Making The Move to Own MC

Good luck driver. Making that jump is never easy. Although you have your some freight lined up. Be aware that 6K in cash will probably best be used as fuel money, but it's going to be gone in a matter of 2 weeks 3 max. Also keep in mind there is no 30 days to pay its usually about 35 when all is said and done. I'm not tyring to discourage you I'm trying to help you plan. Stay away from factoring you have the right idea with the quick pay they offer. Also if they offer you a comchek ask if they do Tchecks instead. comcheks are $10 Tchecks are only $3 that adds up at the end of the year depending on how many you have to take. Talk to TCH they have a fuel card that is like a debit card, and then they will extend you a line of credit. Also when it comes to fuel cards most have a $3000/week limit, and they are net 7 terms. that may be a helpful option if you don't want to carry cash on you. Although make sure the card at least gets you ash price at the pump where you fuel the most.

I dont' know much about pullin a reefer around, but make sure your account knows to file whatever form it is that you pay on reefer fuel. What goes in the reefer is NON TAXABLE. So if the truckstop sells RED diesel put red in it and make a note of it they usually keep a log on offroad diesel anyway. Be smart about it and remember as well it's a 30 day wait for your authority to be active. so you can't cross state lines until you receive your certificate I'm sure you already know that but I wanted to remind you. Keep the truck in tip top shape and itll take care of you. Good luck, don't let the brokers push you around and I wish you the best.

 

Good Call on your Part.....A+...This was a very smart move on your part.Landstar is RELENTLESS and it is one big Pain in the ### to get guys qualified....

Good luck to you,i am right behind you...I am researching and asking many many questions about getting away from these Landstar Nuts in the office,wanting to be DOT COPS.When in fact they are office workers who never drove a pick up truck...LMAO

Let me know how your making out...I do have a number of Ins Agent another Independent gave me.I could not use them because ''NY'' is on the under 500 mile clause with them.

He stated he pays about 8,200 a year for cargo and liability...

 

At 12,000 cash available, you may need more in the bank before you begin this venture. Not all brokers offer quick pay at 1-2%. Some don't offer it at all. Let's assume you will be paid at a mere 30 days on average. Let's also assume you are going gangbusters right out of the gate, and are grossing on average $5,000 per week and putting out about 40% for on-road expenses, such as fuel and tolls, scale fees. This 40% does not include any tire blowouts, oil changes, any money aside for the eventual repairs. That is $2,000. So each week, you will be gaining +$3,000 - BUT - you won't see that money until the END of week 5. You also have a truck payment of $900 per month or $225 per week, you will have a trailer payment of let's say about the same $225 per week, you will have insurance of probably $1000 per month, or $250 per week. That is another $1000 per week in costs. You are now up to $3,000 per week to make that truck go and gross $5k. You have to pay yourself $1k per week, this is also a cost, you have now spent $4k in that first week to gross your $5k. We have not even begun to talk about any repair costs that will come out of that last $1,000 per week while the truck and you are at home (or on the road).

Let's say you go 6 weeks from day 1 before you start receiving any money worth talking about. 6 weeks money OUT = $24,000. Projected revenue 6 x 5k = 30,000.

At $12k cash available you will burn through it like you never thought possible. You do not want to be having to choose your loads based by who is going to pay you quickly. That will limit your gross revenue by a lot. Avoid using factors as much as you can. Take the quick pay when you need to. This doesn't even talk about if you have a major expense on the road, could likely bankrupt you. You do not want to be in the position where you have to wait for money to come in before you can haul your next load. Remember, your family expense is still $1,000 per week whether or not you earned any money. Your insurance and payments also do not care if you earned any money that week either. Another $1,000 per week.

I recommend waiting until you have more like $30,000 CASH IN THE BANK startup money. I did kind of exactly as you did, but I was fortunate by having a $25,000 line of credit. I used all of it to keep my business going.

 

I have always been told at least 30,000 CASH...Many threads i read people are saying 10,000....That seems crazy..

 

I don't understand why Landstar takes so long to approve new owner operators. I have a friend who has a very good record who applied to Landstar several years ago. They took so long to approve him that he went with another carrier. Most carriers can approve an owner operator in a day or so unless your references are slow to get back with them.

I would caution you about getting OOIDA insurance. A number of brokers won't accept their insurance. Before committing, I would check with brokers with whom you plan on doing business to make sure they will accept your insurance.

I would not discount setting up with a factor. It can help your cash flow, but make sure you read the contract very carefully. Some have hidden terms or fees. Factoring fees can vary considerably. It would be better to haul for brokers who offer quick pay or just wait to be paid. You should expect 30-45 days from the time you send in the bills. More and more brokers and shippers are accepting email, faxes or transflow rather than original bills. That can shave off several days on the turn around time.

With a single truck, you can go with a PDCA card, offered by TAB Bank. (Transportation Alliance Bank). They cater to the trucking industry and their card is accepted anywhere you can use a Mastercard. But, Flying J, Pilot and most truck stops will give you the cash price. It is a debit card, but can be used like a TCH and credit card. If you want to go with a fuel card, TCH or EFS. EFS merged or bought TCH so they are now one company. I did business with them for a number of years. I have also used Fleetone and Comdata. I would discourage anyone from doing business with Fleetone. Most fuel cards charge a fee each time the card is used. There is NO charge for using the PDCA card. For the small operator, fuel discounts are minimal for most small operators. Most fuel cards offer open credit or you can fund the card in advance. You only have use of their money for 7 days, in most instances. The biggest advantage to using a fuel card is the reporting feature. You can print off the gallons by state and that can help with fuel taxes.

It is a good idea to start off with a good bookkeeping program. You can use a spreadsheet, like Excel, or go with one of the trucking specific software programs. There are also a couple of generic programs that are not specific to the trucking industry that you can purchase. I will be glad to offer some suggestions, if you need it. You can also do a search for software.

I am glad that you have cash put aside to help run your business starting out. Many start on a shoestring and if something happens, they are out of business. I would recommend that you build up your reserves as quickly as possible in case of a major overhaul. If you don't use the money for a major repair, you can always use it to pay cash for your next truck.

You will be entering the business during what is normally considered the slowest time of year. That can be good or bad, depending on your perspective. It can take some pressure off the learning curve, but can also create some stress in finding loads. If you have a couple of brokers who can help you get started, they may also be able to help you reload on the other end. I only have a handful of companies that I usually work. It takes time to build relationships, but all business is built on relationships. It isn't always about the price. I got a call yesterday for a load where he told me to name my own price. He usually calls when he is in a bind and can't cover a load. He knows that I will get the job done, but it will cost him a higher rate. That doesn't usually happen when you start out. You need to get to know your customers and they need to know you. That takes time. Have patience. You don't necessarily need to take something cheap, just to move your truck. It can be worth sitting for a day to find a good rate. You don't want to get a reputation for a cheap freight hauler. If you do, then you will not be offered the better paying loads. It isn't about the miles, but the rate. That is one of the most difficult concepts for new owners to understand. They are scared to sit for fear that they will lose everything if the truck is not moving, regardless of the rate. My thinking is that my truck doesn't move unless I can make a profit from the rate. I have NEVER moved my truck for a rate that only pays fuel money. Good luck with your new venture. Remember, you are a businessman who happens to drive a truck. Treat this like a business and you should be successful.

 

Most of us who have been doing this for a while, usually recommend that anyone starting out with their own authority, have sufficient funds available to take care of an overhaul. An inframe can run as much as $20,000 or more. That is the largest single repair you can make on a class 8 truck. Few actually wait that long, but having a good cushion starting out can sure provide some peace of mind. You don't want to get caught on the road with no means of repairing your equipment should something happen. ALL trucks break down. It is only a matter of when. That doesn't mean that you cannot get started and be successful.

You already own the truck. I like that you have a small truck payment. Too many start with a big payment and when business slows down or they have a major expense, they don't have the resources to make the repairs and get back on the road. I also like that you are working to establish some contacts. It can be a huge help when you already have people set up with whom you can do business. Another thing that is positive in your favor is that you are renting a trailer rather than going into further debt. Renting can be much easier to walk away from than buying. If the rental company picks up all the maintenance, that is even better.

I don't think that establishing a relationship with a factor is bad. In fact, having the added cash flow can be positive in keeping you moving. Most factors will have money in your bank account within 24-48 hours from the time that they receive your bills. I used a non recourse factor, but paid a premium of 5%. I felt that it was worth it, especially since I didn't have to send them ALL my invoices. I no longer do business with that factor, but it served my purposes at the time. I was getting good rates and that offset the costs of using a factor. You can also set up a line of credit through your bank. The down side to a line of credit is that the money needs to be paid back. Using a non recourse factor, you send them the bills, they pay you and you don't need to repay the money. If you are running for good rates, you can afford to pay the factoring fees. There are recourse factors that may or may not charge less due to the time for payment. Without cash flow, no business can survive. The largest corporations in the work use factors and lines of credit to grow their business.

One other thing that I will mention. Once you establish a relationship with a broker, some will advance funds once you pick up their load. Most won't advance loads when you first start doing business with them. Some charge a fee for any advances. You have the money to run on. I would just sign up for quick pay and not worry about it. Save back money from each load so that you can build up your money for the inevitable breakdown.

 

GREAT INFORMATION From ALL!! As a few of you know (gman,) I been working on coming back to OTR and having own Authority. Got most information/paperwork done. Here is the deal. Tell me if crazy or not. I'm not blind but planning on doing this way ( use their money instead of mine idea) . I know where I stand credit wise for loans/insurance etc...Which is great for me. My plan I'm checking on now is to get a SBA Loan with a 10 year Term. Pay cash for Truck/Trailer and have first month or so operating cost in bank. Just a rough figure if I borrow 150K my payment on loan with 10 year term be roughly 1600 a month. Or say 100K total and 1k a month TOTAL cause just one loan paid cash for everything. Now all tell me if I'm thinking crazy? Now I do have a couple shipper/broker local and have idea average load pay for me to move truck as I won't move it unless making profit. Way I see it is 3 easy average paying loads should cover my loan payment,insurance,fuel per month. Am I close to my thoughts??