starting out

If you were talking about buying a tractor and leasing it on that would be a good plan. Look for a percentage lease not a mileage lease. With a mileage lease the only way to make more money is chase miles. With a percentage lease you can run more miles, change freight type, change freight lane and change length of haul.

If you are talking about a company lease purchase, look long and hard and research. Most are not designed for your success. Few owners complete the contract. Many have a buyout at the end that is much more than the truck is worth. You can easily pay $140,000 for a truck that would cost $100,000 with conventional financing. Some of these are only designed to lease until end of term and then start over with newer equipment - you never actually own the truck. Some weeks you get a statement saying how much you owe instead of a paycheck. I have seen a couple that I might consider and a couple more that someone has made a success of.

IMHO, you should drive first for a year or two. I don’t think a driver becomes very seasoned before two or three years. I base this on my own experience; the insurance companies policies and the hiring requirements of the really good companies. Then you should lease to a company for a year or two. Then you can get your authority and become a carrier.

By doing this you can learn the business in logical steps: 1) Driver Responsibilities; 2) Owner/Operator Responsibilities; 3) Business Owner Responsibilities. In addition you can make your mistakes earlier in the process when they cost less in money and liability.

You can save the money to purchase a truck while working for a company. Then you can purchase your trailer while leasing. With some leases you can generate additional revenue if you own your trailer. Then you can get everything setup while leasing and get your authority.

I have done the owner/operator thing twice and I’m about to go again. Once I borrowed $16,000, bought new and failed big time. Then I borrowed enough to buy a worn out 8-year-old truck that burned/blew 3 gallons of oil in a 2300-mile turn, ran it, rebuilt it and succeeded. I wouldn’t take either approach in today’s market. My story is on the first page of the first thread I suggested you read in my above post.

 

$312 for a outlet hose on the air to air plus $175 for mileage and another $85 in labor. I chose to sit for 15 hours and wait rather than pay the extra for after hours call out. My duct tape job didn't hold to get to civilization. Moral of the story is - you can never have too much cash!!

 

First I will share with you something that many overlook when getting into this or any other business. If you have only planned for success you have missed a big part of the planning process. If you have only looked at reward and not weighed the risks involved you have missed a big part of the planning process.

In aviation, you have a plan and a checklist for almost every conceivable emergency. You have procedures for engine out or fire while in-flight. This insures the most successful outcome for a bad situation. It should be no different in business and most other things in life. If you wait until you are in trouble to make a plan, the outcome is not likely to be favorable.

You need to calculate your COST OF OPERATION in CPM (Cents Per Mile). You need to estimate miles and revenue low and costs high. If you can't make it work like this you are not likely to succeed. Have a Plan B and a Plan C.

Know how much you are willing to lose. Are you willing to loose your personal vehicle to make the truck payments? Will you give up the truck, your vehicle, your house or even your family? Everything is at risk if you ride the sinking ship to the bottom. Trust me, I am speaking from personal experience with no plan in place. Have an exit strategy. Know when to utilize the exit plan. Know how much you will lose if you do utilize it.

As for what kind of income you should expect, I will share my opinion based on lots of reading and research. I have spent the last couple of months finding out just how the industry has changed since my last time in it.

As a new driver, you will probably make between $35,000 and $40,000. When you get more experience you can get better jobs and higher income. After two or three years, I would expect to be able to earn $50,000 - $60,000. There are drivers that make $80,000 a year but this isn't the norm or average.

Most new lease/purchases with no experience make less than driver's wages. Without a clue and no experience, few make it a year and have no clue what happened or why.

As a truck owner leased to a company, I would expect from $45,000 to $70,000. Believe me if you reach the top mark you are a smart operator who monitors and controls cost with great skill. There is often a certain amount of good fortune involved too.

As an owner of your equipment with authority you are a carrier. I would expect to earn from $60,000 to $130,000. In my business model this includes my wages, benefits, Return On Investment and profit. I am targeting $80,000 for my second year but could just as easily end up with less than I would make driving for a Mega-Company.

Even the best-laid plans sometimes fail. I'm looking at buying an 8-year-old truck with about a million miles. Most of the ones I'm looking at have a fresh in-frame overhaul, new virgin rubber and new or nearly new brakes and drums. In addition they have dyno runs, oil samples and engine warranties. Still I could go run for a month and blow the engine. They could decide that it was abused. If the block was damaged it could cost upwards of $20,000 to get it back to where it was. With $2500 a month in payments and $3,000 in my repair fund I could be out of business just like that. In this scenario there is no viable exit strategy. I would lose my $17,000 startup capital and probably at least that much after selling off the equipment for a loss. So I have a choice of losing $35,000 or trying to borrow $20,000 more and taking on another ~ $800 a month in payments. If I can get this loan it will cost almost half my profit for the next 2.5 years.

 

So what you are saying is I should become a diesel mech not a driver...

 

Good job men, That should having him crapping his britches about becoming an O/O, bring on the next dreamer!!

 

No, don't be an owner op if you want to be a driver and you think you can make better money. You can make better money but it is a business first. And you need to develop a plan that you understand (you would not believe all the guys that have a plan but can't tell you how they got the numbers) and implement it.

 

To make a plan you would need to understand everything about the industry. Read all the threads I posted. Then read all the docked threads in the "Ask An Owner Operator" section. This is a good thread to learn about a company lease:

http://www.thetruckersreport.com/truckingindustryforum/ask-an-owner-operator/64679-my-numbers-o-o-leased-crete.html

Once you have researched this you will begin to see what you need to know to make a plan. You have to calculate your cost of operation and compare that to what different leases pay to see if it is worth you while.