Leasing at Prime

Well not so sadly, as a solo lease-op, job no. 1 is getting the freight moved, then something to eat and a good chunk 'o sleep. Catchin' up on TTR is somewhere south of all of that in the scheme of priorities.

$1100-ish is the answer I get from the breakdown of my expenses in the settlement analysis that I pay for weekly, lease to date. It does not include the money I set aside in my emergency fund, but does include other optional items in my fixed expenses such as individual BCBS health insurance, dental insurance, the mentioned financial analysis, and my APU payment. If you drop the emergency fund contribution (which is essentially retained earnings) and the health/dental insurance, that number is $1261.71 averaged over 144 weeks. Remember that is an average, and you cannot count on that as a "paycheck." There are weeks you will be much less (or much more,) and even weeks when your cash flow is negative. A wad of operating cash in a bank account is the appropriate way to compensate for cash flow interruptus. It's also important to remember that my cash flow is after ALL expenses including current cash maintenance expenses- I'm not hitting my emergency fund to pay for oil changes.

IP Inc. pays the driver what he averaged as a company guy a few years back... $800 a week. It's more than the lazy so-n-so deserves, says the CFO of IP Inc., who is a notorious tightwad!

I transfer what I need to cover current personal expenses into my second (linked) checking account, I use to cover everything that isn't business-related. The primary account (that my settlement is sent as a direct deposit) is used to cover everything that I'll pay cash for involving the truck. Sounds a little complicated? Try remembering what the $85.98 expenditure you made on January 14th was, come April 11th in the next year. It also gives you a much better view of what your present cash situation is on a daily basis. Excess funds in the business account are moved over to a savings account - that makes it harder for me to just say the bright, shiny, useless piece of chrome I'm looking at is a necessary and required expense!

As of this week my fixed expenses breakdown like this...

APU payment... $70.00
Truck payment... $796.00
Health insurance- single... $87.96
Dental insurance- for 2... $9.45
License and permits... $37.50
Statement preparation... $21.75
Occupational accident insurance... $55.73
Federal highway tax... $10.58

Grand total... $1088.97

That's what it costs ME to run every week- i.e. cost of doing business with the options I pay for. It costs me that sitting at home on the couch with momma, running my backend off, or whatever. It will cost you more because that item called "truck payment" is for a 2009 Cascadia with lowered payments for being in the last year of my lease. A brand spankin' new (overpriced) Kenworth will probably run you more in the neighborhood of $1500 per week. Pete's are more expensive too. A 2013 Cascadia was quoted to me recently as $1300 per week. That's the base number without goodies like health insurance, etc.

Now lets talk gross revenue... from all sources, it doesn't matter where. That's $4016.50 per week averaged over the last 144 weeks. If you don't file tax returns, that's what the IRS figures you put in your back pocket. Hah! That average cash flow number is figured from gross revenue, less fixed costs (above) less variable costs - and that's net cash flow into my business before taxes.

Variable expenses are everything else that changes on a weekly basis. My analysis of my business (and every other transportation business) will show that the largest single controllable expense you have is fuel. Anything you do to decrease this is money in the bank - including spending a couple or three years on the company side polishing your driving technique. And buying expensive, low rolling resistance tires - and learning how to maintain them, because that's the next biggest expense... maybe one hundreth of what fuel costs you.

Almost every decision I make is based on how much it will cost me in fuel... at 10-cents per gallon, fuel is nit-noy. At $4 or so dollars per gallon, everything you do is based on what this will do to your weekly fuel burn. It is also why I run down the road only as fast as I have to in order to make my load and unload appointments on time, with arrival an hour early when I plan it. It's why I will spend money on a toll road to avoid heavier grades on a free road in the mountains, and why I spend ten minutes or so in the morning planning my next fuel purchase.

A final observation... my cash flow is not a paycheck. A paycheck is what you choose to "pay" yourself out of that cash flow. If you have a great week, and your settlement is way above average, the best thing you can do is bank that excess - because something will come along that gives you a negative settlement check... eventually. If you don't have the cash in the bank to carry you through those weeks (or that stinkin' first year while you are feeling your way around,) you are going to have an immeasurably more difficult time doing this than someone else who does. Personally, I like to invest in a steak every once in awhile, and not treat myself to a steady diet of ramyen noodles.

 

The last long-nose Pete's we had got liquidated at auction as soon as they could get them off of the property. That "look" is awfully expensive. The public records for fuel consumption at mygauges.com show a rough average of about 5.5 mpg for a "hood." 8 mpg is an optimistic average for the newer trucks with that nasty ol' short hood.

A quick calculation using $4 per gallon and 130,000 driven miles per year shows it will cost you around $30,000 per year in fuel. Now that's probably an overly optimistic number, but even at 2/3 of that, say $20,000 per year - that's a might big chunk of cash to be paying for "look." Or ease of installing mirror mounts. I prefer to have a pain in my butt (aka a fat wallet) than any amount of "look." Show me the dead presidents!

 

1.5 cpm, although I'll be setting aside 2.0 cpm in the coming year. That includes money for maintaining those tires.

It is, and it's up to you to initiate and fund it.