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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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Lucastookis Bobtail Member

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Midwest Trucker said: ↑

@HokieBlueBalls Im glad you joined the forum. Well done. I don’t necessarily agree with your year 4 thoughts but I’m confident your results will be what you think they are regardless.
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I assume you are thinking the rates will stay on the higher side compared to where I thought they would be. I hope you are right and I am wrong. We did have Covid and there is still a large demand for supplies out there. We aren't caught up yet from Covid, and going by this, the rates staying higher or not plummeting would make since.

Lucastookis, Jul 23, 2021

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Jarhed1964 and Midwest Trucker Thank this.
Midwest Trucker Road Train Member

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HokieBlueBalls said: ↑

I assume you are thinking the rates will stay on the higher side compared to where I thought they would be. I hope you are right and I am wrong. We did have Covid and there is still a large demand for supplies out there. We aren't caught up yet from Covid, and going by this, the rates staying higher or not plummeting would make since.
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Your fuel never goes up. But yes I think your revenue will keep up. It should increase offsetting your fuel. I think your maintenance will be lower as well. Also, please buy a 5yr 500k warranty on the next one and also trade this truck at 500k vs 600 to 700k. Your maintenance will then surpass your 20k at 5 and 6 yrs.

Overall though it’s all going to balance out for you. Great job.

Midwest Trucker, Jul 23, 2021

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Lucastookis Bobtail Member

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Midwest Trucker said: ↑

Your fuel never goes up. But yes I think your revenue will keep up. It should increase offsetting your fuel. I think your maintenance will be lower as well. Also, please buy a 5yr 500k warranty on the next one and also trade this truck at 500k vs 600 to 700k. Your maintenance will then surpass your 20k at 5 and 6 yrs.

Overall though it’s all going to balance out for you. Great job.
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Thanks for the advice. I will take it and do just that. I was thinking the same at the 5 or so year mark, my maintenance is noway staying at 20 or less, but likely be much more.

Lucastookis, Jul 23, 2021

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HokieBlueBalls said: ↑

Thanks for the advice. I will take it and do just that. I was thinking the same at the 5 or so year mark, my maintenance is noway staying at 20 or less, but likely be much more.
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Yeah, I’ve been considering going to the 3 yr mark and trading/selling outright. Then pay cash for another one. Still in the testing phase though as my oldest truck is only 3.5 yrs. Gathering data.

Lastly, what if you wouldn’t have done the entire 179 deduction the first year? Maybe try and work it down to everything g under 20% bracket and spread it out over a few years?

Midwest Trucker, Jul 23, 2021

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cgilliland Medium Load 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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this has to be the best ever summary
a great template for people to work with
and sets expectations realistically
well done

cgilliland, Aug 6, 2021

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cgilliland Medium Load Member

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this

HokieBlueBalls said: ↑

Lets say the rates plummet to 1.80 for an entire year. What would I make? Could i stay afloat as an OO? Yes,
Will drive 120,000 miles over 40 weeks, and have 12 weeks off. Here goes,
Total Costs are 111,000. Maintenance, 20 K, Tires, 10 K, Insurance 16 K, Gas 60 K Tags/insurance/Tax/Fees 5,000
Total Revenue is 120,000 miles x 1.80= 216 K.
Final Pay is 105 K, but again, I put back 24 K per year for a new truck every 6 years, so I am making about 80 K per year hear. Paying taxes on that leaves about 60 K, or 5,000 per month in my pocket. So yes, if the rates go to 1,80 and stay there, I can be just fine. It's not preferrable or comfortable, but I can stay in business. One thing I could do to offset the low rate of 1.80 average per mile is to run for 46 weeks instead of my usual 40 weeks per years. It sucks but that would basically put 6,500 bucks per month after all taxes and everything in my pocket instead of 5,000. So, there is some cushion. If rates get to 1.50 on average an stay there, well, we would all be in trouble.

My point is this folks There is a lot to be said about having your truck paid for. I am flat out lucky, plain and simple to have this option. But when you are paying out money for a truck, it's killing our take home. It's more beneficial to purchase an old truck if you can't afford one, and especially do it when rate are high and are going to be high for while when you break in to OO with own authority if going that route. This way, you can absorb the unforseen maintance cost or breakdown of the truck. The high spot rates will absorb, easily offset your maintenance costs for that one year which will allow you to be that much closer to having enough money for a new truck with cash.
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This!! Yes!! well said

cgilliland, Aug 6, 2021

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amberfeldt Light Load Member

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Young_Gun said: ↑

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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YES

amberfeldt, Aug 17, 2021

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Kbub Bobtail 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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Wow

Kbub, Oct 27, 2021

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BackwoodsGA Road Train Member

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Just spent $10.000 in repairs last week thankfully I have 2 escrows.Thats minor considering what could go wrong.And fuel in some area's are now at over $4.00 per gallon.If you're easily discouraged this isn't 4 u.

BackwoodsGA, Oct 27, 2021

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shooter19802003, Bean Jr. and dwells40 Thank this.
Rubber duck kw Road Train Member

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BackwoodsGA said: ↑

Just spent $10.000 in repairs last week thankfully I have 2 escrows.Thats minor considering what could go wrong.And fuel in some area's are now at over $4.00 per gallon.If you're easily discouraged this isn't 4 u.
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Paying for number 1 fuel is going to be a real blast this year.

Rubber duck kw, Oct 27, 2021

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