Originally Posted by Cam

Ok Steve, you're up! But, let me see if I can't figure out a little of what he's thinking.

One, he's happy. He does what he wants to do, goes where he wants to go (within reason, of course), and works when he wants to work. I doubt he'd want to 'sell' all that for a higher rate.

Two, he can, as LOAD IT put it, protect his equipment. He can look for the lighter loads and if he's got to get to the other side of Donner he can insist on it.

Three, he's quite profitable, though that $1.50- hub, company trailer etc., etc., by itself that would be hard to beat.

How did I do, Steve?

Yes, I'm very happy and your about right on Cam. I'm making money and my checking account is growing. I don't have a separate envelope for maintenance, fuel, bills or anything else. All my money goes into my checking account. I started a separate checking account when I started this with only about $3,000 of my money put into it. Well, that didn't last long. I ended up taking another $10,000 out of my personal account to keep going. That has since been put back and I now have a little over $10,000 extra in my account and it keeps growing and at a lot faster rate than when I started. I'm bringing in about $5,000 gross a week.

I have 3 big trucking companies that I deal with on a regular basis when there own trucks can't handle the traffic and I'm in the area. There's no haggling over the price and they give me a good rate. They don't call me for status either any more. They know it will be delivered.

I don't need to analyze the crap out of my figures and I'm sure if I posted them here by the time a few of you were done with me I would be making $11,000 a year or something like that.

I go where ever I want, I buy what ever I want, I almost have enough to rebuild by engine if need be and my bills are being paid. I could afford to buy another tractor and make the payments on a loan if something really bad were to happen. To me, that's all the matters and I'm happy.

The loads seem to come easy and I don't have to work for it. My tact of waiting for the phone to ring works well. For the past few weeks my average has been over $2.00 a mile. What my overall average is I don't know, I'm just rolling along.

I don't go home and look at my checkbook and say, wow, I have $12,000 left over and all my bills are paid....I think I'll go out and buy another Harley. I live pretty simple other than my 60" plasma screen.
I think once my extra money hits the $20k mark I'll back off from being so frugal.

[no_worries]

While the question of profitability has been brought up several times, my question is directed specifically at what you said. I think you're making an awfully big assumption in stating that, "he's quite profitable." Don't get me wrong, I'm not bashing Steve at all. My point is that everybody is always so quick to declare an operation profitable when there's really no evidence of that. I've seen just as much anecdotal evidence that there's not much profit in the operation as I have evidence that there is. I'm quite sure Steve's making money, I'm less sure about the level of profit that he's making. However, I wouldn't make a claim one way or the other without being privy to the numbers.

Sorry but I'm not going that route like others have done. This is an area which is so subjective and the cause for many arguments. The only thing I see that comes out of it is some old timers here putting themselves up on a pedestal. I've seen some people by the end of the thread making over $400,000 a year. As far as I'm concerned, Rev is the ONLY one who has posted real figures.

It doesn't matter to me about analyzing my figures. I have a good amount of cash on hand left over for any serious problems, I could afford a truck payment if need be. My checking account is growing and my bills are paid.

I've been doing this full time since November 21st of last year. Do you think someone else is privately funding me? I'm still here and smiling. I did start off with a lot of money. That was all spent on my truck, trailer and equipment. The spare money I had left over went too. That has since been replaced and is growing.

I'm not getting rich by doing this but like someone else said, I have food in my stomach, a roof over my head and the bills are paid. I don't have to answer to 5 different bosses anymore or worry that my company will be sold for the millionth time and I'll have to look for another job.

[Cam]

Originally Posted by no_worries

While the question of profitability has been brought up several times, my question is directed specifically at what you said. I think you're making an awfully big assumption in stating that, "he's quite profitable." Don't get me wrong, I'm not bashing Steve at all. My point is that everybody is always so quick to declare an operation profitable when there's really no evidence of that. I've seen just as much anecdotal evidence that there's not much profit in the operation as I have evidence that there is. I'm quite sure Steve's making money, I'm less sure about the level of profit that he's making. However, I wouldn't make a claim one way or the other without being privy to the numbers.

Well, what am I missing?

-I was using $1.60 loaded average, not fishing story, I think Mike3fan proffered that one (spelling of privy noted, BTW :wink: )
-long average length of haul
-expressly assumed his deadhead wasn't unreasonable

That's revenue

Expenses? Have no idea. Yes, I'm making assumptions but I didn't and still don't feel the need to put together a case I can take to the Supreme Court. If you feel I was misleading somebody don't worry about it because, oh here I go again, assuming, I'm assuming Steve isn't ready to make stock in his trucking company available to the public just yet.

You know, 'quite profitably' isn't something I lose sleep over. If I botched it, if I missed something, I like Steve but quite frankly it just isn't all that important to me.

[GMAN]

Not everyone has the same break even point. In Steve's case, he paid cash for his equipment. His level of profitiblity would be different if he had a $2,000/month truck payment. At 10,000/month, he would need an additional $0.20/mile to break even. Fuel costs should be comparable. Both should probably be putting money aside for maintenance. If an owner operator has a $500/month payment his break even would be different than either Steve or the guy with the $2,000 payment.

Another thing one must consider is the level of acceptable profitability. Steve may be happy with an extra $200/week and someone else may be satisfied with $1,000/week. On the other hand, Steve may need $2,000/week to be happy. I am only using these as examples to demonstrate some differences in perception and needs. Each person is different.

You guys use too many big words and now my head hurts.

[rank]

I have 3 big trucking companies that I deal with on a regular basis when there own trucks can't handle the traffic and I'm in the area. There's no haggling over the price and they give me a good rate. They don't call me for status either any more. They know it will be delivered

$2 loaded and they call you.......you're obviously doing something right.

[no_worries]

First, just to clear the air...Steve, I'm not attacking you. I don't even think that you're failing. You just get to be the default example because you've been kind enough to post your experiences and everybody points to you as an example. I'm not saying you should post your numbers. I don't claim whether you're failing or not because there's not enough evidence either way. So if one of those claims arises I ask how they arrived at that conclusion. As far as being subjective, Cam may know by now that I only deal in economic profit and there's no subjectivity involved :lol:

GMAN, I'm going to take exception with what you said. It makes no difference whether someone paid cash or financed their truck as far as expenses and profitability go. The only place that difference shows up is cash flow. The guy that paid cash still borrowed money, he just borrowed it from himself. In determining profit, that MUST be considered. You're saying that the break-even point is the point at which your income for the month matches your outflow. So the guy that paid cash has a break-even point $1000 lower than the guy with the $1000 payment. By that logic, if I paid $10,000 for a truck, ran it for a year at your break-even point, and sold the truck for $5000, I'd be $5000 ahead. In actuality, I'd be $5000 behind. Regardless of how the equipment is purchased, the cost must be considered. If someone pays cash, the cost of the equipment is the amortized cost PLUS the loss of investment returns they could have had.

I will agree with you on the question of profit and the fact that different levels are acceptable to different people. But only if we're talking about profit in the proper manner. Some people think profit is whatever is left after paying their bills that month.

Cam, in case you haven't figured it out, I rather enjoy this stuff :lol: At least you guys can carry on an intelligent discussion without anybody feeling the need to get personal. For me, what this all comes down to is that there are way too many operators out there who have no idea what it's truly costing them to run their business. Therefore, they make terrible business decisions. Those decisions affect the rest of us because they directly affect rates. There are guys out there like Pepe who have cut their costs to the bone and aren't worried about what they make above a minimum level. That's ok, many guys like that will be around for a long time. As I've said, Steve could very well be making a decent profit. I'm speaking about anyone in particular, but in general. The failure rate every year for small carriers, especially in a year like this, is extremely high. The reason is bad business decisions and the number one one factor is not knowing the true costs of doing business. You hear it everyday. The guy that just bought a truck and is making "great money." You even hear it from guys doing a brand new L/P with CR England. Where are they in a year or two? Notice the contrast in comments hear between the guys who've been out there less than 2 years and the guys who've been out there 5 or more. Every single Ra Ra! comment you get comes from somebody with relatively little experience. For the most part, the guys that have been out there a long time give support, but it's cautionary.

When I see someone make a claim about their own profitability or someone else's, I say, "Really, are you sure." All I'm trying to do is get them to take a second look, because the odds and my experience say that they're missing something. I will guarantee you one thing. If all O/O's knew how to correctly figure their costs and profits, rates would go up. And aside from enjoying the debates, that's where my interest lies.

[geomon]

No_worries....To step in here for Gman.

The cost of the money needs to be factored in...absolutely. So whether you finance it yourself (cash) or borrow it from a bank, you need to factor the cost of money in. What would Steve have been making on the $ if he had it invested in stocks/bonds rather than the truck? The business also needs to be paying that money back (to himself) as well. That needs to be added to the cost sheet. So I agree with you on that point.

I think where Gman was going was with the total amount that was being invested...ie what are you "investing" in order to run your business...Steve started with a $35K tractor (if memory serves). He did not go out and pay up for a $130K new one. So his cash flow and profitability are different.

Now the question is: should your business be funding the purchase of the next power unit on existing cash flow? I think it should be so that you keep the costs of the tractor (per month) even and are not suddenly jumping your costs per month when it's time to trade in.

[GMAN]

Thanks, geomon. You should be planning for your next truck purchase. I recall one owner operator who regularly traded trucks every 2 years. He kept trading until he had a new truck. It worked for him. That is a bit too frequently for me. I don't really care whether I drive a new truck or not. Anything mechanical wears out. At some point, you will need to decide whether you will make major repairs or trade trucks. Either you have the cash to trade or you can finance your purchase and pay interest. One other factor you should consider when looking at paying cash is the cost of borrowed money. Any money you save is money in your pocket.