Starting small fleet trucking business...

[BEN52]

Hello,

My name is Ben and I live in Memphis, TN. I work as a career firefighter and am looking into starting a small fleet trucking business. My current work schedule allows me 20 days off per month and my salary allows me to cover all of my bills comftorably.

I am looking into purchasing one or two trucks and hiring driver(s) to operate them leased on to a carrier. I have been pondering this business for several years now. I am willing to put the time and effort into establishing a business for the long term. I acknowledge that there are significant risks and many factors both controllable and uncontrollable in the freight business. That being said, America runs on trucks and people aren't in this business to lose money so there has to be a way to do this profitably. I believe there is a relationship between risk and reward and those who stick there neck out there increase their chances for success but unfortunately get thier head cut off to. At this point I am in the planning stages and am assessing the feasability of this venture. I value the experience on this board and would love to get any feedback that yall would be willing to give me. That being said here are some of the many questions I have;

1. Is purchasing a truck via dealer financing, independent bank financing, or via a leaseing company the preferred way to go?

2. How would you organize your business? (sole propietership, LLC, etc...)

3. What is the average time between delivering a load a receiving payment?

4. Can you recomend any companies to lease to?

5. Long term what pay structure is most profitable and most consistent? (per mile vs. percentage of load)

6. When leased as an o/o / fleet owner, how is dispatch handled? Would the company dispatch the truck(s) or would I be responsible for finding loads?

7. I have my costs figured at $1.10/mile. Is this realistic and is profitability possible at this cost per mile?

8. What "fleet" type programs are avaliable to small fleet owners?

9. In figuring my costs, I allotted $0.38/mile for driver pay. Is this competitive?

10. Do fuel surcharges adequately adjust to market fuel prices?

11. What advice would you give to somebody in my position?

I would like to thank anyone who replies in advance. Also, if anybody with verifiable experience in a small fleet operation be interested in any "consulting" work?

Thank You,

Ben Bindokas

[GMAN]

Hello,

My name is Ben and I live in Memphis, TN. I work as a career firefighter and am looking into starting a small fleet trucking business. My current work schedule allows me 20 days off per month and my salary allows me to cover all of my bills comfortably.

I am looking into purchasing one or two trucks and hiring driver(s) to operate them leased on to a carrier. I have been pondering this business for several years now. I am willing to put the time and effort into establishing a business for the long term. I acknowledge that there are significant risks and many factors both controllable and uncontrollable in the freight business. That being said, America runs on trucks and people aren't in this business to lose money so there has to be a way to do this profitably. I believe there is a relationship between risk and reward and those who stick there neck out there increase their chances for success but unfortunately get their head cut off to. At this point I am in the planning stages and am assessing the feasibility of this venture. I value the experience on this board and would love to get any feedback that yall would be willing to give me. That being said here are some of the many questions I have;

1. Is purchasing a truck via dealer financing, independent bank financing, or via a leasing company the preferred way to go?

It is usually best to go with a lender who is familiar with you. It will usually cost less if you go with your own financing. Not all banks loan money for class 8 equipment, especially for someone who has no experience in the industry and will not be the driver. There are leasing companies that do financing for class 8 equipment. I would stay away from any lease purchase from any carrier.

2. How would you organize your business? (sole proprietorship, LLC, etc...)

I prefer a corporate structure. Everyone is different. I would consult with your CPA to see what might be best for your situation.

3. What is the average time between delivering a load a receiving payment?

If you lease to a carrier you can have your money in a few days from the time you deliver and send the paperwork in to the carrier.

4. Can you recommend any companies to lease to?

It depends on the type of freight you want to haul. If I were planning to lease to a carrier I would look for one who is agent based and paid percentage rather than one who paid mileage. But, doing so will likely result in your having to be more actively involved in the dispatching.

5. Long term what pay structure is most profitable and most consistent? (per mile vs. percentage of load)

Rates can vary according to the type of freight hauled and where you run. Percentage usually pays a higher rate to the truck than mileage.

6. When leased as an o/o / fleet owner, how is dispatch handled? Would the company dispatch the truck(s) or would I be responsible for finding loads?

Some carriers have a dispatcher assigned to each owner or truck. Some will require you to look for your own loads. Most of the percentage carriers require a pro active owner.

7. I have my costs figured at $1.10/mile. Is this realistic and is profitability possible at this cost per mile?

Your costs are likely to be higher than $1.10/mile, especially when you consider the cost of a driver. Fuel alone can run upward to $0.70-80/mile. Other than a driver you will have other costs associated with ruining a truck. You will usually need to buy base plates and permits, contribute to a maintenance account and purchase insurance.

8. What "fleet" type programs are available to small fleet owners?

I am not sure what you mean. Each carrier has their own program for owner operators.

9. In figuring my costs, I allotted $0.38/mile for driver pay. Is this competitive?

It is competitive. In fact, you could probably find a driver for about $0.30-.32/mile. You will likely be required to purchase an occupational accident policy or workers comp for your drivers.

10. Do fuel surcharges adequately adjust to market fuel prices?

The fuel surcharge usually changes every week with the federal fuel price index come out. Some owner operators do well with the fsc. The fsc can be different with each shipper or broker.

11. What advice would you give to somebody in my position?

I would advise you to drive yourself for a year or two before putting a driver in a truck. It can be difficult to make much of a profit when you only have one or two drivers in your truck. It is even more challenging when you don't understand the business. I am not sure you can get sufficiently decent rates with most carriers to be able to let them manage your trucks. You will make a lot of mistakes starting out. Mistakes can be expensive.

I would like to thank anyone who replies in advance. Also, if anybody with verifiable experience in a small fleet operation be interested in any "consulting" work?

Thank You,

Ben Bindokas

The main problem with putting drivers in trucks is that they will never take the care of your equipment as you would. If something breaks you will get a call in the middle of the night and be expected to fix the problem. You will have drivers who will not only abuse your equipment but will also sell your fuel and steal from you. It is the dark side of this business that most don't want to discuss. Most who own trucks expect it to happen so they are not surprised when it happens. That is one reason many pay a lower wage to compensate for the high cost of theft and abuse. There are some of us who have drivers and do manage to make a few dollars along. It is not something that I would recommend to anyone who didn't have some driving experience. This industry has a very high failure rate. It will help your odds of being successful if you have some actual driving experience.

[One]

As a driver that has driven for fleet owners:
If i make $1000 a week driving for a big company, i would have to make almost $1500 on a 1099 to get to the same place...I would factor in taxes, health ins. 401k/retirement, life insurance, FICA etc. also i would consider the support structure and equipment. Your profit margin will be low and dependent on the driver doing what he is supposed to and not screwing up or your equipment messing up. I have had an automatic trans go out while on a load- the towbill was $1000 and the trans rebuild was close to 10 grand if im not mistaken. Add to that the loss of income. You have to ask yourself if you could suffer a major loss like that and not go broke. You cannot expect to be able to pay this months costs with this months revenue, there will be delays.
I drove for 2 different fleet owners, 1 knew less about the business than i did and lost his pants on the whole endeavour; The other had junk equipment and didnt want to fix/maintain it, he ended up without a driver and said driver (me) got screwed out of a paycheck.
I am not as pessimistic about the drivers as Gman is, but yes, it happens that fuel is stolen, it happens that a driver gets and advance on a load but then doesnt go get the load, but go to the bar, or calls in sick to do whatever. It happens that trucks get hit or broken into in a parking lot, freight stolen while the driver is asleep in the bunk, robbed or equipment stolen. Sometimes its the driver thats envolved, more often it is not.

[GMAN]

More often that not when something is stolen the driver is the first one who is checked. That doesn't necessarily mean that I don't like to be so pessimistic about drivers, but he should be aware of what can and will happen when he has drivers. Even with good drivers things will happen. When you own trucks you need to be prepared to pay a tow bill or pay for a major repair such as a rear, transmission or engine. Tires will always need to be replaced.

[Mackman]

Just letting you know. You are talking about getting into a business with one of the smallest profit margin there is. Plus finding and keep good drivers are hard to do. There is a reason why the avg. turnover rate in OTR trucking is 100%+. Good luck. But i would look at something else.

[GMAN]

One other factor you need to consider is your truck sitting when you don't have a driver. If you finance your purchase your payments will go on whether it is moving or not. There is a high turnover in trucking. It is rare for anyone to have one or more drivers in the waiting to step into the drivers seat when one quits. Your truck could sit for days, weeks or months. You don't want to put just anyone into your equipment. They will need to be qualified by the carrier to whom you lease. Once approved they will need to go through orientation. You can count on losing about a week, just for orientation. You will usually be responsible for the cost associated with getting your new driver to orientation and the cost of his motel or living expenses until he gets into a truck. You could also have a driver abandon your truck. It will be up to you to get it back. Unless you have a CDL, you will need to pay someone to get it for you. I don't like to be the bearer of bad news, but this is an industry where you can very easily lose your shirt.

[Mackman]

I think he should maybe buy one truck and drive it himself on the 20days off he has. Sounds like you have a great job. I would stick with the FF as along as you can. Retire with a great retirement I'm sure you get and live a happy life down at the beach or something. I wouldn't even think of messing with trucks lol.

[rank]

I think he should maybe buy one truck and drive it himself on the 20days off he has. Sounds like you have a great job. I would stick with the FF as along as you can. Retire with a great retirement I'm sure you get and live a happy life down at the beach or something. I wouldn't even think of messing with trucks lol.

I agree completely. This is such a bad idea. It's not bad enough that you are thinking about doing this with one truck...you want TWO!

Your FF salary will be subsidizing the trucking operation. IMO you cannot manage drivers if you have never been a truck driver. Furthermore, unless you are capable of replacing them on the spot (which means getting in the truck yourself), they have you over a barrel. I can offer some stories as can many others on here, but I will stop at 2.

An former engineering co-worker of mine had a father who was a truck driver...a car hauler. Anyways, the son (my buddy) saw that his dad was making money so he bought a car hauler setup, put a driver in it and leased it on with the same company his dad was leased to. He said it was awful. He went through several drivers. One stole fuel. My buddy never knew because he had never driven a class 8 truck so when the driver said it was getting crap mileage he believed him. They damaged cars. They missed appointments. It was the happiest day of his life when he got rid of that truck. He lost many, many thousands of dollars. His Dad was making money as an owner/operator/driver, but that does not translate to making money as an owner.

My driver trainer in truck driving school was a fire fighter. He had his CDL and on his days off he would drive for L.E. Walker. All he had to do was call dispatch and they would generally have a short run for him. It was enough to get the bug out of his system.

[GMAN]

I think he should maybe buy one truck and drive it himself on the 20days off he has.

This make a lot more sense than to buy 2 trucks and put driver in then when you have no experience in this industry. Once you get some solid experience behind you and if you then want to buy another truck and put drivers in them then you will have a much better idea of what you are dealing with and how to manage your business. You will find that you will need to spend much more time managing those trucks than you ever imagined. You will probably net more money driving one truck on your off days than if you bought two trucks and put driver in them.

[goldentouchfreight]

I do apologize but i need to chime in a little bit here so I might give similar answers to everyone else.


1. Is purchasing a truck via dealer financing, independent bank financing, or via a leaseing company the preferred way to go?

I found that independent banks that finance Class 8 equipment are the cheapest and reasonable. I prefer to own the truck and trailer. I will lease a trailer but it is cheaper in the long run to own the truck and trailer. That way when you pay the money for payments you are essentially own the equipment at the end.

2. How would you organize your business? (sole propietership, LLC, etc...)

Incorporate or LLCprotect yourself

3. What is the average time between delivering a load a receiving payment?
My suggestion is to get your authority. with you having your authority you essentially make 100% of the money. Just my opinion. It is not for the weak of heart. All things considering most companies that you will run under there authority are gonna cut more off the pay than you will ever have knowledge. Do they all NO but majority do.

4. Can you recomend any companies to lease to?

For leasing I have heard great things about GreatWide, not so sure about Landstar.

5. Long term what pay structure is most profitable and most consistent? (per mile vs. percentage of load)

% HANDS DOWN

6. When leased as an o/o / fleet owner, how is dispatch handled? Would the company dispatch the truck(s) or would I be responsible for finding loads?
tYPICALLY when you lease a small fleet to a carrier, A)either you will have an assigned agent/dispatcher B)some companies require the owner to do it

7. I have my costs figured at $1.10/mile. Is this realistic and is profitability possible at this cost per mile?

Varies, depends on all your factors and always fudge on your fuel!!! I would recommend using 2000-2500 miles as your mileage

8. What "fleet" type programs are avaliable to small fleet owners?

contact specific carriers for their details and if that is what you want to do, pick the best one for you

9. In figuring my costs, I allotted $0.38/mile for driver pay. Is this competitive?

I recommend pay the driver a % of rate. Just my recommendation. Some might say otherwise, but the guys that will take the % will work harder in my opinion and will want to run

10. Do fuel surcharges adequately adjust to market fuel prices?

NO

11. What advice would you give to somebody in my position?
gET YOU AUTHORITY, sorry all caps. But .... you will make more money. You are taking the risk of dealing with drivers and carriers and brokers, why not just accept the risk that you will be taking anyway and get paid for it

I would like to thank anyone who replies in advance. Also, if anybody with verifiable experience in a small fleet operation be interested in any "consulting" work?

I can consult for you. I drove, owned trucks, and have brokered freight, and I am an independent dispatching service.

[YerDaddy]

In a perfect world this would be a great idea.

In a perfect world we wouldn't need firefighters either.

In a perfect world the Obama economy would be the perfect time to start a new business on credit.

In a perfect world you would be the only person in a 500 mile radius thinking of starting a trucking business.

In a perfect world the government would never think of interfering in a private company's affairs several times daily.

Need I go on?

[Musicman]

You know what they say... “The best way to become a millionaire in trucking is to start with two million.”

To the OP:
Just the fact that you have to ask some of these questions is indicative that this is a very, very bad idea. The answer to your question number 11: Find something that you know a lot about and maybe even enjoy doing and sink your spare time and money into that.

I am not being negative, just trying to be helpful. Many years ago, success in this business was virtually assured if you had a little money to get started with and a modicum of business sense. These days, to be successful in this industry you really need to be an expert at everything from maintenance to load planning and routing to billing and accounting… you name it. I’ve been driving for 13 years now and have a background heavy in management and business before that; and even having been a leased-on owner operator for five years and running under my authority for three, I am still learning new things about this industry. I am constantly looking back on and analyzing my decisions and finding things that I could have done better, smarter, more efficiently. I cannot imagine trying to start from scratch as a fleet owner having little or no knowledge about the trucking industry. I think it would most likely be financial suicide.

[repete]

Instead of risking all that money on employee's and equipment that you will rarely see why not open a pizza shop? That way you can work it 20 days a month watch it easly AND get biz from your brother FFs?

[Musicman]

Instead of risking all that money on employee's and equipment that you will rarely see why not open a pizza shop? That way you can work it 20 days a month watch it easly AND get biz from your brother FFs?

I was thinking a strip club myself. :-)

[RostyC]

I was thinking a strip club myself. :-)

I was thinking of a hot dog cart.

[RostyC]

I think he should maybe buy one truck and drive it himself on the 20days off he has. Sounds like you have a great job. I would stick with the FF as along as you can. Retire with a great retirement I'm sure you get and live a happy life down at the beach or something. I wouldn't even think of messing with trucks lol.

I have to agree, as much as the op doesn't want to hear it, this is a bad idea.
Ben52, Your playing with your sanity.
Seriously.

[Mackman]

I was thinking of a hot dog cart.

You and that damn hot dog cart. So when you buying one lol

[RostyC]

You and that damn hot dog cart. So when you buying one lol

As soon as I think I can handle the responsibility of owning one.
I might eat all the profits.

That's something you don't have to worry about with the sh***ter gitter.

[chain binder]

Hey Ben I drove trucks for several years before I got out a few years ago.I started my own business and doing great.It might be something you might want to consider in your off time.It is Mobile Oil Change business.Have a Oil changing unit in a 6x12 trailer as well as all of my equipment.Go to residents or businesses and change the people's oil.Takes about 15-20 minutes to do a car and I get $40.00.Don't cost alot to get started and can make some serious money.I see you live in Memphis,that would be a wide open market for this type of business.I live in Central Texas,in a rural area, and I stay busy.Something to think about. Thanks Rick

[RostyC]

Hey Ben I drove trucks for several years before I got out a few years ago.I started my own business and doing great.It might be something you might want to consider in your off time.It is Mobile Oil Change business.Have a Oil changing unit in a 6x12 trailer as well as all of my equipment.Go to residents or businesses and change the people's oil.Takes about 15-20 minutes to do a car and I get $40.00.Don't cost alot to get started and can make some serious money.I see you live in Memphis,that would be a wide open market for this type of business.I live in Central Texas,in a rural area, and I stay busy.Something to think about. Thanks Rick

This is interesting.
How do you have your trailer set up?
How do you buy your oil? quarts or drums? whole sale prices?
Do you carry ramps or jacks?
Do you drain the oil out or suction?

I've never heard of this type business before. It actually sounds good.