How to become an Owner/Operator
Discussion in 'Ask An Owner Operator' started by jessepaul, Jun 13, 2011.
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csmith1281 Thanks this.
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If you follow BigJohn's assumptions you will certainly peg the numbers to start. I just want to touch on the importance of tracking your Costs, Liabilities and Assets on a regular basis.
When I started I had the fortunate opportunity to have parents that were in the business and a Mother that was fanatical about knowing the basis of the truck. From an accounting perspective that is basically assets less liabilities which equals your equity.
I learned from her the importance of two main reports. The income Statement or Profit and Loss Statement and the Balance Sheet. Years ago it took an accountant or book keeper to sort all that out and most truckers were lucky if they saw those reports more than once a year.
Flash forward to today and there is no excuse to not know where you have been, where you are at and where you are most likely heading from a cash flow perspective. Quickbooks is an incredibly powerful accounting tool for the small business and if set up properly (by an accountant if you don't have any accounting experience) can show you exactly what your basis is and the reports are awesome! I will say that just because you might have $10,000. in the bank does not necessarily mean you are good to go. In fact- you might actually be broke and not even know it is coming. The person that jsut sees the cash will spend it and then poof- you are broke because something came up that affected your cash flow and the money is gone.
It is important to come up with a business plan but I can't stress the importance of tracking your progress. I find it incredibly rewarding to see the positive numbers and I am not near as stressed about the negative numbers because I can clearly see what went wrong and be proactive to change it before the situation becomes critical.
Lastly, if you ever hope to play with a banker you are going to need to prove to him or her that you are a business person first and a trucker second. If you can't prove that you will always be forced to use the "skinners" of the world that will be more than happy to charge you a hefty ransom in interest to offset their risk that you will most likely lose the truck because you don't know your numbers.
Know your basis and set yourself apart from all the others that don't.
Good Luck.csmith1281, Grijon, 53STEP and 3 others Thank this. -
Class pays. When they see you rollin' the money will come pourin' in. -
Paradigm nailed it. You need to be a business man first and a trucker second. It's fine if you are a trucker in your heart. Passion can be a great motivator. But you better be a businessman in your head. That allows you to pursue your passion.
IMHO, you start with an Analysis or a Projection. From here you find a template for a Business Plan. A financial institute won't take you seriously unless you have a business plan. SBA has some decent ones. If you Google business plan you will find several choices and you can pick the best parts of many. Many will not fit trucking exactly but you will figure out the parts that all include.
As part of a good business plan you should prepare a Pro-Forma 5-Year Financial Forecast. This will include an Income Statement, Balance Sheet and Cash Flow. These are the most important tools you will ever lay your hands on. These financials will tell you where you've been, where you are, where you're going and how you'll get there. These will be your bible after you start operating. The projections need to be revised and will serve as your goals for building your business.
Obviously you can just come up with an analysis like I presented or projection of some type and use scratch paper and a notebook to keep track. I'm guessing that's how a high percentage of truck owners does it. IMHO, that makes you a truck owner not a businessman. I'm not knocking their way. If they can make it work like that, then that is great. Unfortunately I fear this is the beginning of the downfall that plagues many in trucking. But then again I wouldn't use a breaker bar to rotate my tires when I could purchase a compressor and air wrench. I also wouldn't trade the peace of mind I get by buying quality tires versus cheap tires. These financial tools give you control, peace of mind, efficiency and that increases profitability.
Whether we admit it, or think of it that way, we are always in competition for everything we do in life. To be successful you have to better, faster, luckier, smarter, more efficient or some combination of these. Good tools allow you to leverage you time and effort.SoDel, csmith1281, Paradigm and 2 others Thank this. -
What you guys have said is exactly what I'm doing. Based on your inputs and the feeds in this forum, as well as talking to family friends that have been in the business over 20 years, I'm building the business plan w/the crucial income, balance sheet, cash flow, and start-up costs statements. Though all but the latter are kind of primitive at this point since it's all estimates. But I agree 1000%, I'm approaching it as a business man first. I have a young family to care for and my goal is to make it work and be profitable above all else.
Thanks for the posts and I look forward to keep reading.csmith1281 Thanks this. -
on a side note, what brand trucks do you guys recommend? I intend on buying used to reduce on costs but hopefully no more than 500k miles. any tips on used trucks?
thanksLast edited: Jun 16, 2011
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PA/NJ on the other hand can burn in hell along with all their toll roads LOLcsmith1281 Thanks this. -
I HIGHLY suggest looking at Penske Truck Sales as well. The maint their is top notch, and the trucks usually have under 500k. My 1st truck I bought wad an ex Penske truck and they put brand new tires and brakes on it as that is part of their policy. I drove the truck for 7yrs and the only thing I had to do was new shocks, an ect and brakes and that was all in the 7th year.
As for the truck itself, I suggest a freightliner with a 12.7 Detroit and a 10spd trans if you can find one. Cheap to fix and can be repaired by just about anybody. After that, IH 9400i with a ISX would be my next choice. Now this is all based on a start up budget and guessing you are going to be pulling vans? Each brand of truck kind of has its own niche. Pete and KW are more of a flatbed or tanker truck, tho the 386 and 387 are good for van. Mack and Western Star are more of a vocational truck such as tanker, dump ect. Freightliner is an all around truck as well as IH. Volvo are garbage and only good for vans imho..... just make sure you get a truck specd for what you will be doing. The wrong truck in certain applications can cost you a lot of money in fuel and maintenance.csmith1281 and BigJohn54 Thank this. -
I'll second the Penske option, although that's not the route I took. You're getting some absolutely terrific advice and suggestions here. About the only thing I could add would be to insist that you keep you're overhead as low as possible. High overhead's a killer as most everyone will agree. I'm not saying go el cheapo on everything because in some cases that can cost even more. I'm suggesting you do your research and make the best possible decisions. Buying a NEW truck would NOT be the best possible decision.
csmith1281, jessepaul and BigJohn54 Thank this.
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
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