Shoestring start ups?

Going to the bank this morning, then to look at a trailer, and a tractor next week. But, I'm not exactly a noob.

Bought my first dump truck in 1984. Single axle bobtail, 15 year old gas-burner, but with a brand new dump body. Transferred that dump body over to a newer, diesel truck in 1992. I also had a backhoe and small bulldozer. Sold all of that equipment in 1996 and started another business from scratch. (different industry) Sold that business last year and invested almost all of the profit in equipment for my farm. We are now in the worst drought this area has ever experienced. I had counted on making a $20-25k profit from my farm this summer, but instead went in the hole about that much. (if not more) So now, I have no business, no farm income, (but still have the note) and I'm working part-time, earning about $350/week, operating heavy equipment. Please understand, I'm extremely grateful for the paycheck that I have, but I'm going in the hole every month. I see a rig as a way to earn enough money to pay my notes and set a little back for retirement. (hopefully about 10 more years)

I'm not going into this blind. As stated above, I've done this before and know what it takes. I can, and will, do ALL of my maintenance and most of my repairs. Also, I have work for my rig. A cousin owns a business that moved 25,000 tons last month, mostly on hired O/O trucks. (they have 8 of their own)

Plus, the biggest factor in this is that I will be working for myself. I've done that most of my adult life, and I like it that way.

I would say that to be succesful, you have to have a really good business mind-set. What business you may be in isn't nearly as important as how you run it.

I'll let you know how it turns out.

 

Reminds me of the old saying.

"How do you become a millionaire in trucking?"

"Start with 2 million"

 

I really like this thread. (Just finished reading) It's good to hear the positive side instead of always NEGATIVE.

Good job folks!
Thumbs up.....

 

Are there loans out there you can get that will get a loan for the truck, all the startup costs, and have a healthy capital base?

Granted you might be paying a little more, but you'll at least have something to fall back on in case something happens until you start getting that revenue stream coming in and building up some money generated from your business.

It just seems like there's too much risk otherwise. If I had 50-60K saved up, I'd buy a house, not a truck.

 

Your way of thinking is backwards. Taking on a loan to start up a business increases the risk of failure exponentially. The smart way would be to pay cash out of that $50,000 for a good truck and have a nice cash reserve left over to operate on for a short time. That lessens the risk...


And I really hope there aren't any loans like that out there. Easy credit/cheap money creates an artificial glut in capacity. A bunch of people who don't have a clue go and take on stupidly huge risk, get desperate, run for fuel money, etc. Easy money is responsible for all the economic instability and suffering in this country and the world - the past few years especially so.


Cash is king. Well, if you can ignore the fact of their intentional devaluing and inflation of it anyways.... it's king... Did you know there were people who became millionaires during the Great Depression 70-80 years ago but I'd almost gaurantee you very few if any of them did it by taking out any sort of loans. Money management is not rocket science.


Houses don't make money and the last time I checked all the phoney money they did "create" for the better part of the last decade was a bubble that burst. I actually had a choice at one time between a house or a truck. The house got put on hold... ...for the time being.

 

There are some people who might lend you the money you want. Interest will be about 10% per week and if you miss a payment you can expect to have a broken leg.

You might find the money from conventional sources if you have real estate or other tangible assets you can pledge as security. You will also need good credit. If you don't have any tangible assets or money then you are not likely to find anyone who would be willing to lend you the money that you want. This is your dream. If you don't have the discipline to save and invest in your dream, why should anyone else? When you have money invested you are more likely to put forth the extra effort to make your business succeed. If you have nothing invested you can just walk away and leave someone else holding the bag. That is one reason we have such a high failure rate in this business.

If you want to be an owner operator there is only one way to do it and have some assurance of success. Get a decent driving job, gain some solid experience and SAVE your money. Make a commitment to save a minimum amount of money out of every paycheck. Saving as little as $100/week could give you enough in a couple of years for a good down payment or possibly to pay cash for a used truck. If you make a commitment to save $200/week for 2 years you can save over $20,000. That is enough to buy a decent used truck. If you can manage to put back $300/week, you can save over $30,000 in only 2 years. That will be enough to buy a good used truck and have working capital to get you started. And you can do it without accumulating any debt. Cash is always the best way to start any business. I saved and paid cash for my first truck and trailer. I didn't want the debt. It was a good decision. I also got a much better deal on the truck and trailer than had I needed to finance my purchase. If you have good credit you might be able to finance a truck in less than 2 years, but you will need to have a good down payment. Most lenders will require 10-30% down. You will also need working capital to protect yourself should you have a major breakdown. The very worst thing you can do is to buy a truck with limited experience and no working capital. If you finance a truck have enough of a down payment to keep your payments less than $1,000/month. I would try to keep it under $500/month.

 

Houses are an expense unless you have rented it to someone else. Anyone who looks at their home as their retirement is a fool. Although I don't completely agree with you in regard to taking loans to operate a business, there is smart money, and stupid money. Smart money doesn't cost much and is invested in a way that the return on the investment pays the principle, the interest AND turns a profit for the company. Otherwise, in general, I couldn't agree more with what you are saying here.

 

I understand some people can and do borrow money running successful businesses never having any problems. Again, that comes down to money management skills, which when you're talking about drivers, most of them don't have a clue.. I see nothing wrong with a well managed business using credit. I just dont like feeling the pressure of it personally.


Going through rough times with breakdowns or slow freight can be difficult enough to deal with. I would not be here today as an owner operator if I had been leveraged at all when I first started out a couple of years ago. I had a really rough time of it and always encourage newbies to be patient and do this the "easy" way paying cash for everything outright -having money in the bank before they come out of the gates.

 

What I would do different is, I would ask a lot more questions and have a mentor. That's it, that is exactly what I would do. The questions are many and that is one reason you need a mentor who has already done it. Doing it on a shoestring probably can be done, but it wouldn't take much to take you all the way down. The truck won't repair itself. If you need to borrow to make major repairs it will take a major loan. It will become a vicious circle and you'll not see the end in sight.
Would I try it again. If I was younger and wanted to drive then I would say yes. For now I have a great situation and I'll keep what I got.