Some numbers for new O/O

Discussion in 'Ask An Owner Operator' started by DUNE-T, Aug 23, 2018.

  1. DUNE-T

    DUNE-T Road Train Member

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    There have been a lot of threads lately here and in Facebook groups from people wanting to start their own business. Here are some rough numbers to show how much does it really cost to run a truck.
    Lets take a single O/O with new authority and a dry van trailer, who will run 100% brokered loadboard freight (thats how majority of people start out, right?). Lets say this guy (John) has a family and wants to be home every weekend to have somewhat normal life, so he will work Mon-Fr.
    1. Truck payment of $1500 per month
    2.Average truck/trailer yearly maintenance/repair bill is $25000, so lets say $2000 per month
    3. Trailer payment $600 per month. Yes, you should get a brand new trailer. Running a used one will cost you the same or most likely more, when you calculate the repairs and downtime
    3.Insurance for the first year will be $12-16k, so lets say $1200 per month
    4. Driver salary (pretend you are an experienced company driver and you make $72k per year, so $6000 per month.
    5. Fuel $5000 per month
    6. Ifta, plates,parking, misc expenses $1000 per month
    So we have $17300 in expenses. Now for being a business owner and all the headaches, you deserve another $1000 per week, which makes it $21300 per month, I will round it up to $22000.
    $22000 per month, means you need to gross at least $5500 per week, or $1100 per day. You have to figure out lanes/rates and how to make that amount every 5 working days and be home for the weekend.
    If everything goes smooth as planned, John will make $120000 per year and be a happy camper.

    Of course things never go as planned. John takes time off to spend time with his kids, some repair downtime adds up and now gross revenue starts shrinking. John is lucky if he does all repairs at home, thats usually cheaper. Because if his 500k Cascadia starts having DEF problems on the road and a gangsta dealer charges him $6000 to fix it, on top of the $1000k towing bill, his maintenance/repairs budget starts having problems. Its not uncommon for a new O/O to dump $40k into his truck during each of the first couple years of ownership. The worst I have seen is complete engine failure and a few months of downtime. (happened to me too haha).

    Now think if you have a tough enough skin to deal with shark brokers every day, make your revenue goals and deal with all the headaches of owning this business. Remember, in busy months you have to gross much more, than $5500, because in the slow season you might be working only couple of days per week and only do $2-$3k. It means you have to play constant poker games on spot market. You have to be ready to talk to 50 people per day, constantly hear "NO" for an answer, be very resistible to stress and be very efficient with time management. The first year you will be spending time learning lanes,you will make many mistakes, like taking 1500 miles load to Miami for $3500 and thinking its a great rate, or taking already late loads to grocery warehouses and sitting there for 3 days waiting to get unloaded, while getting paid $150 per day broker layover fee. Some of those mistakes can have you make a great big $0 profit at the end of the week.

    Oh, also, if you are one of those people who just want to buy a truck and put a driver in it, think about all that and about your truck going down for a month and how you will be paying your driver to seat and wait while your truck is getting fixed. Also think about your driver not checking oil level, ####ing up the engine 1000 miles away from home, getting put out of service for some stupid reason, damaging the load, e.t.c and another 100 mistakes crappy drivers do, because being a new business, you will not be able to hire great experienced drivers, they usually already have good places to work at.

    Some people will be lucky and have less expenses and some will be lucky to make more money, but you still will be around numbers posted above. Good luck
     
    Last edited: Aug 24, 2018
  2. SteveScott

    SteveScott Road Train Member

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    Well stated Dune. This should be pinned at the top of the forum.

    On top of all the things you mentioned, you must have some kind of business sense. Some guys want to get into this having never balanced their personal check book in their entire life, and now all of a sudden they feel confident they can file all of the proper paperwork on time, pay fees, and balance the books every month. If you don't have some very basic accounting skills and can't balance the books, you don't know how much you made (or lost) for that month and you could be broke and not know it. You have to know when to file and pay taxes and not mix the company funds with your personal funds. You need to know how to negotiate with brokers and how to look sharp and sell your services directly to shippers so you don't have to rely entirely on brokered freight. You can't look at a huge balance in your business account and think you need a new boat, or a motorcycle, because that money isn't yours, it's the company's money. Running a business takes some know-how and a lot of discipline. Learning it after you buy a truck just won't work and you will fail quickly.
     
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  3. HillbillyDeluxeTruck

    HillbillyDeluxeTruck Road Train Member

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    Pretty spot on.

    My truck has receipts in 2017 totaling 52k in maintenace and repairs. But that includes 30k for a completely rebuilt 12.7 and some other stuff from Pittsburgh Power (not my choice on the shop). Obviously maintenace this year is a fraction of that.

    It took me 4yrs and an act of god to get me in the truck Im in and its only because of family health issues. I luckily have 10yrs of small business ownership under my belt. But it still took me these last 4 yrs to really learn the industry enough to hopefully not lose my ###. I look back now and Im thankful I learned what I know on the back of others who paid the bills.

    Something my dad always said to me "I can't tell ya what to do, but I can tell you what not to do". I feel like this is what Ive learned these last years.
     
  4. TheyCallMeDave

    TheyCallMeDave Heavy Load Member

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    Great post a good reality check for those thinking of rolling the dice with ownership. From everything I've gathered after reading a multitude of posts related to owning your own truck is this, it doesn't matter how much you plan, how much you save etc, you're in for a bumpy ride 99% of the time when starting out.
     
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  5. Gdog66223

    Gdog66223 Road Train Member

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    If you pay your insurance, trailer rental, plates, and e log system up front for the first year you will not have many expenses. Now not everybody can do this, but it is the best way.
     
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  6. Young_Gun

    Young_Gun Light Load Member

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    Just curious, would it be wiser for someone who is in their first year as O/O to lease onto a company, and learn that way?
     
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  7. Ridgeline

    Ridgeline Road Train Member

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    Very good post except that the driver's wage as a o/o is the profit, not an expense.
     
  8. thelushlarry

    thelushlarry Road Train Member

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    So, in other words it is easy money!
     
  9. ACO476

    ACO476 Light Load Member

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    "John" is doing it wrong. He should be doing a lease purchase from a mega. Those guys bring home $300,000 plus per year!
     
  10. TallJoe

    TallJoe Road Train Member

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    With a dry van, getting that 5500 a week Mon-Fr is not that easy either. Depending where you live, but wanting to go back home to Chicago area and be empty on Friday for anything more than 1.5 a mile is a daunting task. I have to work over one or two weekends to keep the right revenue level. Also going with own authority and relaying solely on load board freight is way too overrated - too much randomness and resembles one big rat chase.
     
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