How do my preliminary business plan numbers look?

birdmanfromsc · Dec 1, 2013

There's an owner-operator who has a blog where he lists all of his cost to operate and revenue. You can see it at higb7.blogspot.com....it will give you something to compare your numbers to. Good luck with it

jfar28139 · Dec 1, 2013

Do you have your own authority or are you operating under someone?

double yellow · Dec 1, 2013

daf105paccar said: ↑

I think your maintenance on the new tractor is too high.
And did you calculated any tax deductions because off higher investment?(old vs new tractor)
Click to expand...

I calculated the tax deductions for the CA income tax, but you're right that it would be good to see after federal tax too. And looking at that blog, I adjusted my new tractor initial maintenance WAY down to 4cpm. Please see the updated spreadsheet at the bottom of this post and let me know what you think.

Ridgeline said: ↑

I think your 2002 tractor will need an inframe and a tranny/clutch work - $5k won't cover that.

Also an LLC would not work if you are driving. I would get a hold of a good accountant who can give you a plan to reduce your taxes as much as possible.
Click to expand...

The 5K would be just for deferred maintenance the prior owner let go (tires? brakes? whatever). An inframe would not be covered under that initial 5K, but would probably fall under the extra $20K in maintenance budgeted for the first two years compared to the 2010 maintenance costs (under the new spreadsheet posted below)

Why would an LLC not work if I'm driving?

birdmanfromsc said: ↑

There's an owner-operator who has a blog where he lists all of his cost to operate and revenue. You can see it at higb7.blogspot.com....it will give you something to compare your numbers to. Good luck with it
Click to expand...

Thanks, that was very helpful. I kept permits roughly the same (adding his Cab card, licenses, IFTA, HUT, etc came to ~4500), increased subscription costs (cost of cell phone with data), and lowered maintenance costs on the new and newer truck...

I've been tracking my fuel religiously the past year while working as a company driver and based on the "cash" price posted on the sign, my fuel costs are running 49-51cpm (getting 7.5 measured miles/gallons pumped). Between that and NOT paying someone 10% of gross to handle permits & paperwork, I think I'll be in much better shape.

jfar28139 said: ↑

Do you have your own authority or are you operating under someone?
Click to expand...

I'm currently a company driver, but I would be running under my own authority.

Updated numbers based on your feedback:

[TABLE]
[TR]
[TD]2002[/TD]
[TD]$15,000.00[/TD]
[TD]cash[/TD]
[TD="width: 100"]
[/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Year 1[/TD]
[TD]Year 2[/TD]
[TD]Year 3[/TD]
[/TR]
[TR]
[TD]Tractor[/TD]
[TD]$15,000.00[/TD]
[TD]$0.00[/TD]
[TD]$0.00[/TD]
[/TR]
[TR]
[TD]Trailer[/TD]
[TD]$15,000.00[/TD]
[TD]$0.00[/TD]
[TD]$0.00[/TD]
[/TR]
[TR]
[TD]Maint/Repairs[/TD]
[TD]$25,250.00[/TD]
[TD]$23,625.00[/TD]
[TD]$23,625.00[/TD]
[/TR]
[TR]
[TD]Permits[/TD]
[TD]$4,514.00[/TD]
[TD]$4,000.00[/TD]
[TD]$4,000.00[/TD]
[/TR]
[TR]
[TD]Insurance[/TD]
[TD]$10,000.00[/TD]
[TD]$10,000.00[/TD]
[TD]$10,000.00[/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]$68,850.00[/TD]
[TD]$69,525.00[/TD]
[TD]$70,200.00[/TD]
[/TR]
[TR]
[TD]Subscriptions[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]$142,114.00[/TD]
[TD]$110,650.00[/TD]
[TD]$111,325.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]costs:[/TD]
[TD]$364,089.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2010[/TD]
[TD]$75,000.00[/TD]
[TD]15k cash, 12% financing 3 yrs[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Year 1[/TD]
[TD]Year 2[/TD]
[TD]Year 3[/TD]
[/TR]
[TR]
[TD]Tractor[/TD]
[TD]$38,916.00[/TD]
[TD]$23,916.00[/TD]
[TD]$23,916.00[/TD]
[/TR]
[TR]
[TD]Trailer[/TD]
[TD]$15,000.00[/TD]
[TD]$0.00[/TD]
[TD]$0.00[/TD]
[/TR]
[TR]
[TD]Maint/Repairs[/TD]
[TD]$13,500.00[/TD]
[TD]$16,875.00[/TD]
[TD]$20,250.00[/TD]
[/TR]
[TR]
[TD]Permits[/TD]
[TD]$4,514.00[/TD]
[TD]$4,000.00[/TD]
[TD]$4,000.00[/TD]
[/TR]
[TR]
[TD]Insurance[/TD]
[TD]$11,000.00[/TD]
[TD]$10,500.00[/TD]
[TD]$10,000.00[/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]$67,500.00[/TD]
[TD]$68,175.00[/TD]
[TD]$68,850.00[/TD]
[/TR]
[TR]
[TD]Subscriptions[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]$153,930.00[/TD]
[TD]$126,966.00[/TD]
[TD]$130,516.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]costs:[/TD]
[TD]$411,412.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2014[/TD]
[TD]$152,500.00[/TD]
[TD]15k cash, 9% financing 5yrs[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Year 1[/TD]
[TD]Year 2[/TD]
[TD]Year 3[/TD]
[/TR]
[TR]
[TD]Tractor[/TD]
[TD]$49,200.00[/TD]
[TD]$34,200.00[/TD]
[TD]$34,200.00[/TD]
[/TR]
[TR]
[TD]Trailer[/TD]
[TD]$15,000.00[/TD]
[TD]$0.00[/TD]
[TD]$0.00[/TD]
[/TR]
[TR]
[TD]Maint/Repairs[/TD]
[TD]$6,075.00[/TD]
[TD]$8,100.00[/TD]
[TD]$10,125.00[/TD]
[/TR]
[TR]
[TD]Permits[/TD]
[TD]$4,514.00[/TD]
[TD]$4,000.00[/TD]
[TD]$4,000.00[/TD]
[/TR]
[TR]
[TD]Insurance[/TD]
[TD]$12,500.00[/TD]
[TD]$11,750.00[/TD]
[TD]$11,000.00[/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]$67,500.00[/TD]
[TD]$67,500.00[/TD]
[TD]$68,175.00[/TD]
[/TR]
[TR]
[TD]Subscriptions[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[TD]$3,500.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]$158,289.00[/TD]
[TD]$129,050.00[/TD]
[TD]$131,000.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]costs:[/TD]
[TD]$418,339.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Miles/year[/TD]
[TD]revenue/mile[/TD]
[TD]Gross revenue[/TD]
[TD]Days Out/year[/TD]
[/TR]
[TR]
[TD]135000[/TD]
[TD]$1.60[/TD]
[TD]$216,000.00[/TD]
[TD]317[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Annual Costs[/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]California[/TD]
[TD]Tennessee[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Health Insurance[/TD]
[TD]$3,000.00[/TD]
[TD]$900.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Workman's Comp[/TD]
[TD]$10,000.00[/TD]
[TD]$4,000.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Income Tax[/TD]
[TD]8.00%[/TD]
[TD]0[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Annual Profit[/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD](normalized over 3 years Pre Federal Tax)[/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]California[/TD]
[TD]Tennessee[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2002[/TD]
[TD][/TD]
[TD]$89,737.00[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2010[/TD]
[TD]$62,593.65[/TD]
[TD]$73,962.67[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2014[/TD]
[TD]$62,069.37[/TD]
[TD]$71,653.67[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Fed Taxable Income[/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]CA[/TD]
[TD]TN[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2002[/TD]
[TD][/TD]
[TD]$68,574.60[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2010[/TD]
[TD]$41,431.25[/TD]
[TD]$52,800.27[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2014[/TD]
[TD]$40,906.97[/TD]
[TD]$50,491.27[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]Take-Home Pay:[/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]CA[/TD]
[TD]TN[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2002[/TD]
[TD][/TD]
[TD]$66,245.19[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2010[/TD]
[TD]$50,040.61[/TD]
[TD]$56,827.91[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2014[/TD]
[TD]$49,727.61[/TD]
[TD]$55,449.44[/TD]
[TD][/TD]
[/TR]
[/TABLE]

Ridgeline · Dec 1, 2013

double yellow said: ↑

The 5K would be just for deferred maintenance the prior owner let go (tires? brakes? whatever). An inframe would not be covered under that initial 5K, but would probably fall under the extra $20K in maintenance budgeted for the first two years compared to the 2010 maintenance costs (under the new spreadsheet posted below)
Click to expand...

OK I would have to say that practical experience is better served in this case. a 2002 machine can lose an engine a week after you get it, not something you can plan on. Your reserve cash situation should be at least $20k per truck per year, if you don't use it, then ok you don't use it and it rolls over.

I use a few formulas that I help me determine the increases per year for the truck, they are based on my numbers and won't share them but in general the longer the truck stays on the road, the more risk of a break down there is and the need to increase maintenance CPM yearly or quarterly. In my case, I have been very lucky but I know others who have similar setups than I do (business management and structure) who have struggled because of problems with trucks.

Why would an LLC not work if I'm driving?
Click to expand...

Simply because it affords you no advantage.

On the other hand, a good accountant can figure out how to fragment things to reduce your tax liability, in many cases you are drawing a salary and that's it.

Look if you are managing, then you are isolated from some decisions that can cause problems - cheating on your logs, not sleeping, drinking or making stupid driving decisions. If you are not just managing but also driving, then you lost that isolation and you are liable for your actions. Can you get sued and have your personal assets taken? Yes you can, I know a couple lawyers who are good at piercing that false vial of protection and go after personal assets.

This is the time you have to step back and actually get two people involved, one is a lawyer and the other is a good accountant. Even if your numbers look good to us, they may not be to someone who knows about finance and how to leverage things to reduce your tax liability - like using the life cycle of the truck to determine when to dump it or how to measure the costs over the life of your ownership to show you metrics that can let you decide to dump it or keep it. By the way, when I did my OTR work, I tracked costs carefully and when my reefer unit reached a specific level of costs, I got rid of it.

jfar28139 · Dec 2, 2013

I think it is good in one sense that you are "stressing" your business plan by using a conservative income figure of $1.60 per mile but, once running, do not settle for $1.60 per mile freight. Our vans average $1.95 per mile on all miles (over last 2 years) and make more during produce season. Those figures are based on keeping them moving full-time not just very selectively. Others have different strategies such as working a lot less and just pick off high $ opportunities and expedited freight. That can work well for an O-O.

DsquareD · Dec 2, 2013

What's the depreciation and value of assets at the end of the three years? Your 2014 will probably be worth much more than zero.

double yellow · Dec 2, 2013

DsquareD said: ↑

What's the depreciation and value of assets at the end of the three years? Your 2014 will probably be worth much more than zero.
Click to expand...

All 3 trucks will have been completely depreciated (for tax purposes) in 3 years. But you are right that there will be some residual value.

Estimated residual values in 2017 for:

2002: 8,000
2010: 25,000
2014: 75,000 (but still owing 68,400 for a net value of 6600)

So net value assuming I saved 100% of income (at zero interest):

[TABLE]
[TR]
[TD][/TD]
[TD]Net Value[/TD]
[TD]After 3 years:[/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD]CA[/TD]
[TD]TN[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2002[/TD]
[TD][/TD]
[TD]$206736
[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2010[/TD]
[TD]$175122[/TD]
[TD]$195484[/TD]
[TD][/TD]
[/TR]
[TR]
[TD]2014[/TD]
[TD]$155783[/TD]
[TD]$172948[/TD]
[TD][/TD]
[/TR]
[/TABLE]

BigBadBill · Dec 2, 2013

Look at occupational accident over work comp. I really good plan will cost $180 per month and you can get that down by cutting some benefits.

Richter · Dec 2, 2013

figure everything out per mile. I have no idea what your assumptions are. The older truck should cost less to maintain because dpf cleaning cost are high. What are your 2500 in subscriptions. Insurance should be less then 10,000. Fuel cost will varry depending on that kind of truck and expected mpg.

G/MAN · Dec 2, 2013

I will just ofer a few observations. Your maintenance costs seem to be high unless you are putting money into a maintenance fund. Base plates and permits should run less than $2,500. In fact, it could run less than $2,000. Your insurance costs may be high. Liability and cargo insurance should be the same, regardless of which truck you decide to purchase. Comprehensive or collision insurance usually runs 2 1/2-5% of the stated value of the equipment. You should not need workers comp, but may want to get an occupational accident policy. OOIDA and a few others have good policies for about $140-150/month. From your costs I assume you plan on running under your own authority. If you lease to a carrier your operating costs should be less. At one time we broke down some of the operating costs and it was put on a sticky. It might help you to check out those numbers.

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