Double Yellow's Company Driver to Independent Thread

My point being if one wants predictable, steady, same old same old out and back the price will not be as high. Because everyone wants that and there is only so much supply of it. The way Vic was talking about it as if that was the life for any o/o and dealing with brokers sucks. I prefer the wild market swings of open markets and brokers.

 

The thing about numbers is they do different things for different people. I get bored very quickly just driving from point A to Point B, especially if there are many miles between them. I need to keep my mind actively engaged in something at all times, so for me, it's a challenge, definitely not a distraction.

 

If you could walk a day in my shoes you'd figure out pretty quickly there's really no idle time except for when the wheels are turning. And believe me I am a numbers guy I love math and always have. It's just that I see what a lot of guys keep up with and it just boggles the mind the amount of time and effort spent on things that really don't mean much. For me it's like a game of chess and i'm more focused on my next move or next half dozen moves. Learning lanes and honing negotiation skills are the most powerful tools in your box. The numbers are simple and easy. There's no need to over complicate the easy. You know what your costs are and you know what you need. I see on on here all the time. Guys that are really good at the book smarts part of this but come up short on rates. Don't over complicate the easy and put more effort into busting these people for more money. Everything else falls into place.

 

What jumps out at me in DY's numbers is how much easier it is to meet your goal rate wise if you are willing to average 400-500 miles per day. If we take his numbers based on $3/gallon fuel and convert to a per year basis we see that to meet his goal he could either

1. drive 75,000 miles @ $2.42/mile for $181,500 gross and $100,000 net - 1500 miles per week
2. drive 100,000 miles @ $2.00/mile for $200,000 gross and $100,000 net- 2000 miles per week
3. drive 125,000 miles @ $1.75/mile for $218,750 gross and $100,000 net- 2500 miles per week

I think those are good practical numbers because each week you can look at your miles ran and avg per mile and guage how you're doing. And make a plan to meet your goal based on what is available to you. If you are falling short is it more practical to go for higher rates or run an extra load ? personally, I would not want to be under 75,000 miles doing what I do. I'm one of these idiots who actually enjoy trucking and I didn't buy a truck to park it all the time. I also don't want to be much over 100,000 miles, I also didn't buy a truck to run my butt off like a 22 year old with a fresh cdl. My numbers come out a bit differently than DY's, interestingly, I was thinking much along the same lines in January and set a goal for myself of 100,000 miles and $225,000 gross. But my goal was exactly the same, to produce $100,000 net. my extra 25 cents per mile probably is fuel and additional expenses due to stepdeck trailer and securement equipment. I found that interesting as well, because I've said in the past I think I could operate with a van trailer for 25 cents per mile less, now I have a little roundabout evidence to back up that statement.

 

True!!

Not everybody, obviously NOT!!

Dealing with brokers is time-consuming and a roller coaster. This summer I pulled my own outbound loads off the boards, got paid more for doing it and built relationships with a number of good brokers. After delivering the outbound, continued on to Prairie du Chien, got our money load and came back to Indiana--the regular, predictable, rob the same bank a couple times every week load. My goal on outbounds was $3/mile and usually got it. We made enough on the Prairie load to run out empty.

But why???

Had a great experience for a company driver. Eye opening. With your substantially deeper experience, RC, you know what brokers you want to work with and don't want to work with. Experience counts. What's that take? Time and experience. Natch!!

You didn't ALWAYS have that time and experience, RC... it took you--time and experience!!

 

True!!

RC, with all due respect, yes, YOU know YOUR numbers. YMMV!! DY and Blair are entering into, for them, unknown territory and shark-infested waters. DY likes to get through the messy and tell us, well, it was messy but here's the gist. Blair's giving a blow-by-blow (so far).

Your handle on your numbers comes from long sweat equity, much time and experience. If you've got a pill for DY and Blair to take to instantly gain your time and experience, they'll find their own glasses of water, I'm sure. We all would, myself included.

Blair and DY are paying those dues now and generous enough to share it. Great stuff! As is your input gleaned from dues paid long ago... Don't forget that it takes time to earn broker trust, get better loads not on boards. For Blair, many new BCOs will wash out by end of year 1 and before better Landstar brokers start to notice and take him seriously.

 

Lets keep this real. The numbers that DY posted are for DY's operation... not yours. You can use what he did as a format for your operation, but unless your costs are the same as his, the numbers have no meaning except as a guide. Skateboard posted some per-mile numbers as what he charges. That's nice... but you can say you're getting $2/mile all day long, but that's not what's going in your pocket. If you're spending $2.10 per mile to make $2.00 per mile, you're in trouble. The fact is that somewhere north of 80% of owner operators don't have a clue about their numbers, and only know if they're making money if the checks aren't bouncing. That's no way to run a business. Don't get the deer in the headlights stare, it ain't rocket science.

If we're leased to a carrier, we should be getting a weekly settlement statement, if not, just putting your revenue and costs down in a ledger of some sort is vital. Doing some basic bookkeeping on your own is something you need to do. CPAs are for taxes, not bookkeeping.

Numbers...

Gross Revenue... that's all of the money coming in, and you should have figures for the week. month and quarter. BTW... this is a number you need for last year right now. It should match what's on your 1099, and if it doesn't you need to know way.

Costs... you can break it down any way you like, but most accountants use 19 different categories to prepare your taxes. Filing these numbers in the different categories your CPA uses is convenient. Again it's helpful to know these numbers by the week, month and quarter.

Miles... same breakdown, because eventually you'll want per-mile statistics.

So how does this work? I use a spreadsheet, and just take 10 minutes once a week to enter numbers off of my settlement. The rest of my process is automated. There are plenty of trucking bookkeeping applications out there. The key is to make it as easy and painless as possible... with the analysis done for you once you enter the data.

So, with numbers like gross revenue known, it's easy to figure out things like how much revenue you need per day, per week to stay afloat. Rolling Coal says this is useless, but I think otherwise. Knowing what your revenue targets per day and per week helps you keep track of where you're at.

Fixed costs... these are the bills that come due whether you're running or not. Equipment costs, insurance, workman's comp, medical insurance. All of these bills need to be paid, and usually come in either weekly or monthly bills. Figure out what a years' worth of these costs are and divide by 52 for fixed costs per week, and by 365 for fixed costs per day. Why is knowing what your fixed cost per day important? Because the day you sit in the truck stop waiting for a home run load isn't free. If you don't run today to pay for today's fixed costs, you'll need to pay it tomorrow. This stuff adds up. The lease guys can be sitting around $150 or so a day. So even for home time, that's money that either has to be set aside up front, or you're going in the hole. Knowing what this is allows you to plan and stay ahead of the game.

Variable (operational) costs... knowing what it takes to run the truck down the road is important too. It's not just say 30-cpm for fuel. This is where knowing what your maintenance, tires, equipment replacement costs, etc, come in. You can estimate some of this stuff if you don't have hard numbers for it, but these are basically assumptions that may or may not be true. One needs to go back and actually validate this stuff at some point. Taking your fuel bill for the quarter and dividing it by the miles you drove gives you an accurate cents-per-mile number for this one. You can do the same thing for the rest of your variable costs once you have some data... this is where long term averages come in. We don't buy tires every day, or even every year. So taking some of these categories for an entire year, dividing it by the miles driving gives you a real number for things like maintenance, tires, etc in a cost per mile. Add this stuff up, and you have what it takes to run your truck down the road.

Whys it important? How about estimating what your profit from each load is? If you have 4 loads you're looking at right now how do you choose? Eeenie, meenie, miney moe? A dart board?

Estimated Net Profit = Total Load Revenue - (days on load X fixed costs per day) - (miles on load X variable cost per mile)

Operational Ratio = 1.00 - (Costs/Gross Revenue) X 100%

The Operational Ratio tells you how healthy your business is... the smaller the number the more you're keeping. Any time this one goes over 100%, you're bleeding money. If you can't get it down, it's time to throw in the towel if it's long term. Victor V mentioned a carrier having an OR of 94%... that's not uncommon for the big guys because they can't operate efficiently. An owner operator should be shooting for something closer to 50%... because you have control over how much money goes out. 50% means you're keeping $50 of every $100 you make. Knowing this number so you can just keep an eye on it tells you when things are changing, and that you might have to change your operation to stay in business. Isn't it nice to know these things long enough in advance so that you don't need to get friendly with a bankruptcy attorney?? Hmmm???

Maintenance cost per mile. A good truck is running under 10-cpm. A lot of the newer ones cost 15-cpm and up to run. If your number is up in the 20 or 30-cpm to keep running, it's time to think about a new truck.

Fuel cost per mile. Knowing this to a fraction of a penny is important too. Not it's kinda of around... but a (real) hard number. This is going to be your biggest expense, so if you spend some time working on this cost it will do more for your bottom line than any amount of cheaping out somewhere else. It's also a good way of monitoring the health of your engine. A sudden rise in your fuel cost per mile without a corresponding increase in the pump price of your fuel per mile means there is something wrong.

Revenue targets. If you keep track of how much revenue you're making during the week, then a number like Gross Revenue to Date/Days on Loads gives you a number that measures your gross revenue per day during the current week. If you take what it costs to run your truck, plus your salary, plus any other revenue you're putting away per year and divide by 52, you now have a number that represents how much money you need to bring in each week to satisfy your MINIMUM revenue goals. Taking that same revenue per year number and dividing by 365 tells you what you need to be doing each day. If your revenue per day to date is less than what you need per day... you're underperforming. What's hard about keeping track of where you're at? This is simple stuff that tells you how you're doing.

These are just some of the things that you can do once you have the numbers, and mostly it's just keeping track of what your business is doing. Making decisions about your business is really easy if you have the numbers... it comes down to what puts more money in your pocket. I had a decision awhile back to make on whether to lease another new tractor for three years, buy the one I was in now, or go do something different. You can take your historical numbers and estimate what the net revenue will be from each course of action. We're out here to make money, so obviously the choice that makes you the most money is the one you want. IF you have numbers to back up your choices, the one to choose is easy. BTW... I told the carrier to jump in the lake. Buying the one I was in puts me at nearly twice the net revenue earned at the end of the 3rd year going forward.

This stuff is easy, and most 8th graders have the skills to get 'r done.

 

When I first started,I was like DY,running numbers all the time. Now I'm more like RC,the numbers are in the back of my mind,but I don't feel the pressure to reach a daily or weekly goal. Although i do more direct than broker now,I still know what a load should pay without breaking out a calculator.
The more you do this,you'll figure out what works for you. A couple years ago,I bounced all over the country,now it's 95% northeast.

 

I used to try to run businesses by just letting numbers rattle around in the back of my head. None of them were particularly successful.

Let's do some 8th grade math...

White Line Fever wants to make $100,000 net profit before taxes. WLFs operation is running at a 60% OR.

(This means WLF is running a pretty tight ship.)

$100,000/(1-0.6)= $250,000 in gross revenue.

That's about $4805.00 per week, or if he plans on working only 250 days this year, that's $1,000 per day.

So now WLF knows what its going to take to get there. Let's go a little further... let's say WLF wants to average 400 miles per day...

$1000/400 = $2.50 per mile. Average rate.

S'pose WLF better hit the road.

The OR encapsulates the efficiency that your operation runs at, and plugs that into a little revenue planning. You can run this in reverse too, using your average revenue per mile for all miles to plan your year and see how much you'll have to work to reach a given level of profit.

 

Hey DY!!!

Was checking out your spread sheet. That's one hell of a formula for your Minimum rate. lol
I'm a XLS spreadsheet junkie myself. I have a few that I created when I started in 2006. It's a lot of fun.

My 2 cents. If you could get a run from coast to coast and back for $1.75 you would rake it in for sure. Running non stop 600 miles a day will bring in some real decent money pretty quick.

Screw everyone. Just keep doing what your doing and keep posting. Your touching on a sensitive topic that gets way too many people ticked off.