($300k) To lease or not to lease? that is the question!

Because it's completely unnecessary.

 

G&C, regarding the above, I do hope you do have a background in trucking, whether it be owner operator of one truck, dispatcher, broker, or mechanic. The details are important and the regulations and risks are high. Besides, you need to understand your drivers to keep them happy but not let them BS you and cost you money.

 

Hard work is completely unnecessary ?

 

The work (and experience) of being a driver is completely unnecessary to starting and running a successful trucking business. Conversely, having been a successful driver and/or single-unit O/O is no guarantee of operating a successful trucking business/fleet.

 

But then your drivers could bs you and you wouldn't even know it

 

The real money is in servicing this industry. There are tens of thousands of o/o paying 30% interest on trucks and factoring their A/R for 5% on 30 day net invoices. Without industry knowledge as far as owning trucks, you can and more than likely will get chewed up and spit out. 300k will buy two new trucks and that's about it.

 

The only way to be successful is to do the hard work. Now if he wants to buy 2 or 3 trucks with no actual experience, and then hire drivers without knowing the industry, then go right ahead. But i garentee the trucks will be speced wrong for the sub industry he chooses and every broker will take advantage of a guy who doesn't know how to runt he business.

If you really want to just invest with no work, then hire a current O/O to run the business for you and to spend your 300K wisely.

 

Being a fleet owner and being a carrier are two separate business models. Starting a small carrier is very hard these days without some real experience. But it can be done.

Being a fleet owner isn't easy but can be much easier if you partner with the right carrier. Key for any trucking business is drivers. Most carriers will not help you with finding drivers. But some will and I would look for places like that.

Other challenge is doing it correct in terms on pay. Most fleet owners will hire drivers as contractors and not have Workers Comp. This is a risk. If you go this direction you need to make sure that you are working with a carrier that understands this and has a plan. Many don't and just push it all back on the fleet owner.

I like the straight truck market return so much that yesterday I took delivery of 6 units and will be a fleet owner for the first time since getting in this business. I'm still looking at tractors but the return on straights is pretty nice mainly because of the increase fuel economy and the program that I have implemented here that is a two-pay system. The fleet owner gets paid from the carrier and the driver is an employee of the carrier and gets paid by the carrier.

On the tractor side we aren't doing the two-pay but will put Occupational Accident in place and we have a back-up plan if something major happens.

Also look at how to finance equipment. With $300k you are really looking at only being able to get into 3 units and have the reserves you need to not get in trouble. But if the carrier will help finance the equipment you can leverage your investment with 7-10 trucks and get a return that makes it attractive.

But if you are new make sure that you are working with a carrier that is willing to manage the whole process with you. The learning curve can be steep and expensive if you are on your own.

 

The best office staff are the ones that understand what a driver does on a daily basis. To run a trucking company without ever being on the ground floor is hard. Some of the most successful companies start with the CEO working his way up. Bill gates started Microsoft in a garage programing the software himself.

Also, you need to know the industry to find out how to give yourself the edge. What will you do differently to make your company more successful.