5 Owner Operator Mistakes to Avoid

[Lawrence]

5 Owner Operator Mistakes to Avoid


With increasing demand for expedited trucking in recent years, savvy owner operators are poised to take their business to a higher level. Yet, with long sit times between loads, extended stretches away from home, and volatile income from week to week, just one mistake can sink your dream as an expediter.

So, how can you keep your business on the road to success?


Here's more...

 

[davekc]

Undercapitalization is the largest reason for trucking failures. Family issues and health problems are there but much farther back. All to often folks get that new truck and do well the first and second year. Then things change when they are still making payments on a truck and repairs start to increase. Then the warranty runs out and it is a whole new adventure. Some just tank, or roll the disaster into another truck, and then they are just working for the truck rather than themselves. Bad things happen when you are making decisions with only a handful of dollars.
The other one is where a wreck or major breakdown sidelines you for a considerable time. Even a wreck that may not be your fault could require thousands to get repaired. Don't think for a minute you get that money up front in all instances. Also have to remember that you have no money coming in during that period. Can you carry all your business and personal costs for a extended period of time? And I am not talking days or weeks either. Try months. Just had a conversation recently with John at CIS and a individual had a wreck and his insurance carrier took a month to get a adjuster there just to look at the damage. That can be depressing.
I can't emphasize enough, make sure you are financially fit before jumping in.

 

[fastman_1]

Undercapitalization is the largest reason for trucking failures. Family issues and health problems are there but much farther back. All to often folks get that new truck and do well the first and second year. Then things change when they are still making payments on a truck and repairs start to increase. Then the warranty runs out and it is a whole new adventure. Some just tank, or roll the disaster into another truck, and then they are just working for the truck rather than themselves. Bad things happen when you are making decisions with only a handful of dollars.
The other one is where a wreck or major breakdown sidelines you for a considerable time. Even a wreck that may not be your fault could require thousands to get repaired. Don't think for a minute you get that money up front in all instances. Also have to remember that you have no money coming in during that period. Can you carry all your business and personal costs for a extended period of time? And I am not talking days or weeks either. Try months. Just had a conversation recently with John at CIS and a individual had a wreck and his insurance carrier took a month to get a adjuster there just to look at the damage. That can be depressing.
I can't emphasize enough, make sure you are financially fit before jumping in.

How do you make a million dollars in trucking?? Start with 2 million.

 

[davekc]

How do you make a million dollars in trucking?? Start with 2 million.

Yep. "Cash is king"!

 

[geo]

i have for a back up fund one year in bank
have a side line when i ran the road , i sold pc, laptops, new and used trucks
proheat genset and a field rep for them
and had a consult business on side amazing what people will pay for your point of view
others wrote books for a living on side

 

[Exit99]

Undercapitalization is the largest reason for trucking failures. Family issues and health problems are there but much farther back. All to often folks get that new truck and do well the first and second year. Then things change when they are still making payments on a truck and repairs start to increase. Then the warranty runs out and it is a whole new adventure. Some just tank, or roll the disaster into another truck, and then they are just working for the truck rather than themselves. Bad things happen when you are making decisions with only a handful of dollars.
The other one is where a wreck or major breakdown sidelines you for a considerable time. Even a wreck that may not be your fault could require thousands to get repaired. Don't think for a minute you get that money up front in all instances. Also have to remember that you have no money coming in during that period. Can you carry all your business and personal costs for a extended period of time? And I am not talking days or weeks either. Try months. Just had a conversation recently with John at CIS and a individual had a wreck and his insurance carrier took a month to get a adjuster there just to look at the damage. That can be depressing.
I can't emphasize enough, make sure you are financially fit before jumping in.

So, how much should you have to get started?

 

[jamom123]

So, how much should you have to get started?

Most likely more than you have now.

 

[TeamCaffee]

Dave you said that much better than we did. We could not get the words out right. Great Comment

 

[Dynamite 1]

Having resources to survive and succeed in this business is the most important thing along with learning as much as possible prior to starting. Having good knowledgeable people to work with is a must also.

 

[FlyingVan]

5 Owner Operator Mistakes to Avoid


With increasing demand for expedited trucking in recent years, savvy owner operators are poised to take their business to a higher level. Yet, with long sit times between loads, extended stretches away from home, and volatile income from week to week, just one mistake can sink your dream as an expediter.

So, how can you keep your business on the road to success?


Here's more...

So, how much should you have to get started?

Have at least 6 months of expenses, meaning that if you dont generate a penny in 6 months, you still have money to buy food, keep your lights on, pay the mortgage, pay the car payment, pay the payment on the 3 credit cards that you maxed out, etc.
As you see, this number varies greatly between individuals, with the advantage towards those that aren't up to their eyeballs in debt.
Some debt is necessary, like a mortgage, and maybe a car, but those credit cards are not. If you cant keep them in check, cut them up.
Cash is king.

 

[Turtle]

Another recommendation is to pay off the truck/van/Sprinter/Sprinter-wannabe ASAP. Any benefit you may gain from deducting interest on the loan is far outweighed by not having the interest expense in the first place, since the amount that the deduction reduces your taxes by isn't anywhere near the interest payment itself. Ideally you'd just pay cash for it up front and be done with it, but if not put a large downpayment on it and then do double payments to get that thing paid off.

There's also a world of difference when you take a month or three off at home when you don't have a truck payment hanging over your head.

 

[davekc]

It is always hard to quantify a amount for someone with quite a few variables involved. As mentioned, the less debt you carry the better for a single truck operator. Six months of expenses saved would be my minimum. One also have to remember that if the truck isn't moving because of a wreck, health/family issues, or a major breakdown, you need additional monies as well.
If the truck has payments, I would have six months of that saved along with insurance and carrier fee based items like qc or anything else that is a monthly payment.
Have to remember, these costs are still coming whether the truck moves or not. If you pay 2k a month in a truck payment, you need 12k plus those other costs which could make that 12k turn to 15k. Again, this is in ADDITION to your own personal expenses.
Every dollar less than that tells you what your exposure is.
If you have a older paid for truck, same applies. The difference here would be to have 50 percent of your highest exposure. Price a replacement engine and have half or the full amount of that cost available. "Bad things can happen to good people". EO is littered with disaster stories and most can be attributed to lack of total funds.
The purpose isn't to scare people, but be informed and know your exposure.
You have been warned.

 

[Dynamite 1]

Also most don't think of the relationship or lack there of, with there financial institution till they need it in a hurry !!!!! One would and should prefer to pay cash but in the instance that a loan is needed most have trouble cause they have not already crossed that avenue !!

 

[davekc]

Also most don't think of the relationship or lack there of, with there financial institution till they need it in a hurry !!!!! One would and should prefer to pay cash but in the instance that a loan is needed most have trouble cause they have not already crossed that avenue !!

Very true or they get money with outrages interest rates and the downward spiral begins.

 

[jamom123]

I'm wondering, with everyone being able to save all this money why the he** would they then want to buy a truck? If I had been able to save 6 months worth of expenses before I started I probably never would have started. Not saying its bad to save the money that's great but the whole reason I got in this business is because my previous job went down the drain, hence I couldn't really save any money.

 

[Daffyduck528]

I'm wondering, with everyone being able to save all this money why the he** would they then want to buy a truck? If I had been able to save 6 months worth of expenses before I started I probably never would have started. Not saying its bad to save the money that's great but the whole reason I got in this business is because my previous job went down the drain, hence I couldn't really save any money.

A lot of people drive for an owner and then go to buying a truck. I think the idea is to save while driving for someone. Then you buy the truck to make more money. It's not so much for people quitting a problem job and going out and buying a truck. Most of us would say that's an easy way to fail anyways.

 

[jamom123]

A lot of people drive for an owner and then go to buying a truck. I think the idea is to save while driving for someone. Then you buy the truck to make more money. It's not so much for people quitting a problem job and going out and buying a truck. Most of us would say that's an easy way to fail anyways.

May be an easy way to fail but I decided when I left my previous job that I was going to call my own shots.

 

[Daffyduck528]

May be an easy way to fail but I decided when I left my previous job that I was going to call my own shots.

I know other people that did it also. It's easy to fail, not impossible and I don't recommend it.

 

[usafk9]

Also most don't think of the relationship or lack there of, with there financial institution till they need it in a hurry !!!!! One would and should prefer to pay cash but in the instance that a loan is needed most have trouble cause they have not already crossed that avenue !!

May just be the most important post here.

 

[Dynamite 1]

Very true or they get money with outrages interest rates and the downward spiral begins.

Exactly rite Dave, don't ever, ever be a desperate borrower !!!!
We won't even talk to a financial institution that mentions APR . Simple is better !!