Question for Prime Solo Lease Ops

Ah yeah. Be seeing you on the "Prime Screwed Me" threads.

It takes more than a couple of months in a trainers truck to figure this out. Go company for a year, figure the business out, get used to how we route our loads, get some business education first. There is quite a bit more to this than you might think. You are starting a business, and statistically 80% of new businesses fail in the first couple of years. One of the biggest causes of this is under-capitalization - a severe lack of money. You need to have two or three months of your personal expenses banked before your start - especially if you have dependents - and you have to be able to bank money for your home-time in advance of taking it. Its also a very good plan to separate your personal and business finances completely. Do the due dillegence of a shadow company on your company-side loads so that you know what kind of revenue to expect. You absolutely must know the HOS regulations inside and out if you are going to tie the expense of a truck lease around your financial neck. And you absolutely must understand how the freight-cycle will affect your revenue.

You can change over to the lease side as fast as a QualComm message can get to Springfield. Going the other way is impossible unless you have built-up a relationship with a company side FM.

For the poster who thinks they will get more hometime as a lease operator, plan on being poor.

 

82 cpm? You've got to be joking!

It costs you something on the order of $1.25 per mile to break even.

 

Depends on how much fuel you burn. Its your number one controlable expense.

And what are you going to do on a week that grosses $3500?

How about a week that shifts half of your revenue across cutoff?

The key to this is operating efficiently. That's how we make our money. The big guys with wheel-holders who always have their foot into the throttle are lucky to make a few cents on the dollar of gross revenue. Thats an operating ratio (dollars spent making money divided by gross revenue dollars) of abou 0.98. The well-run companies party when they hit 0.90 (making 10-cents on the dollar of gross revenue.) If you aren't in the 0.7 to 0.8 range, you may as well stay on the company side. There's only one way to do that... get your driving technique to the point that you can be in the upper 7's in fuel economy. On a regular basis.

 

Very old information...

 

You are absolutely correct, IP. We soak you words of wisdom up like a sponge.

 

Been there, done that... had the same ####y attitude when I started almost ten years ago. At that time, Prime didn't have company drivers (they were just getting started) and I had to start out in a lease. My trainer was profitable, etc. and I was just like this STUDENT. Got my ##### handed to me because I simply didn't understand the business yet. Go ahead and poo-poo the advice of the veterans. Like IP said, be seeing you on the "Prime Screwed Me" threads.

 

Granted the numbers are old, but the actual experiences that were related later in the thread didn't change

 

Running a truck effieciently is the key..in all aspects..Your FM can help with some of it..but it is ultimately up to you.

Limit deadhead..empty miles usually don't pay near as much or not at all.

Slow the truck down a little..if you can run 55 to 60 mph and make the load on time..run it..your mpg's will love you for it and so will your pocket book.

Invest in aero upgrades for your truck as long as your lease allows..also invest in things to lower the rolling friction of the truck..Microblue bearings, oil additives in all the boxes..2 cycle engine oil in the fuel to get a cleaner, more efficient burn..(check engine manufacturer website for what won't damage the engine) These cost money, yes, but pay for themselves multiple times over.

Time management goes a long way to being able to run a little slower and save on the fuel. They are right..fuel is going to be your most expensive and most controllable cost..followed by maintenance/tires.

Change your own fuel filters, oil whenever you can..buy a good pressure washer and wash your own truck..Leave the chrome shops for the large car drivers.

Lets get down to the overall truck budget and lets base it on a 1.05 a mile and and 3k miles a week and 4 bucks a gallon for fuel..most freightliner century/cascadia class will easily get 6.5 mph with a driver watching their right foot..heavy or light.

first I'll break it down by the mile.

4.00 a gal devided by 6.5 is .62 cents a mile for fuel

1.05-.62=.43 cpm

Now..most companies offer some sort of fuel surcharge..guaranteeing a certain cost per gallon of diesel to the lease/op and is usually a 1.15 to a 1.25 per gallon guarantee. Based on mpg above..comes to about .42 cpm..possibly more if they figure at 6 mpg even..ask about it..its important.

So we add that to the .43 cpm..total .85 cpm going to the truck after fuel cost.

Out of that set aside .10 cpm..most drivers jaws will drop and they will start spluttering all kinds of things about that..but let me explain why I say that much. .05 cpm is enough for routine maintenance on a truck..but there comes a time when that warranty disappears..so by setting this aside from the get go..should the turbo blow at 502000 miles you will have enough in your maintenance fund to cover it without going in the hole..head gasket blows..etc.

So now you at .75 cpm..take .02 cpm out and set it aside for your iiving expenses during mechanical break downs..this can also be used after you own the truck outright as a potential down payment with truck trade on on a new truck if you never use it..it will add up.

Fed and State taxes..11 cpm

Brings us to .62 cpm..

Out of that .62 your little LLC that you should definately set up as an o/o or l/o should then pay you, the driver half..the other should be put in a business account to cover any other unexpected expenses that can come up..say insurance deductibles in case of an accident..apu upgrade for the truck and the aero and rolling resistance upgrades to increase mpg.

Thats the basics of your business plan and it does give you a .30 cpm buffer for loads that pay less than 1.05 a mile while still paying you a decent wage as your driver. If you want to be a successful owner op thats how you do it..put enough in that business account till you retire and and you got a decent chunk of change to help you retire on..it can also be used to help future truck purchases..or even going completely independent under your own authority..whichever way you decide to go with your career..I would recommend taking part of that business account eac year and setting it aside into a retirement fund no matter what..even budget it in at another .02 a mile or more

Petey

 

Obviously one of the things you learned in your business experience is to LISTEN to those who know what they are doing.