Failed O/O's post here

I understand that to be a successful O/O means to be a successful business man. What mistakes did you make that have caused you to fail, or that have caused major financial hardship? Why did you fail?

 

bla bla bla

 

Sorry to hear that

 

I can't say from personal experience but I can give you an expample of a friend of mine

He was about 26 years old, he bought more truck than he could afford, he started living large, bought a brand new pickup truck, wasn't smart with his money at all, kept getting deeper and deeper into debt, untill he finally lost everything

 

That is unfortunately a common story for people now days. When I become an o/o, my truck will have to be paid for, and my personal finances will have to be in order.

 

smart thinking l.o.t.w. trucking isn't the only business that can fail because of bad decisions though. my transmission shop failed after 5 years because of not being prepared for bad times. b.t.w., i am impressed w/ reference to john 8:12 in your handle. He is the light of the world!

 

All of those years in Sunday School at a fundamentalist church....

 

From what I have observed most businesses fail because of a failure to have a sound business plan, lack of adequate funding, and spending more than they make.

 

What should the prudent new O/O have in his business plan?

 

Some thing to consider:
1) Equipment: look for the best you can afford. I never recommend new, unless you have no mechanical incliniations, then the warranty route may be your best bet. Just because it has a warranty doesn't mean it won't break. A $2,500 a month payment is harder to make than a $1,500 payment when the truck is in the shop. Shop around for the best interest rate you can get. Same with a trailer. If the company you lease to has a trailer rental, then compare what it would be compared to purchasing one yourself. Consider what it will cost you to outfit the truck/trailer: flatbeds need a lot of stuff; reefers need a lot of fuel/maintenance; all need tires. We use recaps on the trailers and good quality steer tires.
2) Insurance: depends on if you get your insurance through the company you lease on with or if you purchase your own. If your driving history is weak/non-existent, rates are higher. Same (or worse!) if you have tickets/accidents. Shop around! OOIDA is a great place to be if you are an O/O and there are a lot of good folks there than can help you find good rates.
3) Maintenance: Oil changes, tires, broken parts, and general malfunctions. An oil change/lube can run about $200 every 15,000 miles. We are actually checking into bypass oil filter systems which would pay for themselves in just a few oil changes.
4) Plates/permits and escrow: Ask the company you lease to if they have an escrow (most do). How much do you need up front and how much are they going to hold back each week/month? Ask about apportion plates; are they paying for them or will you need to purchase them yourself (about $1,600 per year). I have heard of some companies charging as much as $75/week for plates and permits....that's $3,900 a year!!!!
5) Fuel: One of the most costly and consistent things you will purchase and certainly the largest expense item unless of course, you buy that brand new, shiny Peterbilt with all the bells, whistles and chrome. If you are buying through the company you lease on to, they may have a fuel program and will deduct your fuel purchases from your settlements. They may also have preferred chains that give good prices. If on the other hand you are funding your fuel yourself, you definitely need a good stash of cash to get going....and never let that pocket go dry! Also, consider an APU. It will save you money on fuel, wear and tear on the engine, and keep you in compliance with the stifling anti-idle laws and consequential fines.
6) Technology: What you need depends on how tech savvy you are. You certainly want a cell phone; make sure your plan offers the best coverage and minutes. Who is going to keep track of your expense records? A computer is so much better than a pencil and pad, so figure in some software as well.
7) Taxes, taxes, taxes: I cannot stress enough that every O/O needs a good CPA. For about $500-$700/year they can take care of all of your tax stuff so you can do what you do best. They can help you determine when you should consider making a new truck and/or trailer purchase to offer you the best tax advantage. You will need to make quarterly tax payments, pay for your 2290, pay quarterly fuel taxes, find a tax shelter such as a SEP or IRA (yes, your CPA can help with this as well). There is nothing worse than working hard all year and then have Uncle Sam penalize you because you failed to make a qtrly payment, or you didn't estimate you fuel purchases correctly. Keep good records of everything you buy.
8) How hard to you really want to work? Loading and unloading take up a lot of time. How far away from home do you want to go? How long do you want to stay out? Longer runs = more money. Consider the schedule the company uses for settlement pay and try to work your loads (and fuel purchases) around that schedule.
9) Tolls, fines, and other pesky penny-pinchers: Look at the lanes you want to travel. If there are tolls, are you paying or being reimbursed? We purposely avoid PA just for the toll roads (OK, and BAD roads) which can run as high as $80 on a round-trip. If you drive a truck, you will get a fine....fact of life. Could be a log book inspection, speeding, any number of things. Then there are those incidentals like parking, buying log books, cleaning supplies, duct tape, lights, chrome and so many other things too numerous to mention.
10) Eat well but try to stay out of the fast food and truck stop establishments. You can get a microwave for almost nothing these days, a small refrigerator and coffee maker, go to the grocery store and buy your own food! It really does make a difference.