Thinking about diving in to O/O

Ok first off I want to say that I understand the recommendation is to be in the business a couple years before thinking about going on your own. You need to learn the business.

A few things about myself. I am a former business owner. I was at my last job 16 years, starting at the bottom and eventually working my way up to owner. I had 2 cemeteries and a monument company and there wasn't a job any employee could do that I hadn't done already, I wore many hats in the company. I dealt with vendors, shippers, retail customers, as well as every grunt job and training employees as the work was seasonal and would usually have new guys every spring. I am above average intelligence scoring top 3% in the country on my military entrance exams having never took the SATs and I am a fast learner.

I am looking this summer to get my own truck and break into the flatbed business. I live in central PA and have heard there is decent freight nearby so hopefully deadhead starting out and backhaul home shouldn't be a problem, and thanks to my former business I have many local contacts as well as contacts with granite companies all over the east coast that ship headstones via flatbed.

My former trainer, who taught me well and himself has almost 3 decades as a business owner as well as being a certified accountant, became a L/O and is more than happy to help me out with advice as well which is a boon for me. He could have financed his own truck but instead signed with CRST on their lease purchase agreement. How it works with them is you lease the truck for 3 years, then at the end you can either walk away or pay a $5k balloon payment and the truck is yours.

Now during the 3 year lease CRST covers all PM and repairs bumper to bumper on the truck. You lease the trailer and they cover all maintenance and repairs on that. It's looking like total fixed cost (payment to CRST) comes out to $700-$800/week. That includes maintenance, tags, authority, insurance, etc. Also with their flatbed division you choose your own loads either from their load board or you can get your own loads and make 75%-100% of the load (not sure how that works yet, have to research it more). They also pass on 100% of any fuel surcharge.

So I'm figuring at fixed cost of $800/month and 5mpg (mpg should be higher but it is a good number to start with) running an average 2k miles a week it should breakdown like this...

fixed cost per day......$114
fuel 400gal per week at 4.00/gal....$229/day

So figure $343/day is break even. So if I run avg 2k miles per week that is 286 miles per day which means $1.20/mile would be break even. Now since during these 3 years my fixed costs do not include savings for maintenance fund for after the 3 years I would want to put back $0.10/mi to build a maintenance fund for after the lease. Assuming 2k miles a week for 3 years that would leave a fund of $31,200 at the end of the lease. So I'm up to $1.30/mi.

Now I would like to profit between $.30-$.50/mi so I am looking at average loads paying $1.60-$1.80/mi.

Is there anything I am forgetting? Is this feasable? I'm trying to plan this as thorough as possible. Also, with becoming a L/O will I need to form my own company? I'm checking out the fuel guages and profit guages programs available online for tracking expenses and profit/loss.

I still got a lot of research to do but this is what I have so far. Thoughts?

 

Yeah, I know probably the first year, or at least few months will be rough with no financial cushion to fall back on. I told my gf when I do this I will try to get home as much as possible but every day the truck sits costs at least $114 out of pocket not counting lost revenue.

I picked an average 2k miles per week in hopes it was a low estimate. In reality I'm hoping to average 2.5k. In 2-3 months of hard running I should have enough saved back to provide an emergency financial cushion. Heck I've been living on $350 a week now, hoping take home is at least double that.

 

the truck insurance is in the fixed costs. If you are talking about health insurance....Well I was going to cross that bridge when I came to it. GF and kids have their own and I can do without until my business model stabilizes.

GF pays bills, phone (which includes my internet on the road), plus the house bills. As for wage all I really need is enough to keep me running at first, rest gets banked until I get a feel for what I am pulling in.

I am fortunate that, for now, I don't really have to support anyone. I could put %100 of profits right back into the business if I chose. What I'm trying to do is build a future where I can gross personally $80k/year. That's what my gf makes right now but that isn't going to last forever so I want to be able to support us at that standard of living when the time comes. Until then I can put $ back into the business and maybe start building a nest egg for retirement.

 

True, which is why I didn't include it when I told my GF it costs at least $114/day to be home. But to figure a cpm break even point you have to establish an average miles per week target so you can factor fuel into the equation. I say $1.30 is my break even point, but that is based on a 2k mile week. I'f it's wed and there is a load paying $1.30/mile for 500 mi that doesn't deliver until sat but I only have 1,000 mi right now that load is not going to be break even because of the time involved and not meeting my mileage goals.

It's hard to explain how it works in my brain. But yes I understand fuel is not a fixed cost in that I don't pay it when the truck is parked, but it is a fixed cost I can estimate for every load based on the miles for the load, my mpg, and current avg fuel cost. Call it variably fixed?

 

Kansas, what is average fuel cost per gallon? I figured $4/gallon was a good average.

2k miles per week is a minimum number I chose to work with. Obviously I would like to run more and make more $, who wouldn't? If I run more than 2k miles a week then my break even point will drop lower because my true fixed costs are spread across more miles. Also that average is spread across 52 weeks. Do you run 4k miles every week, never going home, never taking a vacation, never hitting a slow time? I don't know about you but I'd like to be able to take a few weeks off a year for family vacation.

I can live fine on $.30-$.50cpm, that means all the extra can go back into the business. Truck upgrades, maybe even a newer truck, possibly purchase my own trailer.

There are a couple different CRST branches, the flatbed division is different in that you do not have a qualcomm, you do not rely on a dispatcher for loads. As long as they keep my truck running and legal I can deal with the rest. And at the end of the 3 years I can decide if I want to keep the truck and put money into it, or save the $5k balloon payment and spend the money I saved on another truck.

I am currently micromanaged, running a truck held together with spit and bailing wire. The difference is there is no future here, no chance to better myself as I don't make enough to put anything sizeable away. I don't have the credit to finance nor the capital for a maintenance and expense fund.

I slaved in my old job for 13 years before becoming an owner. 3 years is nothing, and if it doesn't work out I can try something different.