Is this a bad idea?

I just looked into my crystal ball and it says, in the future you will not be the best of friends.

I have been down this road, my old ex-best friend got divorced and his ex got the gold plus the gold mine. I borrowed the money and bought him a pickup for $2000 so he could go to work and he made two or three payments got into drugs real bad and I didn't see anymore of him or the truck, he eventually sold it and I never got anymore money. My only revenge was I went and hooked up with his ex for a while. lol

Why don't you put him in the truck as a company driver, that would help you move freight. It sounds like he needs some guidance and understanding on how to run a business and budget and save money before he becomes a truck owner. While he is driving for you you can help your friend clean up his credit so he can get a loan and buy a truck.

 

Whether you turn out to be the screwer or the screwee depends on how much risk you burden your business with. In a sense we've done for our son what you're proposing to do for your best friend. Except you're adding him into your already established business, where we created a business to get the ball rolling.

In our case, we're doing exactly what Big John has suggested. At this early stage he is a company driver. I know the bills will get paid since I'm writing the checks. If it doesn't work out for some reason, there's plenty of qualified drivers out there ready to take his place.

We're giving him visibility to the business so he can get an idea of what being an o/o will involve. We haven't structured it very tightly - he can do more if he's able and willing, or he can keep getting paid by the mile from here on out. Ultimately, if he is motivated to and we decide he's ready to start hustling his own loads we'll change the compensation to a profit based model versus miles.

If at some point in the future he decides to get responsible enough to build up some capital to buy his truck and get his own business going, we'll help him do that. It's way too soon to tell just how that will work out. My gut tells me (just knowing him like I do) that the most he will ever want to do is lease on to our authority. He wants to drive and/or hustle loads. He's not all that interested in keeping up with the taxes and business side.

My advice is keep your friend at arms length as an employee for at least a year before you start getting into business with him. Bad credit happens to good people with divorce, employment, or medical problems. The only way to prove that your friend just doesn't make bad decisions is give him a chance to prove it. It would appear you're already satisfied he will be responsible with your equipment given what you proposed in your OP. I don't know what to tell you about the insurance, except maybe put his truck/trailer on a Progressive policy and consider that added cost when offering his pay package. In my business model that more expensive insurance added only 5-6¢ per mile.

Carefully consider your offer and let him know your decision is a business decision. That way he knows what he's got to do for the next year or so to meet you halfway. If your offer doesn't meet his needs, maybe he'll walk away still your best friend and do something else.

 

I would do what you are proposing with the added safety of a reserve fund. Make sure that you have money being put away to cover a couple of months payments, taking out for plates and maintance.

From what you are describing it does not sound like that big a risk. You already own the truck so it is not like you are going OUT the money.

If he is going to have his own insurance, make sure that you at a named insured and not just a certific holder. Would also make sure he has GL and Occ Accident.

I did something similar with a firewood business I owned. It worked out well but I made sure that at first he was forced into building reserves. If he didn't work hard enough to build the reserve account then I knew he wasn't going to work hard enough to make the payment to me.

 

I see a trashed W9 in your future... lease purchase plans are the equivalent of public housing... they don't own it so why take care of it...

 

Really?

I got into one in '05, same type deal 0 down 0% interest and a walk away. $80K for a '03 379. I get the title next week, it did take longer than the original 60 months as planned but I also had a $22K inframe at Cat also.

I've got half a dozen friends just off the top of my head that also got in on the same deal and will get their titles within a year.


That's just as much a blanket statement as all truckers being NASCAR watching Harley T shirt wearing trash.


Cummins_444 .... I'd plan on more than $55K on fuel though.

 

Not sure about that. It is a matter of pride. If he has it then this should not be an issue.

Biggest thing is making sure that he feels like he has a sense of ownership from the start.