Starting a company - can this work?

There's alot more to it 2 a mile freight aint average year round ! Workmans comp expensive! And cheaper to buy trailers then rent! Plates were low! You need to drive for at least two years to get experience! For even thibking about it!

 

I would sure like to know why everybody thinks trucking is an easy business to get into. This is like a daily question around here.

OP you making the same mistakes everybody makes in planning out a business: You overestimating your returns and underestimating your costs.

You will not plan 130,000 miles per a truck in any company, let alone a new company, let alone 3 trucks.

The big boys count on 10-15% deadhead, and lie about that figure since it is used to evaluate the office staff. You account for no deadhead.

At your monthly investment in trucks, $900 each, you are clearly investing in used up trucks from a mega fleet. Expect a large layout from the maintenance account before you get underway.

And who is going to loan money for 3 used trucks for a start up with no experience? Especially at $900 a month payment? What bank wants to be stuck with those trucks?

Expect at any one time during your first 1-10 years that 1/3 of that fleet is in need of maintenance and not making the 3x130,000 miles you expect. They are mega fleet rejects for a reason.

Who is your mechanic? Got that figured out? I see it isn't you. Your maintenance account looks on par only if you have an in house mechanic. Farm all the maintenance out and it will cost more.

Shop? Tools? Parking area for the trucks and 4-6 trailers?

What do you do for $40,000? Have you outlined all your responsibilities or are you counting on other's to do them and you reap the reward.

$43,000 for office staff? Why? Is that just a paper weight and an answering machine for a person? Does she just answer phones and tell them "I don't know were the truck and the freight is." Or, does she plan, dispatch and run the whole show? IDK it's your business. For $43k your not getting an experienced dispatcher. Can you find some one to train at that price? Could you yourself know enough about trucking to train? (The cost of most employees is 25%-33% more then their actual wage. Of course you know that. So your $43K only gets about $29K of worker)

.43 CPM? You going to get experienced professional drivers for $.43 cpm? Most megas are paying more then that for newbies. I see $.55CPM on craigslist pretty regularly.

$.09CPM for benefits .Expect to pay at least more like - $.43 CPM x 1.25% = .11CPM for the basic employee.

$.45CPM for fuel is far to optimistic unless you have your lanes and customers all figured out. Which you don't since you are on a load board.

$70 phone and internet? Is that the cheap internet? Your office at some coffee house with free Wifi? How about electricity, water, sewer, trash? Just where is this office and why do you need an office?

Office with truck parking for $2000? IDK, your plan? I don't think it matter at this point, you have spent more money then you will ever earn for the first three years.

 

I'm looking in the same direction as the OP, but I'm starting off with one truck and trailer (me driving) and bringing in my girlfriend (soon to be wife) in a second truck and trailer when (and ONLY when) finances and cash cushion allow.

From there we shall see how long it takes me to grow a fleet. There's still an awful lot I don't know about fleet management. I do know its a whole different ballgame from being a one or two truck operation. But I'm also networking a fantastic support system of knowledgeable and successful people for advise and required kicks in the butt when necessary.

 

The guy who mows our lawn makes a whole lot more than any of your projections. He owns, not leases, all of his equipment. Which consists of a pickup truck, a trailer, 1 heavy duty commercial type zero turn mower, a small push mower, blowers, and the usual hand tools. No office staff, just a cellphone. No rent, no office employee @ $43k. (Your wife?) Works like a dog, 5 days a week, unless it rains. Has a helper @ $15/hr with no benefits, just workers comp. and a good accountant. Also plows snow in the winter, and is fully booked, can’t take any more customers. Home every night too. Doesn’t have to worry in the middle of the night about where his equipment is.
The road is littered with folks who had the same dream and projections as you, and failed. A blown engine, transmission, bad accident put them upside down in a heartbeat. And many had years of experience before starting out. I’ll assume that your investors are family, and when you can’t pay them back, bam, bad vibes that can last a lifetime. I doubt that any bank would loan you the funds needed to get the show on the road. You can confirm that by bringing your business plan into the bank, for a test run. Lots of good advice in the previous posts, hope you seriously consider it.

It’s not what you make, it’s what you keep!

 

I have been in business two years now. Put all the numbers like you did and everything looked good. Then reality set in. Need to factor in deadhead mileage, which can really add up. Also, need to factor in downtime for trucks when you get hit with a major repair. Our first year in we had a truck down for a month doing work for the engine. That can really hurt as the bills do not stop during that month!

 

OK here is why I stress doing so much work on the front end of buying a truck, if you are down for a month, then was it a problem that could have been found before you bought the truck?

 

Read this, it is free... Covers many subjects that the first time truck owner needs to know, and experienced hands too. Oh, it is not just for a lease purchase, do not let the title discourage you. Pay attention to the buying that first truck part too, along with how to drive one for the most profit. It is very good information for someone like yourself. Good luck!

http://rawze.com/book/The First Time Class-8 Lease-Purchase Owner-Op Guide.pdf

 

I wanted to applaud you for being a seemingly intelligent young man and coming here to ask the questions that you are asking. There are plenty of people that go into this business without ever making a spreadsheet or even thinking about the cost.

Here is my two cents from a more mature person to a younger person just starting out. I assume from whatever source you have several hundred thousand dollars to invest. Just as you are here feeling out the trucking industry, I urge you to find someone, a lawyer, an accountant, a financial planner, someone that can show you what will happen to that money if you invested it in whatever types of funds or real estate or an existing business or whatever else. There are people out there that know money inside out, they know ways to make money, and know ways to hang on to your money as you invest it. They know how to get the best bang for your buck so to speak, and how to take a small amount of money and turn it into millions- Especially if you have as many years ahead of you as you do. I assume that's your goal.

You have to do whatever it is that will make you happy, but this business has a smaller percentage of survival than most. That does not mean that no one makes money, it does not mean that it's not possible to make money, but I certainly think that if you begin with money, there are better ways, easier ways that are less stress on you, and less risky.

And just another thought. This is one of the most highly regulated Industries. I'm sure in school they taught you how regulation affects business. For just one example, nowadays the modern trucks with their Def and EGR and honestly all their BS nonsense, those trucks are not nearly as dependable as their elder bretherin and have cost plenty of owner operators tons of money or their entire business because often they're in the shop rather than being on the road. The older trucks were dead reliable compared to that junk. But now the government is going to tell you you can't even have a glider anymore in a few years from what I understand. What regulations will come in five, ten, 20, 30 years? You can be certain it won't be something to make it easier for the little guy to make money.

If it were me, I would make a plan so that when I'm 40 years old I could be on an island and have the beautiful island girls Fanning me and bringing me drinks without a care in the world. That is the exact opposite of this business.

I wish you good luck and success in whatever you do.

 

I disagree about the needing to drive for 2 years part, however I will say that on must get to know and learn the business and the operations of it, that way theyre prepared and know what it takes and all cost assocciated with getting started and staying in business.