Main Reasons for High Initial Failure Rates

Too bad I'm heading off to be an O/O, huh?

The other down side to looking for good drivers. They either HAVE the job they want, or are running their own gig.

 

LACK OF FINANCIAL DISCIPLINE....(Both prior to & during their Truck ownership Experience...)

 

I think he is saying that the owners make too many mistakes in how they work the system. If you lease to a crap company, you get crap loads and take what ever comes along, while if you do your homework and learn how to put the truck in better positions to get better paying loads, then you won't be a marginal owner.

 

Run your business......I know that some insurance treats that settlement like this

one third to the truck owner, even if it IS yourself - pays the normal operating expenses, truck payment, funds a tax account, etc.

one third to the truck for maintenance and breakdown costs and to build up the kitty for the future 'in frame', etc.

One third to the driver as a wage...

Another thing to consider is that among your payments is the Physical Damage insurance your loan requires you to have so they get paid if the truck is totaled.

The amount you pay is based on the 'stated value'. The first year this is the total loan amount.

Physical Damage pays out ACV [actual cash value] so all they will pay is the book value no matter the insured valuation.

Each year of your loan the ACV is less. Everyone will let you pay rate for the initial $134,000.00, or so, cost over the life of the loan knowing that every year the rate should be lowered as the ACV is shrinking every year. More money in their pockets.

BUT NO, YOU have to reach out every year and change the declared value closer to the actual value of the truck so the amount you are paying reflects what you will collect if you end up greasy side up.

I've been telling Owner Operators this for over 20 years and each one is surprised

 

now that was a typo is supposed to be put the truck on with the wrong place.. as in going to a place that hauls cheap freight still not knowing your cost per mile..
not where you park the truck.
basically who you choose to lease on with if you go that route of regular financing not lease purchase. or if you're trying to start your own LLC or company never having owned a truck before
if you're trying to go out and get your own authority right off the bat which is a huge mistake if you've never run a truck before

 

For a regular company driver any rate even 1.05 a mile + Fuel Surcharge appears like a life changing step compared to 40-50 c per mile. No math will convince them that they can do worse than that.

Everybody buying their first truck is in a state of euphoria, even the idea of it. They buy trucks prematurely, underfunded to the point of having to borrow money to buy fuel and tires to be able to run their first 5K miles before they get paid. Then the reality overshadows their expectations. Repairs. Repairs. Repairs. Bills. Bills. Bills. Constant freight that pays over 3 dol a mile nowhere to be seen.

 

The biggest reason is a major breakdown, and all the related costs, towing, lost revenue, overhead.Added together it can eat up 6 mos of profit in a week. For your plan work, it’s best to start with a considerable amount of cash set aside. $20,000 + maintenance fund, constantly growing, while also paying for regular maintenance. If not, eventually a major repair will take the 20 k, then you’ll have a hard time building it back, one more major repair, it’s over. You can borrow and chase a Truck all the way to bankruptcy court. It can happen real quick too. Once you get past a certain point, it accelerates, The Stories are all the same. First this happened then that and so on. Knowing when to cut your losses, sometimes is the only hope, to avoid disaster. It’s a very risky venture. Too much upfront investment, and too many variables. Especially when relying on a Driver. Hard enough when you’re the Driver, doing your best. The Driver you hire, has no incentive, no skin in the game. And I guarantee, he has his own plan. Only using Your job as a stepping stone. All Drivers have a plan.Everyone of them, unless they’re at UPS or ABF or some other great paying gig, they’re working on their plan, and soon you’ll be looking for another very hard to find Driver.

 

you don't need 20000 if you have five to seven thousand that's a good start off the bat to get a truck with a warranty the main thing is to keep that 5 to 7,000 and build it..that's where maintenance account comes in handy you have what's called truck operating expenses for maintenance so you got your $6,000 put away every week you figure $0.10 per mile of whatever you made in a settlement immediately put it into your maintenance account build It.
if you had up say have a starter go outwithin the first week of buying the truck cuz it's used and things do we're out okay that's about 550 bucks out the door work hard but that 550 bucks back in the maintenance account..
but again the main reason people fail unless you're on a fleece purchase is you do not know your cost per mile especially in these days of trucking the last 10 years.
you ask an owner operator how much does it cost to run your truck per mile what is your CPM they look at you like you're speaking another language.