Biggest Setbacks for Failure?

I have always heard that the O/O are made or broken by their brokers. The way this was explained to me was, you need more than one good broker. The guy I was talking to ran from Ga to Tx then Tx to Mo and back to Ga. It was a triangle of freight. He had about 2-3 good brokers in each of those areas and always had something to haul. His relationship with those brokers is what he credited to his success as much as his driving or business skills.

 

I would say that being underfunded is one of the biggies. Just because you bought a truck and license plates doesn;t mean that the motor couldn't blow up the next day. You have to prepare for this just like you would any other small business. I was always taught that the rule for opening a small business was that you needed enough money on hand to run the business for at least 6 months without making a dime, and should be prepared for working the first two years without making anything more than the bare minimum. In fact, I think that you do better with a truck than that, but those are the rules I was taught for opening a grocery store or restaurant, and the basic theory makes sense.

I see a lot of people on here that are undereducated in their particular business and underfunded to operate, and those two things will combine and put you out of business very quickly. It takes a lot of knowledge to succeed, and a reasonable amount of money in the bank. And the less experience and knowledge you have, the more money you are going to need. Someone with experience knows where he can afford to take a financial risk, and someone without that experience ends up paying for that experience in dollars and cents. My 02.

 

Having good brokers/consistent freight is important, however to be a successful O/O you need to have some business savvy as well. For example, a lot of new O/Os (and L/Ps) think that the first thing they can do, is finally haul butt down the road at 80 mph. OF course, you can if you wish, you had better be ready to pay for it.
Also, you need to control costs. That big flashy Pete/KW looks great, and will hold a good amount of its resale (assuming you take proper care of it) but if you are paying so much that your cost per mile (which you should also know) is too high for the freight you're hauling, you won't make it.

If I had to guess, it seems what does most O/Os in, is not being ready for maintenance and taxes. One major mechanical failure, and they are done, because they haven't saved enough money to pay for the repair, and a rental (or sitting at home while the repair is done).

 

sometimes you dont even need brokers if you can garentee a contract with a shipper

 

Generally, all things being otherwise equal, you will make the best income by keeping your business very small or very big. The medium sized business will most often be the one that fails, as with all businesses because of the exponential factor. My advice, especially in the short run, is to keep it small and do alot (or all) of the work yourself. For example, if you have one truck (your wages and hopefully at least a small profit) 100% of your net goes to you (obviously subtracting all business costs like maint, taxes, etc. So far so good, your making a living... Add the second truck with a driver and your net to you on that truck can be anywhere between 15% to 25%, depending upon your business abilities. Although you have added another truck you have doubled your costs and the increase to your pocket has increased only slightly.

Inotherwords, just for the sake of this discussion, lets say a person grossing $125,000 yearly nets, say $55,000. Add the additional truck and you now gross $250,000 yearly, but your net is only $65 or $70,000 combining both trucks. Many inexperienced businesspeople see the quarter million gross as a huge income, when in reality, you have actually only increased your net by 15 to 25%, and now instead of making $50,000 a year your making $65 or $70,000 (with twice the headaches, lol). Now add the third, forth, fifth, truck, etc. and you get the general idea. If your real big and have 50 trucks your cruising, but 5, 10 or 20 might kill ya, especially when considering additional admistrative costs as you increase your business size.

Hope I didn't complicate it too much, but I think you get the point. Moreover, the more trucks you put on, the larger the chance of unexpected overruns (expenses), especially since someone else is driving your additional trucks. O/o is definitely the only way to go though.
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Maybe i can relate my first truck experiance to you in a way to make it with nothing. I started with a brand new 1996 freighliner lease purchase with 0 down from a private leaseing company it was a 4 year lease with a baloon at the end. Ok i had 20 bucks in my pocket and a brand new truck so off we go 2800 a month truck payment on .80 cent a mile freight. Now you don't have to be a genuiess to figure out this ain't going to work but beeing hard headed and stubern i made it work i stayed on the road and drove the wheels off it for 4 years then i refinanced the balloon from the same folks for 2 years and you know i paid it off in 2002 and was doing great except that i had burnt out compleetly and couldn't stand to look at a truck and didn't want to hit it again . So i sold it back to the same people i bought it from now the moral of the story. I was allways leased to a company and at there mercy i made it but barely and the kicker is i still owed the IRS 30000 when i sold the truck so i had to work 2 years to pay them off to get even so there are allot of things that can cause you to make it or not i learned allot dureing those 6 years belive me. Like has been said proper funding and haveing the right plan will save you tons of head aches in the long run.

 

I have flopped TWICE and lost everything but am still stupid enough to try again. I am in a company truck now till I can save up and try again. except this will be my plan:


Save $12,000

file for a DOT and MC number from the FMCSA

Get insurance, quoted at 8000 per year

Lease a Truck and 53' Dry Van Trailer from PENSKE for 1000 per week

run on PENSKE IFTA and BASE PLATE plus NY HUT, KYU Number, and NM Permit

USE getloaded.com and a broker i know running mail out of virginia for $2.05 per mile

do whatever i can including running weekends to gross $4000 per week

heres what I should make:

income: 4000 per week
minus 1000 truck trailer per week
minus 1500 fuel/tolls per week
minus 150 insurance per week rounded


I should profit 1350 per week. with the use of a penske truck and trailer i will have no repairs, no tires, no oil changes, etc...

making a little more than a company driver running the same 6 days per week. BUT no dispatchers, etc....

I tried the same plan leased on but the 25 percent per week coming off the top to be leased on to a company and use their trailer makes it unfeasible.

 

4000 a month truck and trailer !!!! WoW !!!! That plan is a perfect way to fail.

 

thats what i was thinkin......can you finance a used truck and trailer?
i see ex werner trailers are cheap....and trucks...well...just pick up the truck paper....for 4k a month you could get a fully specd out w9 and all chrome trailer and prolly still be money ahead