Planning to become owner operator. Looking for advice.

[GMAN]

The "lazy" people i was referring to are the ones that do a minimum amount of work and then are critical of the industry when they can't afford to pay upgrades/repairs. They lay the blame on anyone/anything but themselves.
I agree that times are bad now but companys large and small go out of business every day in good or bad times. You can't have winners without losers.
Maybe i'm fortunate to be in the food industry,jan09 sales are up 12% over jan08 net is up 4%.

You are very fortunate if you are doing as well or better than last year. I met another reefer owner yesterday who told me the same thing. There are those who blame others for their failures. I have seen many of them over the years. No matter how well you prepare most people will not be prepared for this economy. Granted we always have seasonal changes. Most of us prepare for those changes. We cannot control those economic changes not directly under our sphere of influence. Tight credit markets and low freight volumes are not something we can control. We can survive as long as we have cash flow. Regardless of how little debt we have ourselves, most of those with whom we do business do rely on a fluid credit market. Since we are reliant on the viability of those shippers and brokers for our survival we are affected by those credit markets. We cannot control those outside influences, only our reaction to those changes.

[YerDaddy]

I am OTR company driver and looking to buy my first truck. It seems like right now is not a very good time but I hope owner operators still make more than 34cpm after all the expenses.

Hope is only to be used for electing silver-tongued liberals with no previous experience.

[rank]

Be happy with $.34/hour.

Seriously, if someone had some cash.....like $80,000 - $100,000, now might be a good time to buy some equipment and become a carrier. As long as you don't need to make a profit to live or make payments...the worm should turn at some point and then a guy could make some money. At least for a few months.

I saw 4 RGN loads posted in the last 2 days. Haven't seen that many in weeks. Maybe TWIC is starting to have an effect.

[oneway]

Planning to become owner operator. Looking for advice


are you serious????????

HAAAAAA!!!!!!!

Yeah, you're right!

But, I have to agree with what chris1 is trying to tell you. If you don't have the accounts lined-up that will pay enough profit so you can afford a truck payment, then why even bother to start with? Do not start-out cutting it too close, not these days. Do not start-out thinking things will get better as you learn. Start-out with at least one good account in the bag, or a handful of good agents on-line, or both.

If you are trying to hit the road running off load boards, you won't make it IMO. And for God's sake stay away from those leasing on to those big companies.

Here's a good rule of thumb for you that is consistent with what chris 1 was saying.

Here it is--instead of risking a boat load of your own cash and credit--go to Ryder and do a short-term lease. It will be higher than hell and you will not make much, if any profit for your lease period, (I'm talking 6-12 months) but you can have a free look-see. See? They will put an entire package together for you which includes everything but a blow-up woman. Again, if what you're hauling doesn't pay enough to lease a truck, then why are you hauling it?

That way you can take a tour and see if you like what's out there. And when you are done you will not have three more years of truck payments or a truck sitting in your front yard with a For Sale sign in the window.

[GMAN]

If you can afford to pay Ryder $500-800/week you could have a truck paid for in a year and still have money left over. You will also have something with equity. When you rent you don't have anything left at the end of your lease or rental period. I think you need to either make a commitment or not. Becoming an owner operator isn't something you can do half way. It requires planning and commitment.

[chris1]

The point is that if you do not make enough to pay 5-800 a week for a tractor and trailer you're not making enough. If you have no payments fine,then you should have 3000 per month more net.
Equity in your equipment and a dollar will still get a cup of coffee.

[GMAN]

My point is that we don't need to spend everything on our equipment. If you do then you won't be able to survive the slow times or when the economy is off. If you have big payments right now, then you are probably in trouble. Making big payments is not so difficult when the economy is good and there is plenty of decent paying freight. However, when you have big payments, freight is sparse and rates are low, then making those payments can be difficult. I know of one owner operator who just took a load out of Arizona that paid him just over $0.80/mile. He usually finds loads that pay much better, but there are plenty of loads available in that range to a little over $1/mile. You cannot survive with those rates. He got a good rate going out but even rounding the average for the trip he still isn't doing that well on this trip. Over all he is still doing OK but his wife also works. I think he will survive this down turn because he had a good year with pretty good rates. I would never spend $500/week on payments. It is too much to pay out, especially starting out. If you make that much exta each week then you could buy the cheaper truck and use the difference to trade up to something newer, if that is what you want.

[chris1]

First i have not said that you have to have new trucks/payments. Just that if you could not make those payments you're not making enough.
I take it from past posts that you have three trucks. If you are not putting at least 100,000 into your pocket from those three "paid for" trucks before anything else than you're not doing as well as you think. The object is to maximize the income,not just enough to get by on because you don't have any payments.

[GMAN]

You need a certain amount of profit to be successful. Each of us decides for ourselves how much profit we need to achieve our ideal of success. Some people are happy earning $500/week. Others would not be happy with $5,000/week. There are realities of this business. We have cyclical times of the year when business is good and others when business is slow. We should prepare for the slow times when business is good. It is much easier to get through the slow times when your overhead is low. I understand what you are saying about being able to make big payments. You run into a problem when you have those big payments and then don't have the reserves to make it through the lean times. We are in a depression and don't know when things will turn around. Revenues are down by as much as 50% or more with many carriers and owner operators. You can plan for a slow time of year but it is difficult to plan for a depression. The best way is to keep debt to a minimum. Any debt that you do take on should be for a shorter term. If you have big payments, debt and little reserves you are likely to find it difficult to make it though this year.

[Road King]

Everyone has already given excellent advice, and you should listen to them.

You are on the right track by figuring your expenses, but many of them are off base. As stated by others, your truck is too expensive, your interest is too high, your estimated miles run is too high, and although you calculated maintenance, you are planning to take it out of your earnings. What if your blow an engine on your first run? Do you have enough money to replace it?

Go to How to Become an Owner Operator and Make Money in Trucking: Interactive Cost per Mile (CPM) Calulator to Aid the Owner Operator for an interactive CPM (cost per mile) spreadsheet calculator. You can put in all different kinds of figures and your CPM, Income per Mile, Income per Day, Cost per Day, Net per Mile, Net per Day, Average Miles per Day and your Expenses to Income percentage will all be calculated automatically. You can play "What If" and figure out how much you realistically need to make and how much you need to run to turn a profit.

If you figure above an average of $1.00 per mile income, you are too high.

I have been an owner operator for 37 years, and I haven't seen a slump in the trucking industry this bad in all that time. It gets harder to make a dollar every day. The harder it gets, the more rates are cut, and the more rates are cut, the less you make. It is a vicious circle. I wouldn't advise anyone to become an owner operator at this time.

If you do decide to go for it, I wish you all the luck in the world. You're going to need it!

[AMikonis1980]

thank you for advice. Have you calculated how much maintenance cost per mile for you? What is average rate per mile right now?

[Road King]

thank you for advice. Have you calculated how much maintenance cost per mile for you? What is average rate per mile right now?

My average maintenance per mile ranges from .23 to .52 (I had to do an overhaul on a truck that I had had for 7 years). I am really big on preventative maintenance. When I buy a truck, I look for one that has been overhauled recently, and preferable one with a warranty.

Don't forget, when you are down for maintenance, wheather it is routine (oil change), or major (new engine), you are not working, but your fixed costs (equipment payments, insurance, etc.) are still there and costing you.

Last year (2008) I grossed (to the truck) $1.11 per mile. My fuel cost was 59.67% of my income. Of course that included the period when fuel went up to $4.00 a gallon. In 2007 my fuel expenses were only 48.98% of my income.

As I said earlier, I have been and owner operator for 37 years (and a truck driver for 42). I am semi-retired (LOL), and I don't have to run as hard as I did when I was younger. All of my equipment is paid for, and I don't have any other debts. I can afford to wait for good paying loads, and I am not forced to haul cheap freight (although almost all freight now days is cheap). I pick and choose what I want to haul. If a load doesn't pay enough, I don't haul it!

If you have a $2000.00 a month truck payment, you will forced to haul loads for .80, a mile, for instance, thinking, "Well, at least I am making something." But if it costs you more than .80 a mile to operate, you really aren't making something. You are going in the hole.

As I said in my previous post, if you figure more than $1.00 per mile (to the truck, not gross), you are going to be disappointed when you start working.

[AMikonis1980]

looks like owner operators dont make more than $0.34/mile (after all expences). seems like bad idea to get in to it right now.

[Road King]

looks like owner operators dont make more than $0.34/mile (after all expences). seems like bad idea to get in to it right now.

You are right. I think you are making a smart decision.

I hate to tell someone who is ambitious not to follow their dreams, but it just doesn't make sense if you are going to lose money doing so.

[Doghouse]

I'm coming up on my 2 year ann. as an OO, and the advice here was one of the resons I have been able to make it work.
I bought a 1995 International with 900,000miles on it for less than $10,000. Other than the extras I added for my comfort,..if I add up how much I have spent to maintain this truck over the last 2 years,..that number is around $10,000 and that includes all new rubber and a transmission. It has never failed to complete a run, and thats even in Montana for most of the winter last season. The lower you equip. costs the more $$ you have in reserve= a better chance to weather this low rate storm.
My first year insurance was over $10,000 this year it is $7,000.
This old International shows no signs of leaving me stranded waiting for the hook, good luck to you.


Also I know this will come to a shock,...but Steve O was wrong,....my solar panels are still firmly mounted to the roof,..no water leaks, my A/C runs for 10 hrs off the batteries, and my cheap foam bed has held up well, and still provides a comfortable night sleep.

[JR OTR]

looks like owner operators dont make more than $0.34/mile (after all expences). seems like bad idea to get in to it right now.

I saw this thread a few days ago and waited for all the negativity and hoopla to settle down.

This week was the end of my first year as a lease-purchase operator driving a (then new) Volvo 780. My revenue per mile during this period was $1.26 over 133,303 miles. My take home pay after all truck expenses was just north of $67,700 for the year. I show this as a smidge over 50 cents a mile. The company I drive for is mostly reefer, with some dry van.

(Note, the numbers above do not reflect differing taxation a company driver and independent operator face, eg. paying both sides of the social security and medicare tax)

My blog has quarterly results posts showing 13-week snapshots of my past year, and I just finished posting a moderately-sized spreadsheet that you are welcome to view with all of the nitty-gritty load and settlement data.

It isn't easy, but it is doable with the right mindset, lots of research and dedication to safety and efficiency.

Good luck,

Jim