I am taking the plunge

Discussion in 'Ask An Owner Operator' started by cliffster21, May 21, 2014.

  1. cliffster21

    cliffster21 Light Load Member

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    May 14, 2013
    Mechanicsburg, Pa
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    So, I have decided to become an owner operator. I have been researching this for the last two years and I think I am ready to do it. I would appreciate any helpful, constructive advice anybody wishes to offer. My plan is to buy an older truck (pre-egr) and a 48x102 flatbed trailer.

    I am 30 years old, and have been driving for the same company for the past six years. I have a clean driving record with no accidents and only one ticket for missing a weigh station ( I did actually stop when I realized they were set up, I was empty, the cop did a full inspection and could find nothing to cite me for and then wrote me a ticket for $50 for failure to comply with a traffic signal).

    So far I have found a spot to park the truck and trailer while I am at home, I have written my business plan, figured out my operating costs and I am currently in the process of figuring out my finances. My parents have generously offered to give me $20,000 in start up capital. I plan on talking to my grandfather about a loan, and I also want to go to the bank about a business loan or line of credit.

    Startup costs and operating expenses;

    Startup Costs


    1. Insurance Down Payment (10,000 per year cost est.) $1500
    2. OOIDA membership $45
    3. Authority $300
    4. 2290 (Heavy Highway Use Tax) $550
    5. UCR (Unified Carrier Registration) $76
    6. Base Plate (Truck and Trailer Registration) $1152
    7. New Mexico Permit $9
    8. New York Permit $68
    9. Signage and ID $50
    10. Truck $25000
    11. Trailer $12000
    12. Tools $500
    13. Laptop $300
    14. Printer $30
    15. Headache Rack $1000
    16. Flatbed equipment $2500
    17. Load Boards $35
    18. Catastrophe Account $10,000
    19. Flatbed School $400
    20. DOT Inspection Truck and Trailer $90

    Total Startup Cost Est. $55,515


    Operating Costs (Monthly/CPM based on 8333 mi/mo.) per month and per mile


    1. Fuel (6mpg) $5555 $.67
    2. Insurance $708 $.085
    3. Maintenance $583 $.07
    4. Repair $833 $.1
    5. Permits/Memberships $193 $.023
    6. Health Insurance $1000 $.12

    Total Operating Costs $8872 $1.07


    I am also adding my business plan as an attachment. Again, any advice or tips that anyone has to offer would be very helpful. If I missed anything in my operating costs, or have any of my estimates way off let me know.

    Thanks,
    Cliff
     

    Attached Files:

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  3. GearWarrant

    GearWarrant Medium Load Member

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    Mar 20, 2014
    North Vernon, IN
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    Looks pretty comprehensive. I can't help comment as I don't have first hand experience, but I appreciate you sharing this!
     
  4. thelushlarry

    thelushlarry Road Train Member

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    Jan 9, 2012
    glasgow ky
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    I wish you luck. However, you are not going to get much of a truck for 25k. Your maintenance should be a dime. What about fuel taxes and tolls?
     
  5. cliffster21

    cliffster21 Light Load Member

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    May 14, 2013
    Mechanicsburg, Pa
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    Thanks, I will adjust my maintenance up to 10 cents a mile. What should I figure for fuel taxes, how do I figure that out? Is another .02 per mile enough for tolls?
     
  6. DrivingForceBehindYou

    DrivingForceBehindYou Medium Load Member

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    Aug 29, 2012
    ChicagolandOfOpportunity
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    Looks reasonable. You'd be better off having some green by now instead of loaning but I know everybodys situation is different .
     
  7. godgunscountry

    godgunscountry Bobtail Member

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    Jul 25, 2013
    phoenix, Az
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    Just a thought. Pay yourself a set cpm and also pay yourself back for the truck and trailer so you have $ to upgrade your equipment in a year or two. Looks like you have done some research and it looks good. Best of luck to you.
     
    70s_driver and KSGunny Thank this.
  8. deskdriver

    deskdriver Light Load Member

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    Aug 6, 2013
    Michigan
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    1.07 seems a little low to me, 1.15-1.20 is a little more realistic but if you are going to run only 1 state that may make your operating cost a little lower seems how you do not need the higher priced plate and all the property taxes some of the states are now charging and what not.

    I also agree with the above statement that in the 25k range you will be getting an older truck but if you plan to only run 1923 miles per week you may be able to get away with it for a while and save up for a newer truck.

    Best of luck to you
     
  9. 70s_driver

    70s_driver Medium Load Member

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    May 4, 2014
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    Hi Good Luck. You can go to the link below and order a 2013 cost analysis for free from American Transportation Research Institute. It will be sent to you through email and you can compare your list with theirs.

    http://atri-online.org/2013/09/04/an-analysis-of-the-operational-costs-of-trucking-2013-update/
     
    KSGunny Thanks this.
  10. gokiddogo

    gokiddogo Road Train Member

    8,358
    13,272
    Mar 5, 2012
    Ontario Canada
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    Numbers look accurate, but a different way of thinking about some of the fixed costs (per month) would change your equation a bit, because your monthly miles will differ each month. I break it down into 2 categories, expenses that are directly related to moving the truck, for me that is only fuel(0.75), oil changes(0.03), and tires(0.05). Everything else, including maintenance and my pay, is a set monthly amount I set aside.

    Let's say my monthly expenses, as in equipment payments, insurance, repairs, taxes and licencing, comes out to 6,000 per month. I also take a salary of 6,000 per month rather than a per mile rate. You could include your driver pay as a per mile rate, either way works.

    So we have a monthly gross expected income of (based on # of miles):
    gross = 12,000 + 0.83x (x=number of miles)

    So if I do 8,000 miles, gross per mile must be at least 2.33
    10,000 would be 2.03
    12,000 would be 1.83

    Anything higher than that is all profit. These are not my exact numbers as I do not have equipment payments. But these numbers are in the neighborhood if I did have equipment payments.

    I do it this way because about half the year I do long hauls, 2000-2500 mile runs each way, which it is tough to get the same high rate per mile, and the other half I easily do 2.50 or better, but the loads are only 500-700 miles each way.
     
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  11. 70s_driver

    70s_driver Medium Load Member

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    May 4, 2014
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    That's a good analysis, easy to understand as well.
     
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