So you want to "own " your own company

I tried running like that a couple of weeks. Your overall average for ALL miles is $2.19 per mile.

And you can and I do find great rates like that. Don't even really have to work that hard to find them. $600 to cover 90 miles. But when you have to bounce 200 miles to get them, they kill the rate horribly.

And I have gotten lucky to have been able to pick off loads (did it this month)

Not doubting that you can do this month to month.

This is my first quarter, July to Sept 2012, in operation. It's public record since I have to turn these into an agency because of a loan I have for start-up. These are my actual income statements I had to turn in. August hurt on account of the kingpins. If you take into account that $3100 was reports in Sept that was earned in August, they balance out to about $15,000 per month revenue. Maintenance killed me both months. And it wasn't even an engine, transmission or driveline issue really.

(see 3rd Qtr.pdf)


These are the loads that paid for September. It includes a $3600 set of partials for the last week of Aug. I started in Salt Lake City and left with a full load with two partials, first drop came off in Hot Springs SD. I took off half the truck. I bounced from Hot Springs SD to Alexandria MN (600 miles) so that I could repair my kingpins and put on new steers and to also spend the anniversary with my wife. Friday, I picked up enough partials to fill the truck out to Michigan again. I spent the weekend off at a friends house for a bachelor party and Labor Day. Tuesday, I unloaded in Chicago area, Indiana and Wednesday, I finished in Flint MI and Ann Arbor MI. I drove 600 miles out of route with partials to do the repair and put me in an entirely different market with more freight. It let me have my family time AND it helped with revenues.

My loads you see here I did in the month of September. (See September.pdf) These miles are for the entire month. A whopping 5913 miles in 18 days. 328 miles a day average.

These loads pretty much came from load boards. I don't have the history that you do nor the contacts at this point in time. I have been at the house since September 18. I sent the truck in to get an exhaust manifold gasket put in and took a load to Des Moines and back this week to test the truck. All of 800 miles for the week. This paid me $1350 revenue. I did it for two reasons, to take the wife to see her parents and a road test for the manifold gasket before I head out on Monday for 2-3 weeks.

The load to Chattanooga from Ann Arbor MI was a disappointment. My phone lit up as soon as I posted empty in MI. And the rates were NOT what I expected. They were no better when I included DH miles in them than what I was getting running out in the mountains and points west. I was really hoping for some nice rates and loads and I didn't see them develop. I did receive a call from the office and by the time I got information on DH and loaded miles, the load was gone. I was simply given a rate and a town it was going to and asked, "do you want it or not?" Glad I drug my feet, because with dead head, it was a worse paying load than going to Chattanooga.

I don't live in that market. It's too far out of my area and lanes here in Minnesota. And as I am developing my contacts, they are starting to call me back for repeat hauls with them.


My loads for August averages 1.55 per mile overall. September, they were up to $1.71 to my truck. I have no clue what October will bring me.

My miles are down, my revenue is up. I am more relaxed and my family is acknowledging that with me. I am home more and enjoying life more.

We are both "successful" in our own ways in what we are trying to do. And as I develop things more, I can only see the situation here improving.


And for the record, I EXPECTED to have to put $2500 to $4000 PER MONTH into this truck when I bought it in July until about January. This last week, $1000 for APU work in Seattle,(not happy about a road repair) That included buying service kits for the APU ($100) and bunk heater ($210), [putting those in myself], Motor mounts ($80) and about $400 in labor) I did not have test equipment with me on the road and the APU was not staying running as soon as it fired off. There were 3 bad wires due to 6 years of corrosion. Exhaust manifold gasket kind of got me by surprise for $1000. I have also put in an air dryer service, ($200) that was a desiccant canister and a purge valve and installed $480 produce vents in the trailer.

 

Rates in this industry are mostly calculated by the mile. There are some fixed costs, such as equipment payments, but our costs are mostly based upon the miles we drive. For instance, it costs more to drive your truck 600 miles in a day than 200. Fuel is a variable expense and is our most costly expense when operating equipment. You can calculate the costs fairly accurately by miles driven, but it is much more difficult to find an accurate rate when you base your formula on a daily cost. Your costs of maintenance will also be mostly based upon miles driven. I change my oil at 15,000 miles. If I drive 10,000 per month I will need to change my oil every 6 Weeks. If I drive those 15,000 miles in a month, then my daily costs will increase. It won't change if I based those costs on mileage. Now if you decide to change your oil every 6 weeks, regardless of miles driven, then you could use the daily expense allocation. If you based your expenses off a daily formula, your costs will need to be adjusted accordingly. You can use historical data and come up with a daily cost of your operation. It is more difficult when doing projections.

 

I lump my revenue into one "basket" so to speak. I know my overhead costs are around $5500 per month. Every mile I drive is costing me 77 CPM. Per diem shows I am out an average of 19 days per month. Since March of this year, I have averaged 600 miles per day average driving miles. I don't know how many times I have posted that information in the last month even.

I do not and will not use the same "per mile cost" that seems to be the norm as you post it G/Man. It's faulty at best and not accurate.

The "Sept" spreadsheet in the post above is based off the calculation of ((miles to drive/600)*(overhead/19))+(miles to drive*.77)

If a load is 500 miles, that's about $1050 that I will have to receive to even consider that load.

Short hauls are figured slightly different. I know my daily expenses are about $500 per day (includes the profit I want to earn each day also) The lowest anyone will get a load on my truck for a short haul is $400 unless it's a down and dirty easy in and out load. I have had a couple of those get on the truck and it was 3 back to back loads in a day. It still gave me $1000 revenue for the day and was only 450 miles driven all said.

Other than Maintenance (14 cpm) and Fuel (63 CPM), all of our expense are fixed overhead costs. I have had fuel costs of $6000 per month, My fixed overhead is $5500 per month That's pretty even for me. And I am looking to add $300-500 per month to the OH for a new house with acreage and a shop. So I'd say it's pretty even there. I budget about $1500 per month for maintenance based on miles driven. I want to ONLY be on the road a maximum of 19 days per month. So I know I have to cover those $5500 in bills in those 19 days. The fewer miles I can do it with, the better off I am. Because then I don't have to pay that silly 77 CPM variable expense on maint/fuel taking it away from Overhead. I drove 13,000 miles in Aug. I drove 7800 miles in September. That alone saved me $3300 in fuel I didn't have to pay for. And both months averaged $15,000 in earned revenue.

So given expense of $5500 and 1500, my overhead and maintenance are $7000 over my fuel at $6000. So yeah, it's important to pay attention to fuel cost. I think your model is flawed to base everything off miles driven. Especially if you are willing to sit in a truckstop someplace waiting for "good freight" to show up.

My 3rd quarter report is right out of Quicken Home & Business. It's also the same monthly report I am required to turn into the Foundation where I got a $7000 start up assistance loan in July of this year. Once these "expected" maintenance expenses get back under control, things will settle nicely down. I still have shocks ($450), rear trailer doors ($480), oil change($400), cap trailer tires ($1300), detail/waxing ($300) to get complete prior to winter.

Guess that's what's so great about living here. There are as many business models to follow as there are operators on the road.

 

Everyone needs to find out what works for them. I don't sit in truck stops for very long. I either find a load or move the truck. In any case, I am not spending money sitting unless the truck is idling. I am not talking about food or other costs of being on the road. If your truck is sitting then your daily costs are minimal. You can reduce your cost of insurance, payments, etc., to a daily expense. This is a unique business in how we are compensated. Quicken will not take that into consideration. Costs are different when you are moving than when you sit. That is the main reason that I don't use a daily cost of doing business. It isn't as accurate as using mileage.

 

Quicken operates how you want it to operate. For me, it's simply a checkbook.

It's my spreadsheets in Excel that are doing my calculation, not Quicken. Food is a personal expense. So is everything in the household. I HAVE to have $3000 per month to pay my bills. That is why I show a $3000 per month overhead cost for salary. That's how it comes out of the company check book.

Any O/O that doesn't feel they need to pay themselves a salary I think (IMO) has a flawed business model. Profits at the end of the month/quarter/year are your bonus, not salary.

You expect a living salary if you were to work for someone else, yet you want the freedom of being your own boss. You were a couple different hats. You are the sole employee and you ARE the boss. Act like it and realize you have to ensure your family is taken care of outside of the business.

When you start to blend personal and business financing into one account, you can and will get things into a mess rather quickly. I think that is where most O/O actually set themselves up for failure. They do NOT have a hard separation of the two. I am not saying it can't be done. it just makes it way more difficult.

I sit down and do the business finances and pay those bills. I am finished with that, I take my "TMT" hat off and put on my personal hat and sit down with the wife and we figure out the household bills. Neither one of us have any confusion on what's being talked about and where the money is coming from.

But if I don't cover that $5500 in 19 days or less, then I HAVE to stay on the road until it's done. If I haul cheap freight to do it, then I stay out longer. The higher I get the rates and the shorter the miles to do it, all that money goes to that Overhead. In the case this month, I came off the road in 16 days instead of 19. Bonus for me. 3 days at home with my wife and daughter I wouldn't have otherwise.

I also don't "move" a truck just to get me better freight. I'll change how I operate. IE, I went out to SLC for a good rate hoping to come back with onions. They wouldn't load my dry van with pigeon hole vents. So I came home with LTL freight that paid a LOT better than any TL freight was paying. And I also put in the produce vents that the shippers wanted.


Both instances are examples of changing your operation to adjust for the freight situation. With a greater ROI on it than simply putting a truck into a different market. Those expense come out of my pocket. And that's a direct attack on my bottom line and profit.

 

I agree that anyone who owns a truck should pay themselves, just as you would if you were a company driver. Those costs can be variable, depending on how you compensate yourself. I have a friend who pays himself $800/week no matter how much he earns in any given week. Another friend pays himself a monthly salary of $2,000. There are several ways in which to compensate yourself when you own the truck. You could also pay yourself mileage or percentage, just like a company driver. Food can be a legitimate business expense when you are on the road. Anything you spend is deductible. If you want to just use the per diem from the IRS, it makes it more of a fixed daily expense. Or you could keep track of actual expenses and that would make it more of a variable expense. In reality, we have both variable and fixed costs in this business. Payments are fixed. Fuel is variable. One flaw in your business plan is when you vary the number of days that you are on the road. Your daily expenses will be different when you spend 19 days out than if you spend 16 days out.

I am a strong proponent in being flexible when running a business. You must be able to respond and make changes to your business plan based upon changing market conditions. We all plan based upon our own needs and wants.

 

part of my flexibility comes in,

I see my overhead costs are covered or will be covered, I park the truck unless a REALLY Good paying load comes up. I have had people call me on my home time and my rates show it. One broker even said, "That sounds like home-time rates." We chatted for a bit after that and he says he sees it a lot with O/O. The rates go through the roof. Sometimes they get taken because they KNOW an O/O will provide the level of service that a Mill company will not provide.

And that's what we, as O/O, have going for us. Brokers KNOW, when they get an O/O to haul a load, there is a "care" that goes into moving that freight that a company driver doesn't have.

 

I have a question about authority. I will try to explain the situation as clearly as possible. I became an o/o about 3 months ago and started a authority about the same time but I'm not using my authority. Ive been pulling a company's trailer and they pay everything except plates and bobtail. My plan was is to start using my own authority but for financial reasons I'm still pulling company's trailer. The question is if I stop paying my insurance (liability)will I lose my authority??and if I do what will I have to do to get it back. Thxs

 

If you stop paying your insurance premiums your insurance will cancel and the feds will be notified. Once they receive notification that you no longer have active insurance your authority will be revoked. You can have your authority reinstated when you get new insurance, fill out a reinstatement form and pay a $80 reinstatement fee. It should only take about 3 days for your authority to show active or reinstated once the form has been filled out and the fee paid. You will receive a reinstatement letter in about 1-2 weeks.

 

I've worked for SNI (Schneider) for about 1.5 years, talked to a LOT of intermodel drivers both O/O's and company, NOONE is making anything close to that...lol $134K a year...yeah right I laugh at their commercials on Sirius about company drivers driving intermodal making $60K, at my oc theirs a guy whos been doing it for 4 years and "barely" breaks $40K!