Per mile operating cost?

One of the biggest mistakes that new (and some not so new) O/O's make is not understanding the difference between actual (or what you can write off on you taxes) and planned/budgeted expenses. You are using tires up but may not replace them for several years. So while better business people will be putting that money away (and having to pay taxes on it becuase it is still income that year) the money should be considered spent.

One of the best trucking financial statements I have ever seen had an actual expense line and a budget expense line with money every week going into accounts (in his accounting system with all the money going into his repair bank account). The way he thought about it was that the money was already spent but he just hadn't written a check for it yet.

 

One must have money stashed for routine things such as tires, etc and also for repairs that may come up. You have to plan for things like that.

 

Its called amortizing.

this is when you plan on replacing a component in your finances so using the typical life of the component, you take X amount of money and put it away for the next part. Example is Tires, which depending on the truck have a 200k mile life, so you plan on taking money out each mile. This would be ... say $450 for a tire and you would put aside (rounding up) .02 per mile per tire. 10 tires can be 20 cents. I am aking the numbers up because I can't look up tire prices or my own costs.

 

That's actually pretty close on tires depending on the brand. Drawing a blank on the miles, but that does seem fairly accurate as well. Someone can correct us both if need be!

 

including everything but wages, It cost me about 1.40 per mile to move my truck. /that's fuel, tires ,insurance, and repairs. I average 2.35 per mile gross, for all miles driven, loaded or empty. I don't "pay" myself anything, but expense, until the end of the year, after the taxes are figured out. Anything that is profit after that, the way my corp is set up, reverts back to me, minus a small income tax deduction. If the following year, I have an expense that the corp can't pay, I loan the corp the money to cover the balance of the money needed. I charge a small interest, which I have to claim as income, but the corp writes it off as a cost. As far as insurance, 12k a year, is way out of line. Mine cost 675. a month, including 250,000 in cargo insurance. Cars are getting more and more costly, just look at the sticker in the windows. I hauled a load of Mercedes from Portland to Boise. 4 of them on my 4 car Boydstun, over 300k sticker price for the 4 cars. Makes you pray nothing happens until your empty.

 

Continue doing what your doing, researching and asking questions. I have been doing that for 5+ years and I am so ready to pull the trigger but, it isn't time yet, for me. Take your time, focus on what you want to do; van, flat, reefer, tanker or whatever. Figure out what type of truck you need for that operation and look around, get prices and what not. Find out what companies do what you want to do and how they do it. Leasing your truck/trlr on to a carrier at first is a good way to get your feet wet and over come the learning curve of being in business. Your profile states 1 year as a trucker, if that is true than another year or two or three will set you up much better for going into business as a O/O. Go to www.scribd.com and search for "The First Time Class 8 Lease Purchase O/O Guide". You didn't say you were going to do a L/P but this guide pertains to anyone wanting to get into the business of being an O/O.

 

I don't have the credit or the savings, that is why I am thinking about doing a L/P but, I have come across a deal that may work out better for me, to get my own truck and what not. Your doing the right thing, by getting back into the seat, so to speak. Do what you have to, to get time under your belt, all the while researching and researching what it is you want to do. I don't know what you home situation is but, if you can save some money every week, you will have enough in a couple years to get that SNI truck you were talking about. Don't let anyone tell you that buying a used truck is a bad idea. Sure, you could have problems with it but, you will have problems with a new truck as well. The key to buying a truck is education! Educate yourself over the next two years, or less, regarding what to look for when purchasing a used truck. That link I sent you is an excellent read. I will be glad to share all that I have learned over the last 5 years, regarding becoming an O/O, just let me know.

 

I was leased to a big carrier that provided trailers ( no charge ). Provided a tag and liability insurance.My cost per mile with a paid for truck was about $.83/mile.

 

Excellent RPM!