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Some numbers for new O/O

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

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Blackhorse77 Light Load Member

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People, please don’t cut rates. Don’t accept loads for cheap rates.

Blackhorse77, Apr 13, 2020

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Dave_in_AZ Road Train Member

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Reefer I think guys are doing for like $0.85 mile plus FSC.

Dave_in_AZ, Apr 13, 2020

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Blackhorse77 Light Load Member

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Dave_in_AZ said: ↑

Reefer I think guys are doing for like $0.85 mile plus FSC.
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Not us.
Forget it.
Let brokers drive themselves with those loads.

Blackhorse77, Apr 13, 2020

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JonJon78 Road Train Member

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Blackhorse77 said: ↑

People, please don’t cut rates. Don’t accept loads for cheap rates.
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How do I know the difference between your cheap and my cheap?

JonJon78, Apr 14, 2020

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Blackhorse77 Light Load Member

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JonJon78 said: ↑

How do I know the difference between your cheap and my cheap?
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That I wouldn’t know. But people following lanes along with rates can tell the difference.

Blackhorse77, Apr 16, 2020

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BackwoodsGA Road Train Member

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DUNE-T said: ↑

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
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Skip the truck payment and pay cash for something pre-regen.

BackwoodsGA, Apr 28, 2020

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DMTLLC Light Load Member

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How about the only recurring payment be your Insurance!

DMTLLC, May 1, 2020

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DUNE-T Road Train Member

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DMTLLC said: ↑

How about the only recurring payment be your Insurance!
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You gotta have a lot of money saved up to start out that way, the vast majority of new o/o don't have that money.

DUNE-T, May 1, 2020

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ValentinMichigan2018 Bobtail Member

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Ridgeline said: ↑

Very good post except that the driver's wage as a o/o is the profit, not an expense.
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You’re correct only if the company under which owner op’s is working is an LLC (Limited co).
If the legal status of your business is a Corporation type S, then you can give yourself ( as a driver) a salary, and get P&L Balance , if is positive . At least this is my understanding of it.

ValentinMichigan2018, May 4, 2020

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OTR--247 Bobtail Member

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25k x year maintenance/repair.
That is a new engine every year.

OTR--247, Jun 15, 2020

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