Crude Oil Owner Operator- Profit & Loss Statement (Full Disclosure)

So you busted your balls with 2 drivers and still only cleared $1.24 a mile... man I thought it would've been better hauling crude...

 

Im not sure. Im mean you have to have a measuring stick. The truck IS the equipment used... the drivers are the labor. I guess per engine hour, or man hours might be a more accurate measurement, but I'm not sure I can analyze that.

I do know that years ago a heavy equipment owner/operator told me he needed $1/hr for every $1,000 he had invested in any individual piece of equipment. That included an operator. Can you give us a rough number of man hours or engine hours?

 

Fuel was 16% of your revenue. That is awesome.
Most of your small expenses (less than $2000 are in line).

I look at some the major expenses a little differently.

Insurance: I personally dont consider health insurance as an operating expense. I know its tax deductible, but it has nothing to do with the eficiency of your business. Workers comp is a legitimate expense, but I think there are less costly options since your wife is your employee. I "believe" that expense is overstated. Not that I wouldnt pay those things... and report them on my taxes just as you are showing them. I would not use them to evaluate my business though. I personally think $10,000 should be returned to the profit line.

Communications: A couple flip phones with minimum packages are enough to communicate all of your business needs. Everything else is extra. Again, it may be tax deductible, but its not necassary to the operation of a truck. $2500 back to profit line.

Business travel $12,000? I wont even comment. Return $10,000 to profit... minimum.

Maintenance $48,000: Thats a LOT. I would love to see the break down of where that money went. Did you have an overhaul or some other major mechanical issue? I mean thats 4k per month. You can drive new for that. I think you could get a full service lease from penske for that $. I believe that number to be double the norm.. minimum. I would be looking to get 24k back to profit.

Soooo.. I'm seeing about 46k that I would be eyeballing really hard if I owned that truck. Lets say I could in reality save 25 of that 46 next year if everything else stayed the same, I would be in the 150k profit area after paying another driver.

I'll post more on some things I would consider next post.

Edit: Something I forgot to mention and dont see it in your calculations. But.. even though you paid cash for your truck, you need to be paying yourself back. So, the 25k I believe that I could save would just go back to my personal account that I used to buy the truck initially. Once that is recovered, then I would start saving money.. in the business account... for its replacement.

 

The whole point of a business is to write as much as you can through it BEFORE tax. I see what he is doing with a lot of his expense.

Ex. - travel expenses. I’ll give you an example.

If I’m flipping a house on the opposite side of town I will write off all my fuel, insurance and even my morning coffee on whatever revenue I make off when I sell the house.

Also. I haven’t went though his whole post but having a truck in the oilfield is hard on said truck.... I can see why his expenses are up there. Hell I spent $40k on little #### throughout last year on one of my trucks.

 

On a side note, to the OP. Is the crude your hauling light crude ? ( under 600 density ? )

 

I dont disagree that its a good tax strategy. But when Im trying to judge the profitability of a business, Im not going to consider those expenditures as a cost of doing business... because theyre not. Tax deductible...sure, you bet. Necassary to operate the business... nope.

 

Option 3: Should be first in my opinion. I think we discussed this in pm before, but I would go to your current carrier and request a shorter haul that enables you to slip seat again. If not available, explore other carriers. If you like this carrier, tough it out. You know that these extreme long hauls are temporary. There will be "not as long" long hauls available after the pipelines are operational. Letting it play out is an option.

Option 1 is not something I would consider unless it makes sense as a tax deductible purchase or you and your employee driver would just enjoy working the same shift instead of opposite shifts. Thats not to say I wouldnt consider another truck.. more on that below.

Option 2: If I knew I was going to continue as a crude hauler for the forseeable future, I would definitely be looking into a trailer purchase for more than one reason. If you own the trailer, switching carriers to follow the money will become easier. You can get the trailer set up exactly the way YOU want it. Last but not least... I believe $3,000 month is quite a bit more than you could finance your own new trailer for. So, yes.. that would be a serious consideration.

As for considering another truck. When I consider your current operation, I see the need for a sleeper truck, team operation running around the clock. But, I also believe the current operation is temporary so Im not sure I would make that change unless there are additional reasons.

Whether you achieve 24 hr operation by finding a way back to a slip seat operation, or by getting into a sleeper truck... you would be spreading the high cost of the trailer rental out over more revenue, making a more profitable bottom line. THIS applies not only to your current trailer rental but also applies if you were to buy your own trailer.

Im not sure that you werent better off with a short haul, 24 hr operation. A lot depends on your preference. The ultra short hauls can be ideal for an o/o truck with some miles on it. Keeping it close to home usually allows you to find a good local mechanic to keep it maintained at a reasonable price. There are advantages to short haul. The disadvantages that I see are that you spend more time outside the truck working oil, loading, unloading than you spend driving.

The long hauls will absolutely fall into the "per mile" business plan... and honestly.. there are regular freight hauls paying as much. Especially if you were tanker with the right company.

In my opinion, you are exploring this new business venture correctly. You've moved from one extreme to the other.... super short hauls to super long hauls ( for oilfield work). I believe you may find the best fit somewhere in between. I would be looking for a 2 load per shift, lact to lact run. Thats the gravy right there.. imo. Those will likely be available even when the pipelines are completed.

Having your own trailer would make it easier to follow the money and grab the good runs.

 

No doubt. Dont mean to be critical. There are a LOT of new owner ops who would love to see numbers like yours.