ARE MY FIGURES RIGHT??

[pwilson1204]

Hello, All:

I would really appreciate some professional guidance.

I have been considering expediting as a retirement second career, and I would probably jump in just me (no team) in a "D" unit. I did a lot of researching insurance brokers, truck dealers, online, etc. to try and be reasonably smart before wasting other folks' valuable time. I did some spreadsheet analysis based upon a major company's projected income for a single, cost of the truck, etc. I contacted a recruiter with my findings, and she basically said I was wrong in assuming a truck payment, I could not make any $ paying for a truck. I have a MBA in financial management and have been a manager in large organizations for 30+ years. I can't see how on a business basis you can assume no truck payment, because the truck is the business' capital investment. Even if you "donate" the first truck to the business, you have to generate $ to replace it. Anyway, the parameters I used are an $80K truck, $8K down, $72K loan five years 7 % driving $1500/month payment, 75K miles per year, gross revenue (from the company brochure) $72K, fuel 7.5 mpg, $3.00/g. With assorted fees, motel, etc., I come up with fixed annual costs $23K (mostly $18K truck payment), variable annual $47K (mostly $30K fuel) vs. $72K gross revenue leaves $2K pre-tax? The recruiter said, that's right, you can't generate enough $ to pay the truck. Have I done something wrong, or is this company basically looking for OOs to burn up a truck and then go out of business?

Thanks for any insight you can provide.

Best regards,

Paul

 

[davekc]

I think you are right. You do have to factor your equipment costs. I not sure what she is thinking telling you not to consider it.
While your figures may or may not be applicable, some items like insurance, permits, licensing, and maybe QC charges aren't listed. I'm not sure if that is included in one of your other numbers. My personal opinion is that a 1500 per month payment is too high for a solo driver just starting out. Depending on the age of the truck, I would project another $10,000 in reserves. Bills at home, orientation, costs to get your truck, any repairs, fuel, ect are needed prior to ever getting started. With the HOS rules, you will not be running everyday in most cases.

For vehicle value, you can use the following depreciation schedule based on your numbers. Yes.....there is a cost that can't be ignored.
$85,000 truck on original purchase

residual value at 5 years or 500,000 miles is 25% of $85K or $21,250.00
add this figure to the present depreciated value...

1 year or 100,000 miles deduct one 40% of the original price and add the residual value

or 85k-21,500 = $63,500 x 60% = $38,100.00 + residual = $59,600.00

2 years or 200,000 miles

$63,500 x 40% = $25,400.00 + residual = $46,400.00

3 years or 300,000

$63,500 x 20% = $12,700.00 + residual = $34,200.00

4 years or 400,000

$63,500 x 10% = $ 6,350.00 + residual = $27,850.00



5 years or 500,00 $21,250.00










Davekc
owner
22 years
PantherII
EO moderator

 

[LDB]

Your figures are probably fairly accurate. I suspect your revenue number came from one of the biggies that isn't necessarily the best choice for a solo. If your numbers came from where I believe, they are really a team focused company. I did about 15% better than their projection in a little under 10 months. I'd say your research is going well and now it's time to look into various carriers.

Leo Bricker, 73's K5LDB, OOIDA 677319
Owner, Panther trucks 5507, 5508, 5509
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
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Support the entire Constitution, not just the parts you like.

 

[x06col]

If, that $75,000 revenue figure is in fact your "goal", then your numbers are probably correct. A couple grand net. Obviously, after you've cracked the nut, any "goal" increase would certainly improve the net picture. If, you simply want to see the country, then do it from the window of a Winebago, not an expedite truck. Like in all of life a lil hustle will bring results. That $75k is about $15c a week and give you a whole month off a year (planned). Better raise the bar to $25c a week, then see how retirement goes.

 

[pwilson1204]

Hello, Again:

I really appreciate the insight and help. Serendipitiously, I received a follow-up recruiting letter from the company last evening. I don't know if I'm supposed to name the firm, but they are the subject of the next thread down, and they do a lot of work out of Memphis TN.

To answer some of your questions, my fixed costs did try to identify things like permits and insurance (4K per year?). I projected a startup requirement around $14K, including $6K down for the vehicle. The revenue number did come from the firm and is virtualy identical to the numbers identified in the next thread down. The key seems to be how much mileage, if you move out, can a solo reasonably expect to run annually, given HOS rules, to offset fixed expenses, particularly the truck payment. I reran my spreadsheet with new assumptions: used $55K truck (2004, so good for only three more years per firm's rules not older than five), $6K down, $50K 5 year loan 7%, payment $1000 per month, 100K miles (per reading between the lines other posts) vice 75K, drives fixed costs $18K (of which $12K truck payment), variable $57K (of which $40K is fuel), revenue $96K, pre-tax $21K. Am I closer? Is this a reasonable solo business plan, particularly the annual mileage? One other poster mentioned a solo would have a hard time going beyond 75K per year. This appears to be the critical variable to offset fixed expenses.

Thanks again.

Best regards,

Paul

 

[davekc]

If you are talking Fedex, you can purchase a class 8 truck and keep it for ten years unless something has changed recently. I think the other carriers are simular in that regard.
A decent used class 8 can be had for 55k.










Davekc
owner
22 years
PantherII
EO moderator