Good Time to Buy First Truck?
 

Hi everyone,

I'm looking for some advice for a buddy of mine. He lives in the Sacramento area, and has always wanted to own his own business. He has a full time job which has nothing to do with the trucking industry, and is thinking of investing some money in a truck. A good friend of his is an out of work truck driver, and is very eager to drive for him. He's real close to pulling the trigger on a truck purchase, (a two or three year old truck in good condition), but has started hearing from some people that this would be a lousy time to try to break into the industry. Again, he would own the truck, but would continue working his job, and would have his buddy drive for him.

What do y'all think of this? Could they keep the wheels turnin', and should they try to hook up with a company like JB Hunt?

Really appreciate any advice...thanks!

Re: Good Time to Buy First Truck?
 

Good deal(not JB) if he wants to help a friend. 8)
Very bad investment! :sad:

Re: Good Time to Buy First Truck?
 

I'd say he'll be better off by buying a cheap house and renting it out to a tenant as a part-time business. Not only will he make some money, but he can also use DEPRECIATION of the house against his job income. With this setup your friend can start getting huge tax refunds from the government. I'm not kidding.

It is admirable that he wants to help his friend. It is difficult to advise someone without more information. If he starts this by getting his authority and little money, he could be in for a rude awakening. If he leases to a carrier that has good rates and pays percentage, he could help his friend and make a small profit, providing his friend does his job and he watches his expenses. A potential problem I can see is if the friend decides to go on to other things and he is stuck with a big truck payment and no driver.

As to whether this is a good time to enter this business is concerned, it depends. Freight and rates are soft in some areas of the country. It is not a good time to enter this business if you plan on doing so with a lot of debt. There can be advantages to coming into a new venture when business is soft. We are staying fairly busy. Some people are sitting a lot. I have one friend who is not doing very well right now and another that is doing much better. The first leases to a carrier, the one who is doing better runs his own authority. Both have been in this business for several years. The first for more than 10 years. The one who runs his authority has been in trucking for well over 30 years. In fact, I believe it is close to 40 years now. Another friend of mine is going back to leasing to a carrier and giving up his authority. He has already been told by the carrier that freight is slow in his area. He doesn't live far from Sacramento.

I would suggest your friend check with some carriers before buying a truck. See what they can offer him. Some people run I-5 and make a good living year around. There are some carriers who only run from Southern California to Oregon or Washington and do well. If your friend's driver has a good MVR and work history, he may want to check with carriers such as Landstar who have a strong freight base and a lot of agents. Carriers such as J.B. Hunt still pay low mileage rates and I don't see how any owner operator can do well with them. Company drivers may be another issue.

Doing some research in his area would help in his decision.

Thanks for all of the info...it's very helpful. I think I may have been unclear as to my friend's motivation for wanting to buy a truck. While he does want to help his friend by putting him to work driving, his hope is that the truck will provide a nice side income for he and his family, and could prove to be profitable enough to allow him to purchase a second, and possibly third truck, down the road a couple of years. Ultimately, his hope would be that he would have a handful of trucks on the road, and be able to quit his "day job", and live off the profits of his trucking company.

Is this realistic, or wishful thinking?

It is possible if he can find good drivers who will take care of his equipment and get decent rates. I don't see how anyone can own trucks and not keep a close eye on things. There are a lot of dishonest drivers in this business. It would be much better for him to get some first hand experience before he starts buying trucks. There are other things he can do which would generate a much greater return on his investment than buying trucks. You can't just turn a driver lose with your equipment.

Mostly second...

The first thing that jumps out at me is, why is his friend unemployed? Good drivers don't stay unemployed unless they want to. Otherwise, I'm with Solo...there are better ways to invest that money.

I would never get involved with family or friends in a business,......ever.

Trucks. Everybody should own one. My boss offered to sell me the one I am driving now. I pointed and laughed.

No. You can't have 1 truck, put a driver on it and make money. Won't happen. If you do make anything, you'll find that even a simple savings account at the bank pays better.

Thanks for all of the advice. I've passed it on to my friend, and he's disappointed to hear it, because he was really excited about buying a truck and starting a company. He and his driver/friend have been talking about doing this for quite some time, so it's a let down. There must be some hidden costs that he is missing, because he says he keeps crunching the numbers, and can't see why this wouldn't be successful. Don't know if he is still going to pull the trigger on it or not...in fact, I don't think he knows yet.

I'm in Sacramento and I ran a truck with an employee. It was friggin EXPENSIVE and although my truck would often bring in 1k a day, after TAXES, WORKERS COMP, WAGES, & Fuel, I myself never got paid.

Truth be told, you want to make money with a truck? You best be driving that SOB yerself.

If you see statistics there are many o/p with 10years or more experience strugling, What makes you think yo can jump into this business with little experience and fuel prices as they are and one truck with a driver odds are against you.

Odds would be better if you were the driver.
And still it would hard if you inccure debt.

In one truck one driver outfit 90% of the time the only person making a profit is the driver.

You will be stuck with repairs maintenance fuel taxes and other expenses asociated with owning a tractor.

The reason that some O/O's are struggling, is that they have no clue in how to run a business....

I did and I'm doing just fine! Then again, just read Diesels signature line which I love and that pretty much sums it up in my case. :D

YOU DA' MAN STEVE !!!!

You did!? :roll: Sorry, i must have a wrong impression, that you are driving it yourself...

Just talked to my buddy, and he told me about a website he found, http://www.directfreight.com . Anybody know anything about this site? It currently shows 399 available loads in California, 267 in Oregon and 136 in Washington. So, 802 available loads on the West Coast. Is this a legit site, with legit loads? Thanks!

Join up..find out..come back and tell us of your experience with them.

I think GMAN tried them for a while and wasn't too impressed, maybe he'll comment further. It should come up in a search though.

I tried them for a VERY short time. From what I saw, rates were very cheap. Others may have had a better experience with them. I suppose it is a matter of perspective. I don't haul cheap freight. Unless I get a decent rate, my trucks don't move. I would prefer sitting than moving and not making a profit. I am amazed that there are still those who want to move freight for $1/mile. I am more amazed that there are those who will take those loads. When I looked at the Direct Freight website, there were some who posted who said that they were the shipper. If that is truly the case, their rates were much lower than I would haul.

There you are GMAN, hope all is well.

I am fine, RostyC. I have been on the road and quite busy trying to find some good drivers so I haven't had as much time to visit the forum. I am also doing some dispatching. It takes more time to find the better paying loads right now.

When Direct Freight load board first came out it had some decent paying loads. Almost all of the loads were from shippers. Now, they have gotten crappy, shippers on that board now think they can put loads for $1.00 a mile and brokers are starting to take over the board. It's a load board now for cheap ass shippers.

When Direct Freight first started, they really pushed the direct contact with shippers. I am sure that they pushed lower freight rates to the shippers by cutting out the brokers. I was initially told that there would not be any brokers on their load board. I don't really think that is the case. Regardless, I seem to do better with getloaded and internettruckstop. I also use some boards that brokers have, such as Landstar and CH Robinson, etc. I was surprised at how cheap some of the loads were on the Direct Freight board. I can get a better rate from most brokers than I was offered on that board.

Pretty good advice here to me. IMO, you are self employed for two reasons and two reasons only:

1. You LOVE what you do, or
2. You make so much stinking money it's better than working.

In your friends case, #2 is out. That leaves #1. Does your friend really think he will love paying someone to drive his truck until something better comes along? I'd say the trucker friend is using your buddy.

Business should provide a 80% chance of ROI in a few years, with a 20% chance of failure. Trucking is the exact opposite of that.

I'd like for you to post the numbers that your buddy has crunched that show he can make a profit by paying a driver.

According to my CPA, who specializes in small businesses/small real estate investors, over 80% of all the small businesses started in the U.S. fail in less than 5 years.

I'll bet it's higher in the trucking business. Thinking back to 1975 when I started with my own truck, I can only think of a handful of locals that are still in the business. Dozens, if not hundreds, have come and gone, or gotten out. Most of the people I know who are "successful" in trucking also have another source of income. A wife with a good job, a few cows, a small vineyard, a couple of rentals, anything to help pay the bills.

Thanks everyone, for all of the feedback! I probably wasn't clear enough about the relationship between my buddy who wants to buy a truck, and his driver friend. It was my buddy who approached his driver friend, not the other way around. As far as the numbers he was crunching, I'm not sure what he was using, but the results he came up with were WAY too rosy, with he and the driver making way too much money. That's what caused me to post here. I have lurked around the boards for a year or two now, kicking around the idea of becoming a driver. It seems every month, I see more and more about what a hard time y'all in the industry were having, so I figured he was missing some crucial ingredients in his calculations. I told him what I was seeing, and he asked if I would ask you guys for your opinions.

To my friend's credit, he has listened carefully to what I have told him y'all are saying, and has decided to abandon his goal of owning a truck...at least for a few years. He has a very good job, which pays well...he just wanted to diversify, and pursue his dream of owning his own business. Based on the comments here, he has decided to that trucking isn't the answer, so he's back to square one, looking for other business ownership opportunities.

Thanks to everyone who has generously shared their knowledge and experiences. It's much appreciated! You have been unanimous in recommending against this move...and your advice has been heeded!

You are very welcome! At least we didn't waste the time, what is usually happened with this type of questions! Cause most folks only hear, what they want to hear! :wink: 8)

It is difficult to own a successful business that you cannot run on a day to day basis. Most businesses require the owner to keep a close eye on it. Otherwise, the profits can easily walk out the door. He would probably do better investing in real estate or some other investment that doesn't require a lot of hands on.