So you want to "own " your own company

Most class 8 trucks use diesel fuel, not gas. Before you can decide what to pay a driver you need to know your operating costs. You must know how much revenue you need to generate in order to break even. There is much more to your costs of operation than fuel. Tires, oil changes, maintenance, equipment payments, insurance, base plates and permits, taxes, payroll, benefits (if offered), etc., all go into the cost of operations. If you don't prepare and plan for these expenditures then you will go broke very fast. Your payroll costs should not exceed 30% of the revenue including benefits, taxes, etc., I pay percentage. Some pay mileage. Either way, you need to know what it costs to keep the wheels rolling. One thing many inexperienced owner operators do is only consider the obvious costs of operations, such as fuel, when they decide whether to take a load. More people probably go broke in this business because they underestimate expenses and fail to prepare for unexpected expenses.

If you plan on putting a driver in your truck you can expect your maintenance and operational costs to go up over driving the truck yourself. Drivers don't take care of equipment as well as the one who owns it. There are a few exceptions, but for the most part drivers don't care about taking care of their ride. Most drivers will spend more on fuel than the owner. They will idle when not necessary and not usually get as good a fuel mileage as the owner. After all, it isn't their money. Some may be jealous. You can expect some to steal and sell your fuel or other things off the truck. You may also have a driver abandon your truck. That will cost you money to retrieve and possibly make repairs on the truck.

There is nothing wrong with putting drivers in trucks as long as you understand the risks and costs involved. I don't think it is a good idea for anyone to buy a truck and put a driver in it before the owner gets at least a couple of years experience as an owner operator.

If you run your authority you will need to check background on potential drivers. That costs money, too. You will need to join a drug consortium. Those are not free. You will need to either have workers comp or an occupational accident policy for each driver. either you or your driver will need to pay for this. If you pay your driver with a W2, then you will need to pay about 7 1/2% of his wages in social security tax. There are a lot of hidden costs associated with running a trucking company. It all adds up. If you drive the truck for a year or two then you will have a much better idea of what it should cost to operate and how much you can actually afford to pay a driver.

 

Most rates are paid by the mile. I find it much easier to calculate expenses by the mile. Truck payments, insurance, base plates, 2290 and all the other costs can be broken down by the mile. When I do projected costs I use an average of 2,500 miles per week as a base. That is usually a good annual average. Once you run the truck for a year then you will have actual miles to use in your calculations.

To give you an idea of how to break down your truck payment use the following. Let's say you have a $1,000/monthly truck payment. Using my average of 2,500/mile per week, that means that you are running 10,000 miles per month. If your truck payment is $1,000/month then your truck payment cost is $0.10/mile. If you pay $600/month for insurance, then your cost per mile based upon 10,000/month will be $0.06/mile for the insurance. You can do the same thing for workers comp or occupational accident insurance, base plates and all the other costs you will spend. Annual expenditures can be broken down by the month and mile.

There are a couple of reasons to break your costs down by the mile. First, most shippers and brokers calculate rates by the mile. Second, costs can vary according to the number of miles driven. Your insurance and equipment payments may be a fixed monthly expense, driver pay and fuel are two costs that are variable. Fuel is likely to be your biggest expense running a truck. Labor or driver pay is the second highest expense. They are by no means the only two large costs of running a truck. You must be realistic in knowing what it costs to run your truck. Cash flow doesn't always mean that you are making money. I have seen many people who have good cash flow and gone broke over the years. Some people don't understand that you need to make a certain amount of profit to keep the doors open. You cannot operate by the seat of your pants and survive in this busienss.

 

You need to know the minimum rate that you can afford to take a load. In order to do that you need to know your operating expenses. Your expenses will not determine what you pay your driver, but you need to understand what ALL expenses are so that you will know the minimum rate that you need to take a load. Let's say that you decide you want to buy a new Peterbilt. Your operational expenses will go up significantly over buying a $20,000 truck. That means that you will probably not be able to afford to pay your driver as much as if you had the older truck. A $20,000 truck will likely give you a monthly payment of less than $1,000. A new Peterbilt will cost around $135,000+ and probably have a payment of around $2,500+-. Your insurance costs will also be significantly higher. I am talking about collision or comprehensive insurance which covers your truck. Rates average 2 1/2-5% of the stated value. I will let you do the math.

 

$1.10 in this person's case is break even before driver expenses, it has little bearing on what you pay your driver. You pay your driver the going rate if you want to keep him. A truck sitting without a driver eats into past and future profit. If you pay a driver 35 cpm, plus Occ/Acc, plus taxes, and NO BENEFITS, your cost will be around .42 cpm in most cases. Mandatory Workers comp can drive that up another nickel depending on your state. So 1.10+.42= $1.52 break even, for ALL miles, loaded and empty. At 2,500 miles per week average (this accounts for time off) break even is $3,800 revenue. $2 per mile for ALL miles would give you a $1,200 profit per week, IN THIS INSTANCE.

 

every one else said it pretty well

 

Don't forget when you are quoted a rate by a broker of say $1.90 per mile, he is using short miles, and may be 10% or more short on the actual mileage from pickup to delivery. You have to figure what the distance really is, and adjust the rate per mile to match the actual miles of the run. That $1.90 could turn out to be $1.70 when you run the route because of the short miles of the rate quote.

 

I was running refer, and I want to get into flat bedding. I live in DE and no one hires out of this state

 

By "gas" I do mean diesel; I know how the prices have been and will continue to fluctuate. I also know the "hidden" costs such as workers comp, plates, etc. I just want to be able to have a business provide for my future family & have some money, ya guys know how it is. Some other questions: do I NEED to give a cash advance for fuel to driver? If so how? I knows there are fuel cards like comdata but are those for well established big companies or can anyone have them? Are there any programs out there for computer that help calculate a drivers paycheck for example I type in 200 for workers comp and fees etc and can print it out, and give them a check? How can I have direct deposit as well?

 

we use quick books for payroll

 

Unless you plan on driving the truck yourself you will need to give a driver cash (which I don't recommend), use a T-Check, Comcheck, TCH check, or get one of the fuel cards. Each of the companies I listed have their own fuel card. You could also give your driver a credit card, but I would not recommend that, either. There are a few other fuel cards, but these are the most widely used. Anyone can have one of these fuel cards. If you are established and have good credit you may be able to get a credit line. If not, then you can deposit money with the card company each week to take care of any fuel purchases. In order to direct deposit into a driver's account you will need to fill out a form with their banking information on it, get a voided check and have them sign the form.

I hope you plan on driving yourself before turning a driver loose in a truck that you are responsible. From your post you have much to learn. We all have to learn this business. You can lose your shirt very quickly if you don't understand how things work. The best way to learn this business is by getting involved and learn from the ground up. Without knowing anything about this business you will be easy pickings for a dishonest driver.