Why do the L/O thing?

Look guys, there's one thing you gotta remember.

When you buy, lease, L/P, L/O or anything else you are not just buying a vehicle like when you buy a car or pickup. You are no longer just a driver with a good-looking vehicle.

You are now a Small Business; with all that entails. You now have financial books to keep, different taxes to pay, different legal responsibilities, etc, etc, etc. The govt looks at you and your truck just like it does JBH, Swift, etc. You got paperwork out the wazoo and then some.

That's why most new truck owners fail; because they don't understand how a small business runs. Don't expect that the company is gonna "take care of all that for me". They charge the hell out of you for filling out the paperwork but you better #### well know what it all means and check everything. Final responsibility is yours and nobody else's.

 

Kittyfoot hit it on the head! BUT there is one thing a GOOD business man or woman will have when they start up is OPERATING CAPITAL! No OC and you are destined to fail! You can not make it on a weekly pay check until you have an OC that will cover emergencies and all the other bills you had BEFORE you got that truck!

SO as you save up for that truck you need to get that OC up to where you can do the following:

* Pay breakdown costs (even if that LP you're doing has an"escrow" some of them are a scam!
*Pay your home rent/mortgage bill
*Pay the electric bill
*Food costs both at home and on the road
*clothes for the family
*car payment
*INSURANCE! Yes you need medical and a disability policy! DO NOT expect workers comp to pay as it pays diddly squat! And that disability is most important! I wish I had one when that doctor said the magic word "Cancer" to me! Bankrupcy is a PITA! A policy would have paid me a wage for a lot longer than unemployment or disability from the government! It costs next to nothing!
* Medical insurance is the other you MUST have! What happens if you get a REAL sickness? Do you have any idea how much a hospital stay is? Or some big time surgery? Let me help you here. Feb 22 I had brain surgery. Cost is $130,000! Thats all the freaking doctors, cost of the surgery, the 4 days in the room, and all the meds and needles and IV's and nurses, food and meds!
Then there was another stay of a week because of a blood clot in the leg that cost another $120000 with a filter put in below the heart! This stay even though 2 days longer didn't cost as much because of the "easy" surgery! They only did the "run it through the veins" to put the filter in. It's actually more of an out-patient thing so cheaper than cracking the skull!
Now have you ever called 911 for an ambulance ride? I've done 2 of them in the last year 1 here at home and the other in Hesperia,CA both cost the same at $750.00 a ride and neither one longer than 5 miles! Now that's some mileage pay!! Do not think something won't happen to you! I thought I was invincible and found out differently! I'm glad I at least had medical insurance!That cost you CAN afford! Especially if you have children and a wife! Kids always have to go to the doctor and women need a doctor more than you as you probably think like I did and will not go to see a doctor unless you're bleeding out every pore on your body! Look down at yourself right now. Are you over weight? Don't kid your self! Do you smoke heavily? can you run 50 feet without falling on your arse? Do you lie to yourself and say that unloading a trailer is exercise? IT'S NOT, IT'S WORK! Exercise is a regimen of moves that work out your body several times a week! There is a BIG difference between the two. If you don't believe me ask a doctor. LOL, what am I thinking, you don't have insurance to pay the visit!

*accountant costs
* Your Pay Check, you have to pay yourself unless you work for free!
*fuel costs. Yes, fuel cards can get cut off by that company if they start to have money problems. Remember Arrow!

That's just a few but not all of the things you have to pay for until you have that regular settlement coming in and you're banking it with that OC and then paying the bills! The OC should be enough to carry you and your "company" for at least 6 months to a year until settlements are coming in on a regular schedule by either the company you are leased to or through or from the brokers you work through, but a good accountant will argue that a proper business Plan will say for 1 year minimum.

Hope this gives you a little idea on what you really need to do when starting up this business of trucking! Ask your accountant if this is a good idea and listen to them. Be sure that they understand the world of trucking as a lot of them don't! Go to OOIDA or an O/O in your area and ask who they recommend. But as for that insurance I mentioned above, You get hurt who's going to pay the bill? HMMMM? Workers Comp? ROFLMFAO!

This is where so many of you don't think about and where so many went into the red because they thought they would "make money" just by going from point A to B in the first few weeks and make a "ton" of money because they believed that bottom feeder recruiter about those 3000+ miles a week!

 

Rollover, very good post.

Most "newbies" to the Business of Owning a Truck get all starry-eyed when they hear about grosses of $125 to $150K per year. They think "Wow, that's a fortune".

Well guess what? For what you put into it (cost of equipment, long hours) that gross sucks. What counts is your profit margin (hey look, 5 Libs just fainted). That means what percentage of the gross goes to the business account after everybody else gets paid. No, this is not your wages. You're supposed to be paying yourself as a driver and that is part of your expenses. Your profit stays in the business account and builds up to pay for stuff your business needs.

You're gonna be shocked when you see how low that profit margin is at the end of the year. That's why business people are always thinking about where they're gonna be 5 or even 10 years down the road. That's what they mean when they ask about your business plan.

Sounds complicated doesn't it? Dang straight it is and this is just skipping over the basics. So think about this when some company is offering you "Such a Deal".