Advice Needed From 3 to 5 Truck Fleet Owners

Discussion in 'Ask An Owner Operator' started by Nootherids, Jun 7, 2011.

  1. Nootherids

    Nootherids Light Load Member

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    I need honest feedback from those who have, or have had within the past year or two, a small fleet of 3-5 trucks either with own authority or leased onto another carrier.

    Here's some background...I am a CDL driver and I am in a position where I can inherit a 2006 Sleeper Tractor (no trailer) from a family member free of debt. Will it make more money than working as a driver? Absolutely. But the thing is that I am not one of those people who are passionate about a living my entire life on the road working 3 weeks a month for the rest of my life. I am more interested in the potential of running a business with many trucks where my responsibilities will graduate from driving to managing and spending more time at home.

    I know that having my truck work under my own authority running 3 weeks a month I can expect to bring home $70K-$100K home (after gas but before taxes and other expenses). But I am not in the position to create my own authority and have calculated that working under another carrier I can expect to make $40-$50K (after gas but before taxes and other expenses). It's a big difference which is why I also seek the input of those who lease their fleet to a carrier.

    I have met and known of too many people who have had fleets of several trucks who have failed and have had to sell all their trucks. Some because of poor business practice and taking on too much debts, others because of bad shippers, others cause of bad carriers, others issues with insurance and regulations, and others strictly because prohibitive maintenance/repair costs. And then the standard one who realized that it created more of a hassle than profit.

    So I am respectfully asking for some of you small fleet owners to share some of your good and bad experiences, what are the realistic profit margins to be expected, if it was beneficial leasing the fleet under another carrier or if own authority is the only way to go, and if you feel that following this route is a good option at this age in this industry.

    I am currently at a cross-roads where I need to make the choice of following through with growing a business in the trucking industry or to move on to another waiting opportunity. They both have significant pros and cons and I am thankful that we have a community of helpful O/O's on here that I can count on to give me some information with which to base my decision. The beauty of Owner Operators is that they consider themselves business owners not just drivers, and as such will give you a balanced view of the goods and the bads rather than a skewed perspective. Nothing is rosy and beautiful but nothing is predetermined for epic failure either. Those are the balanced viewpoints that I am hoping that some of you will provide. Thank you very much in advance.

    David C

    P.S. I am a younger family man with plans to grow my family and therefore need to be able to provide both time and finance, it's all relative though of course.
     
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  2. cominghomesc

    cominghomesc Light Load Member

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    In my opinion leasing a single truck on to a carrier and not driving it yourself is not the way to go I do not think that any carrier is going to pay enough money for you to make a profit after paying a driver.

    My profit margins are in between 10-15 % after all is taken into consideration except cost figured in for truck replacement.

    Consider that most carriers are going to take about 20 % off the top when you lease on to them there goes all you profit as a truck owner.

    The next problem is going to be finding a good driver, that is very hard to come by these days. Say all you want about the economy being bad but if a truck driver is not working these days there is a reason why and it is not because he can not find a job (at least in my part of the country).

    My suggestion would be to drive the truck on your own first leased on to a reputable carrier and get your own trailer, then get you own authority and your own customers and your fleet will grow from there. Do not expect that your truck will just go out and make 70k-100k a year that takes work on your part. You have to make sacrifices to own your own business being out on the road etc. If that is not something you do not want to do and noboby would ever fault you because it is hard and not everyone is cut out for it, I would suggest inherit the truck and put it in the classifieds.
     
  3. Mrfasttrack

    Mrfasttrack Light Load Member

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    This is going to be a interesting thread to read. Believe there is alot of drivers right now trying to decide o/o or stay as a company driver.
     
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  4. RedForeman

    RedForeman Momentum Conservationist

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    +1 to what cominghomesc said. Even with the "free" truck, you can count on $5-10k of crap that will need attention right away in the first couple of months, assuming a reasonably sound truck to begin with.

    a big +2 on the work part. I'm guessing you already have employment somewhere else. If you try to run that truck and keep a day job (hired driver, own authority), you're in for some 18 hour days to keep it together without even setting foot in the cab. Plan on working the truck for free for a while too by the way.

    IMO being OTR for 3 weeks out is the least of your worries. Sounds like "not in a position to create my own authority" actually means "not enough cash/credit to get started in business." Leasing on really doesn't solve that and hiring someone else to drive will accelerate your losses.
     
  5. BigBadBill

    BigBadBill Bullishly Optimistic

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    This is an area that I have spent a lot time looking at. The failure rate is high in this business and that is from people being their own driver. While you may find some out there, I have not found anyone that just bought a truck, hired a driver and leased it onto someone else. Most in this position started with more than what you have. They have been driving for a while, upgrade personal truck and stuck someone in the old truck or started buying trucks and had good source of drivers coming from company they are leased onto. This has worked for many because the company that the "owner" is leased to knows the guy and is willing to help with financing repairs in the beginning.
    If you don't have the resources to start your own authority you are not going to see enough profits leasing on and hiring a driver to cover repairs and other expenses.
    And if leasing onto a carrier is the direction you plan to go, make sure it is a carrier that will do a driver background screening for you. A complete one. Some look to make sure they are legal from compliance standpoint but you want to get a lot more information on someone you hire.
     
  6. BigJohn54

    BigJohn54 Gone, but NEVER forgotten

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    I want to get back in and have spent every spare minute the last couple of months researching this. I'm just not as optimistic as you.

    I have stayed up late reading the many good threads here. I have spoken with one new owner/operator on here by phone. I have followed several threads to see guys give up or disappear.

    I have owned two trucks. The first one I owned in economic times similar to now and the other in a better economy. I failed with the first truck because of inexperience and lack of capital. But I never had a chance because my new truck broke down for 10 days on the first trip to California. Trashed my first marriage living on the road too. The second time I bought a truck that used oil almost like it did fuel and worked it carefully until I could do an in-frame. Both times I ran them myself and paid myself about normal drivers wages. Never did I bank an excess of cash.

    Now I know you are just like myself and most other drivers that would consider this. You know you can do this even when others fail at it. This is why people like us take chances and the reason some of us succeed.

    But of all the drivers I see wanting do the owner/operator thing, I see very few that have realistic figures as part of their plan. I have yet to see someone starting out that has realistic figures for their cost of operation. What is even more troubling is the number that are operating right now and still don't have a realistic cost of operation.

    It's great to write down on paper you are going to run 3500 miles a week and not breakdown for two months until you have some cash to cover it. If you read through the driver, lease and lease purchase threads you will realize that you might be better off figuring 2000 miles a week working at least 5 days a week, every week. Then just hope you can do that well or better.

    Have you read all the first two pages of posts in the owner/operator section instead of just asking questions? I'm not saying don't ask questions. I'm just saying you will read honest unbiased information if you want to study and read.

    Do me a favor and research my posts. You can do this and you will see just how much it will cost to do your own authority. In addition, there are lots of other posts by owner/operators who know far more than me. I just have some recent numbers.

    These are just my thoughts. If you want to figure what a truck will make you figure 2000 - 2500 miles a week. Figure in all costs. Figure your wages at .40 - .42. If you have no payment then still figure in the cost of a payment for replacement. IMHO, there is not a truck and trailer on the road that can successfully operate long-term for less than $1.60 - $1.80 per mile. If you plan to bank any money other than repair and maintenance you need to make $2.00 per mile.

    If I thought for a minute that I could bring home $70,000 - $100,000 for myself running 3 weeks a month, I'd be on the road by the 7th of July. Then I'd buy another truck every year, but this is just not going to happen. You can find owner/operators out there doing that but they have more experience than you or I. They aren't likely to be averaging three weeks a month out either. And they run their own trucks; they don't put drivers on them. And when times get hard like the end of 08 and a good part of 09, they are prepared to live in their trucks if that is what it takes to be successful.

    In my business model I think after all expenses, $5,000 - $20,000 a year is far more realistic. I know from past experience, I can be in the hole that much in a year too. I'm not telling you not to do this. I'm just saying come here with some more realistic numbers. Be willing to live in the truck to make it. If you start out believing what you have posted, you will be disappointed. If you are disappointed you will have a hard time giving what it takes to be successful. If you can't give what it takes you will fail.
     
  7. Nootherids

    Nootherids Light Load Member

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    I have the financial backing to take this on. The reason why not in a position to run under own authority is because insurance costs in my area are cost prohibitive for my CDL experience (under 2 years) and because I am realistic about the fact that I do not yet have enough experience on how to establish relationships with shippers/brokers. I already have my own company and have put enough into this, including necessary repairs, to run the truck right away. But I felt that leasing onto a carrier would keep me moving more while I learn the truck and the finances better.

    As far as working on the truck what I meant to say was this... I don't mind being out 3 weeks a month on the road for 12-18 months, then getting a second truck and putting someone in there then repeating the process for a 3rd truck, and so on. My concerns are two fold...whether the money I can make leased on to a carrier driving 36 weeks out of the year will be enough to purchase a 2nd truck...and whether in our economy and industry it would even really be all that profitable to have those 3 trucks running leased onto a carrier.

    I'd appreciate if someone can provide some first hand experiences, good and bad, on how they run or have run their own small fleet business, how much is the likely net profit to expect either running on your own or per truck with driver, and their personal experience leasing a fleet under another carrier (good miles, good pay, good service, etc?).

    I'm basically hoping that somebody will sacrifice a couple of minutes to give a brief mentor-style breakdown of what they have gone through to reach where they are and whether they would do it again or not?


    @BigJohn...Thank you. I was writing this as you were posting but your experiences are very enlightening and informative. It's good to read first hand experiences like you to get a real life viewpoint of what can go wrong and if the profits are worth the troubles. To some they are, and to some they are not. It's good to hear both sides. I've read A LOT on these forums but most of them talk about all the difficulties of the industry. I'm also hoping to hear some positive stories from some successful fleet owners as well. I'm basing numbers on post-fuel expenses only cause I know that the after fuel money will be where all the taxes, repairs, daily expenses, and equipment payments will come out of. But those are completely different for each and every truck out there. What you said that you can expect to make an "after self-payment" profit/loss of $5-$20k sounds very realistic and what I needed to hear as this is the earnings that will make continuing a business worth it or not worth it.
     
    Last edited: Jun 7, 2011
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  8. BigJohn54

    BigJohn54 Gone, but NEVER forgotten

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    Redforeman and BigBadBill are two that I follow everything they do. They can and will give it to you strait. Sorry about the book I wrote. Those are just my opinions and reveal how I am analyzing doing this myself.

    Now I have messed with small business, taxes and bookkeeping. Employees are an even more complicated issue. Even if you get good drivers who don't wreck your truck, tear it up, steal from you or kill someone in an accident, you are still only half way home. Just workman's comp and matching social security will add close to 20% to the cost of wages. If you pay .40 CPM then with these items you are required to pay, you are looking at .48 CPM. Have you heard the drivers crying about lack of benefits? Remember an unhappy driver not only won't make him or you money, he will cost you money. Throw in some health insurance and there goes another .02 - .04 CPM or more.

    Why do you think many owner/operators pay a percentage to their drivers? Employee costs are high and all types of businesses are figuring ways to offset them. It doesn't make for happy employees though. Jobs are being outsourced to foreign countries. Employees are being allowed to work form home. Then their hours and benefits are being cut. Are you prepared for the nightmare that comes with employees?
     
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  9. BigJohn54

    BigJohn54 Gone, but NEVER forgotten

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    Removed duplicate information.
     
    Last edited: Jun 7, 2011
  10. BigJohn54

    BigJohn54 Gone, but NEVER forgotten

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    I ate supper in the middle of my post on employees. I'm glad you did not take what I said as all negative. I believe I am a realist. My wife would say I am on the pessimistic side. I always set goals just out of reach, I believe it causes me to achieve more. I expect and plan for the worst. I hope and work for the best. I don't take disappoint well so this works for me.

    There are two owner/operators on here that lease their trucks to the same company, I believe. They have both ran adds for drivers on this forum. I don't know whom they lease to, how well they are doing or how many trucks they have. You can find there job posts if you look. At least one of them is in the owner/operator section frequently. Maybe you could pick their brains.

    I just don't see the money being there in a lease situation. Most pay .90 - 1.05 per mile plus fuel surcharge. This might be around 1.40 per mile and as far as I can tell they pay maybe .20 per mile of the expenses. SHC runs for Schneider and posts his weekly averages in that O/O thread. I think he might be averaging a little more.

    According to my calculations about $1.62 is break-even at 2000 miles per week. This includes my pay but no benefits and no return on investment. This was just my worse case scenario. Of course more miles would drive down cost per mile and allow for my benefits. But why would you operate a business with thousands of dollars invested without a return?

    The owners with fleet trucks I mentioned, I believe pay a percentage. Lots of drivers will mouth about how this is illegal. It is not illegal but is a slippery slope. If you don't understand it, it can bite a hole out of your backside that will take a long time to heal!
     
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