the engine etc, rear ends and transmission, but it doesn't cover everything and there are limitations to it just like any other warranty. There are exceptions to ALL warranties and extended warranties are available, you pay for them, but you have to be very careful about those as well. Just like a lease car you have to pay for servicing it, tires and all the other expenses that go along with it. Each lease is different, so be sure to READ it and don't sign it unless you understand every word.

Quote:

Originally Posted by Kym

Don't they (owner operators) have escrow accounts that you put a percentage in each week/month?

If you lease/buy directly through a dealership, isn't a great portion of the maintenance covered buy warranty/lease agreement?

No read above

Quote:

Originally Posted by Kym

OK, forgive the barrage of questions;

How much for truck? average runs between $90,000 on up depending on the configuration.
How much down payment? First time buyer with good credit I'd say at least 15-20% down and can't be another loan as that's a disaster waiting to happen. Some will be more or less depending on credit scores, experience in the industry, your ability to prove that you have either a lease waiting on you to fulfill or have the clients to produce the income to repay the loan and if you have a good business relationship already established with them. A lot of times they want to see proof in writing of the projected income and a 5 year business plan. They aren't normally going to finance a truck for some one with no experience or proof that they have the work for them to repay the loan. Financial Institutions don't make it a habit to loan money on collateral that they may not be able to find. A lot of times the interest payment will be based on your credit score and the largest loan that you have successfully paid off excluding your home mortgage, however your total indebtedness will play a major factor in your ability to buy any thing. Be sure to include child support when you fugue expenses. Check out the SBA as they offer a lot of FREE information on starting a business and they can be a primary source of financing IF you have your business plan and have covered as many bases as you can.

How much are payments? Depending on the price of the truck/trailer, how much the down payment(s) are, how long the loan is for and interest between $1600.00 and $2300.00 per month for the truck, trailers will be less than half but furnaced for shorter periods of time and are easier to buy than a truck in some cases.
How much money is a good amount as far as having enough for 3-6 mos expenses?
6 months is best but hard to achieve, 3 months of your total expenses is a minimum to have in an emergency fund which should be in a savings account so that it increases. This fund should be based on ALL your living expenses, and ALL operational expenses not just the truck. When I say ALL I mean ALL down to stamps.

I know the sky is the limit for the last question but realistically what kind of a figure is it?

There is NO way to tell you that as I don't know your financial obligations. $10,000 is NOT unrealistic and would barely cover 2 months depending on expenses. Just add up EVERY thing that has to be paid and multiply by the number of months and don't forget to take into consideration the rising cost of fuel, oil etc.
Planing is the key to success in this industry and getting every bit of information will help anyone make a good decision based on realistic real life cases.
Dress neatly and have all your information and paper work organized and put together as a presentation before you approach ANY lending institute other wise you risk looking very UN professional. Don't make up or exagerate figures and facts as in some cases you can go to jail for providing misleading information in order to get the funding that you need.
After all whether it's one truck or 100 it's a business and you have to convince them to be your partner. You have to sell them on taking that risk with you.

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