Considering investing in OSOW

Hi everyone - seek some feedback. I grew up around trucking, mainly cow hauling, with my father owning trucks and trailers for many years, so I am somewhat familiar with various challenges with owner-operator business models. And I have driven trucks many (many) years ago, the point being that I have some understanding of typical (cow) hauling norms, maintenance, what is expected of a good driver, etc.

After many years in mfg. corporate environments, I this year decided to try piloting of OSOW to learn some of the business, and see if I'd like it. Along the way, I've learned some of the business, and certainly have much more to learn.

I have a long-time friend qualified and capable of driving OSOW - I trust his skill set and OSOW business savvy tremendously. He recently went through a divorce and his credit is crapola, so to speak, and he would like to partner with me in OSOW.

Essentially, we'd target a capable truck-13 axle type perimeter trailer with various abilities. He'd drive, I'd do much of the back-office routine such as invoicing, load boards, permitting, licensing, insurance, would chase a bit, probably learn to steer and do so for a while. I think initially we'd contract with pilot-escort companies, but perhaps also own a chase truck capable of changing tires and the like.

Without getting too much into the weeds on business models, the essence of the sales pitch to me is that there is enough gross and net to meet his driving money needs and replace my typical corp. type salary.

My initial questions are: is the annual gross "real"? Is a target of an annual gross at about $1.2 mil accurate enough? Is netting about 45% accurate? What are pitfalls that are obvious to you (but not to me)? I know the risks are big. I understand challenges of downtime, some leasing issues (or not), etc. But I am not sure of all the right questions to ask yet. I've done a lot of research on the web but there isn't a lot of spreadsheet type operator-owner data, market surveys (that don't cost a lot) etc. Initial thoughts, anyone?

 

I definitely appreciate the reply. My friend does have the experience in HH, so that part isn't a concern. And we are making contacts for potential long-term customers, although the load boards will probably be the primary initial source.

But he is my friend - per your observation, that's a negative. And I do not disagree. Would you share more of your perspective?

Daddy was a cow hauler, my only meaning is some people have no idea of trucks at all - so I am not intimidated by the culture, is primarily my point. As for HH as a business - nah, never done it. Never baked bread, plumbed pipes or any of the rest for a living either. Regrettably, I'm finding at my age getting back into a corp. function comes with age discrimination. I've got to do something.

My friend does have the experience, though. And I frankly don't see myself ever driving at all. Part of my question was is there enough money in the business to carry two "reasonable" incomes, with a primary focus on debt reduction, cash flow and reserve build-up for the inevitable slow times and repairs.

The last point concerns me the most - and I'd love to know what went wrong. Cash flow is usually the most problematic. Without enough cash to carry the bills until producing times, it doesn't matter how good the model. Sounds like this guy had enough for awhile - and still failed. And obviously had some smarts to build his nest egg to begin with.

That doesn't sound abnormal for pretty much any business startup. Can you share any detail on it? I understand your reticence in not sharing real world numbers you experience, which is actually a challenge to me. I can get a bakery's numbers more easily. Trucker's are a very tight lipped group in general. I seek the secret sauce as much as I can garner...I have some very detailed spreadsheets on cost-per-mile operations, etc., from some professional organizations. But almost nothing targeting OSOW specifically.

I don't consider myself smarter than the average bear - or even more tenacious. But some people, such as yourself, do make a living out of it. Some better than others. I plan on doing the SBA route (business plan, et.al) - I figure if I can convince an 80% or so backing and not risk much more than operating capital (am not putting up retirement accounts or my home), then I would have convinced a core group of people that the business has a fair chance. Noble aspirations I'm sure - we'll see.

Any feedback such as yours would be incorporated in any number of ways. Thanks for your time.

 

I think you are right. Bringing intention letters (to offer loads) to any financier is always a plus, a big plus. We've made some strides along that line. I doubt if anything would be "firm" but I do agree with you.

I've been chasing a guy leased to Landstar. He has an eleven axle - and yes, he has sat for stretches. Mainly because of bad permitting. But also for the next load, although I think he's been a bit choosy on things.

I've also wondered if my corp. background could be leveraged in the industry. Outside of "logistics" or similar, any idea of functional experience that discriminating customers would love to see hauling their loads (safety, maintenance, whatever)?

For that matter, what types of advantages would make an owner-operator a "go-to" carrier for a customer?

 

Thanks - I looked for an appropriate section but did not see HH.

 

I definitely do not want a fleet - we'd only start with a truck and trailer. I doubt if I'd have six months operating cash without a line of credit.

Regarding the friend piece, I dunno - I hear and believe what you are saying. And I'd be sol if he walked. I am considering a tier structure of equity he'd lose at any moment if he walked. He has no retirement at all, almost nothing to his name. He is a solid worker, and loves the road, but knows his days are waining like for us all. So he better have a fire to build up something for retirement...

Gotta run - will discuss mor elater. Thanks for the reply