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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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Dadetrucking305 Heavy 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
Click to expand...

I made $110k a year just running hotshot in Texas.General freight non oilfield.How is it that this equation only makes 120k?

Dadetrucking305, Jun 10, 2019

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Eamac2004 Light Load Member

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Dadetrucking305 said: ↑

I made $110k a year just running hotshot in Texas.General freight non oilfield.How is it that this equation only makes 120k?
Click to expand...

Because most new o/os dont know how to change a tire. Parts are cheap. Its simple, dont buy a truck if you dont know how to use a wrench.

Eamac2004, Jun 19, 2019

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Trucker186, KB3MMX, Buckles and 1 other person Thank this.
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Tug Toy said: ↑

Insurance, insurance, insurance!

You a little light on the truck and GL insurance. I’ve had my CDL since 1991 and a clean record with excellent credit. Least expensive I can find is $18k yr. 3 of the 5 company’s I contacted for quotes just flat out turned me down.

Next is health insurance...

Me and my wife are at just over $1400 a month for health insurance.

So those two things alone are $3k a month before you even turn the key.

What about a place to park the truck and trailer while at home or a place to work on them? Truck washes at $100 each?

I’m looking at a shop and parking for my unit right now. Looks like $1750 a month including the $190 insurance and $5200 year property tax but before utilities.

So now you got $5k a moth before the truck picks up its first load or pays a dime to the driver.

But I’m sure they got it all figured out and covered in there business plan?

I mean after all they can just leave there truck parked at the petro and have the TA do all there repairs right? I hear loves dose factoring now too?
Click to expand...

Can’t you reduce much of the wash/maintenance/storage costs? At least for the first year or two, I understand wanting to invest in commercial property to have your own shop once you have 3+ trucks, but that isn’t really necessary starting out.
Edit: because I’m a noob to the multi quote system, haha.

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 hiave 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
Click to expand...

So, 265K+ a year in expenses? This can’t be right.... why is driver pay even included in ‘expenses’? I would personally take around 25% of net income per month to put in my personal account and live as spartan as possible (meaning, I would hope to barely even touch that. 75% goes into business account; Granted, I am single with no kids and I plan to remain that way for a long time.

Fabulous Maximus, Jun 30, 2019

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Fabulous Maximus said: ↑

Can’t you reduce much of the wash/maintenance/storage costs? At least for the first year or two, I understand wanting to invest in commercial property to have your own shop once you have 3+ trucks, but that isn’t really necessary starting out.
Edit: because I’m a noob to the multi quote system, haha.

So, 265K+ a year in expenses? This can’t be right.... why is driver pay even included in ‘expenses’? I would personally take around 25% of net income per month to put in my personal account and live as spartan as possible (meaning, I would hope to barely even touch that. 75% goes into business account; Granted, I am single with no kids and I plan to remain that way for a long time.
Click to expand...

Whatever fits your needs. A family of four in the Midwest can spend a $100k per year in living expenses. A single guy can spend only $25k and invest the rest in the business.
Driver pay is included in the expenses, because it's a business. You gotta calculate your expenses "pretending" that you have an employee

DUNE-T, Jun 30, 2019

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DUNE-T said: ↑

Whatever fits your needs. A family of four in the Midwest can spend a $100k per year in living expenses. A single guy can spend only $25k and invest the rest in the business.
Driver pay is included in the expenses, because it's a business. You gotta calculate your expenses "pretending" that you have an employee
Click to expand...

Thanks for the quick reply, i can see where the family would be a killer in this situation. I’m just happy I’m a loner and don’t have to deal with this problem.

Fabulous Maximus, Jun 30, 2019

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Dadetrucking305 said: ↑

I made $110k a year just running hotshot in Texas.General freight non oilfield.How is it that this equation only makes 120k?
Click to expand...

Was that GROSS?

JBLogistics, Jul 2, 2019

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Well having a 4k truck payment plus a trailer payment and insurance payment would be hard right now. 6500 before turning the key, yikes.

77fib77, Jul 29, 2019

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That's why you buy a used truck in good shape like a old tmc truck and same for trailer then you have a small or no payment.

Trucker186, Jul 29, 2019

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KB3MMX Road Train Member

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Trucker186 said: ↑

That's why you buy a used truck in good shape like a old tmc truck and same for trailer then you have a small or no payment.
Click to expand...

Isn't repeatable for a business model, more of a play on luck.
When you get that 15k repair bill and then another big one a month or two..or six later on that cheap truck.. it isn't profitable or reliable. Just another failed carrier.

KB3MMX, Jul 30, 2019

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Trucker186 Medium Load Member

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KB3MMX said: ↑

Isn't repeatable for a business model, more of a play on luck.
When you get that 15k repair bill and then another big one a month or two..or six later on that cheap truck.. it isn't profitable or reliable. Just another failed carrier.
Click to expand...

Who on earth gets a 15k repair bill sounds like a failed driver unless you don't take care of the equipment and make sure it's ready before you leave meaning have a good mechanic go over it and you'll have a good truck. Everybody who has had good success I've talked to started used heck one guy started with used and created a 300 + truck company and is a multime millionaire and never finished high school. Parts are cheap compared to labor that's why I advocate learning how to repair your own equipment. My grandfather's truck (he's a non o/o) sat at KW for a week and they didn't even touch it. They had brand new trucks and they have been in the shopen way more than the 2002 Cat that truck all the ever did was normal maintenance and it just kept running and it's the spare truck now. He went for his personal best time out of shop 2 weeks without a issue. There's nothing they can find on the truck to fix it.

Trucker186, Jul 30, 2019

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