buisness model

[bijan1]

I am hoping that someone can give me a little help. I am looking at getting a 2004 freightliner with 481,000 miles and it is a tractor. Spoke with a company that pays $1.35 mile plus f/s and deadhead are paid at 1.35 no f/s, so all miles are paid.

I have great credit and the truck is 26000 which equals at 60 months 8% intrest is $527 a month. I figure to run a team about 14000 miles a month in this economic climate. which is 2333 gallons at 2.65 is 6183 a month fuel. i got an insurance quote of 1500 a year plus bobtail at 40 a month thats 165 a month. Putting 1000 a month away for a rainy day. Drivers income is .50/mile 7k a month plus payroll tax of 525. My state requires workmans comp with 3 employess or more but you can exempt yourself so that would put me under 3 employees.
So i average my mileage to be paid at 1.48 bc i sure hope im running more loaded than empty miles is 20720 monthly gross minus all my expenses leaves $5320 a month profit. Paying self employment tax at 28% brings my net pay to 3830. My wife is an cpa so accounting fees are 0. Fuel tax from what I read is mostly taken care of at the pump.

I still work my regular job i am going to have a team operating this truck. Do any of my expenses seem to high or too low? Have I left anything out? Is anyone out there willing to help a newbie out and give him some real world #'s from there expense and profit sheet.

 

[greg334]

Figure out what your break even point will be and work from there.

Also don't take the fuel price at present day prices, go back and look at the national highest prices in the past and use those numbers to see if you can survive with the rates you are talking about.

What saved me was budgeting for $2.50 a gallon at the start of this for me and when the fuel prices hit $3.00 a gallon, I shifted my budget around to meet the increases, keeping on top of the insurance was the key.

Oh someone suggested to reduce the rates 10% to see what life would be like.

 

[Humble2drive]

When I read through a business plan such as yours I come up with a lot of questions. Perhaps it will be helpful to you if I relate these questions to you so you can ask yourself what you may have left out.
Be clear that I am not being critical. These questions are designed to promote a more thorough and thought out plan before you jump in.

I am hoping that someone can give me a little help. I am looking at getting a 2004 freightliner with 481,000 miles and it is a tractor..

1) Are you confident in the current condition of this tractor?
2) Are you buying from a reputable dealer that will stand behind it in any way?
3) Do you know the history of this vehicle?
4) Has an independent mechanic checked it out?
5) Have you had any tests done to evaluate the condition of this truck such as: oil analysis, Dyno w/ blowby, ECM dump?
6) Does this truck have certain comforts and accessories to make it attractive to an experienced team since you will be competing with other owners?

Spoke with a company that pays $1.35 mile plus f/s and deadhead are paid at 1.35 no f/s, so all miles are paid...

1) Is this a contractually guaranteed rate and for what period of time?
2)Is fsc spelled out and guaranteed?
3) Does this company have a clause in the contract that allows them to change these rates at any time for any reason?

I have great credit and the truck is 26000 which equals at 60 months 8% intrest is $527 a month.

1) Is this price in line with other comparable 2004 Freightliners?
2) If it is a lower price than other comps then why?

I figure to run a team about 14000 miles a month in this economic climate.

1) Where did you derive this figure?
2) Did this company provide actual data from other owners?
3) How many miles are the average team run?
4) How many runs per week are teams averaging?
5) How many miles are you anticipating for deadhead including dh for relocation and dh home for the team?
NOTE: 14000 paid miles seems like a very high projection. That would be 168000 per year before the dh mentioned above.

which is 2333 gallons at 2.65 is 6183 a month fuel...

1) What are you forcasting for idling fuel?
2) Does truck have an APU or will the team need to idle frequently for comfort?
3) How will fuel costs be handled for drivers incidental miles and return home miles?

i got an insurance quote of 1500 a year plus bobtail at 40 a month thats 165 a month. Putting 1000 a month away for a rainy day. Drivers income is .50/mile 7k a month plus payroll tax of 525. My state requires workmans comp with 3 employess or more but you can exempt yourself so that would put me under 3 employees....

1) Have you included all of the necessary required insurances at the proper coverage levels that this company may require?
2) Have you compared the advantages and disadvantages of making drivers employees vs independent contractors?
3) Have you compared offering a per mile rate to the driver vs a percentage of the revenue?

So i average my mileage to be paid at 1.48 bc i sure hope im running more loaded than empty miles is 20720 monthly gross minus all my expenses leaves $5320 a month profit. Paying self employment tax at 28% brings my net pay to 3830. My wife is an cpa so accounting fees are 0. Fuel tax from what I read is mostly taken care of at the pump.

1) Have you considered daily operating expenses such as tolls, oil, coolant, anti-gel, truck washes, prepass?
2) Will you have an escrow expense and/or satellite fee with this company?
3) Have you forcasted a monthly maintainance expense which can be costly on an older truck which includes the lost income from repair time along with hotel expense for drivers?
NOTE: That could easily reach your $1,000 per mo.
4) Have you forcasted any down time due to loss of driver team?
NOTE: Turnover in this industry is extremely high and finding a new team is time consuming and costly due to loss of revenue.

I still work my regular job i am going to have a team operating this truck. Do any of my expenses seem to high or too low? Have I left anything out? Is anyone out there willing to help a newbie out and give him some real world #'s from there expense and profit sheet.

In my opinion:
Your expenses seem too low.
Your revenue projections seem to high.
Answering all the questions above may help you in determining what things you may have left out.

These are just a few of the questions that come to mind at this time. When I return to the truck and have my accounting ledgers in hand I may be able to provide more specific help if needed.
Good Luck.

 

[bijan1]

humble
yes the truck is being bought from select trucks an authorized used freightliner dealership. they from what i understand are very reputable and have solid trucks.

the figure of 14000 a month come from 3500 a week. this comes from actual driver data, i dont have an accurate figure of deadhead miles but being that they are paid its not too painful to eat them. The mileage is contractual a flat rate and 100% fs is to the truck

i did not have an accurate idle count for fuel but but hopefully it would only be about 100 hours a week, but anyone with a more accurate # i would appreciate it.

The insurance has evertyhing covered as far as i know comp and collision, and bobtail. is there anything more that i need?

Thanks for the feedback

 

[oncedrove]

I really hate to pop you bubble but:


"I am looking at getting a 2004 freightliner with 481,000 miles and it is a tractor." "I figure to run a team" "26000 which equals at 60 months"

Running team in 24 months this truck will be DEAD.

 

[greg334]

Yea make sure that the insurance covers personal belongings and tools of the trade, many of them don't.

 

[Humble2drive]

I really hate to pop you bubble but:


"I am looking at getting a 2004 freightliner with 481,000 miles and it is a tractor." "I figure to run a team" "26000 which equals at 60 months"

Running team in 24 months this truck will be DEAD.

Lets look at the numbers:
Starting mileage = 481000
Projected paid miles per year = 170000
Add unpaid deadhead of at least 30000 bringing annual projected miles to be 200000
so

start = 481000
Year 1= 200000
Year 2= 200000
Total mileage at 24 months = 881,000

You are correct that he should have sufficient capital in the bank for a rebuild among other things at 24 months. No bubbles to burst there just the reality of the numbers provided.

 

[davekc]

A truck with that mileage is too high. 100 hours of idle time per week is too low. Even at that number you idle costs will exceed another 1000 plus per month.
Gallon per hour x 2.50 per gallon x 4 wks.
Big assumption on the mileage. Only ten percent or so of expediters consistently run at that mileage with a tractor in today's economy.
Remember.................I said consistently.
Better have at least 10k in reserves with a truck and that mileage. Even more so if you are hiring someone else to run it.
Too many assumptions for a automatic green light.
May not be want you want to hear,
but that is my penny in the pond.

 

[louixo]

You'll be a very lucky owner if you can put a team in your truck, achieve those numbers and have the same team still in it 2 years down the road. Do you know anything about life on the road? I would suggest that you take you investment capital, and put it into something you know closer to home, or quit your day job and become one of the drivers in your new venture. Being a one truck fleet owner your first time out is alot to chew, and it won't be easy solving problems that arise when you're hundreds of miles from you assets. And believe me you WILL have fires to put out. That's not saying you CAN"T do it, but I think your newbie approach needs some fine tuning.

 

[pjjjjj]

I couldn't help responding to this post. I have found that biz plans are great tools, and sounds like you've done some homework. Sometimes the trick is in the details, knowing what you don't know, and don't even know to ask about. In my experience one can have an excellent biz plan, but it can fail because it's difficult to get the revenue numbers to come true. Might seem easy on paper to reach a certain level, but in reality it's often unreachable.

Off the top of my head, the things that come to my mind when I see your numbers:
i) WAY too many miles to count on, at least on a regular basis
ii) no amount in there for repairs and maintenance, nor downtime when you do need a repair
iii) you didn't mention the company or whether you have spoken to the actual OOs to see if those numbers are true and consistently reachable
iv) your insurance amount sounds WAY too low.. if it's too good to be true, find out why, talk to other companies, see if this quote is missing an integral part.. you mentioned collision and comp, what about liability (the expensive part)?
v) if the company is paying the same rate for DH as they are for LM, I'm thinking you're not going to be doing a lot of DH, and will that mean that you will instead sit for longer periods waiting for less DH?
vi) does this company not have any other costs, ie QC, uniforms, whatever?
vii) no inclusion of downtime for your drivers.. how often will they want to go home, who pays the fuel when they go, etc?

On the other hand........... if you are going to remain employed at your usual gig, and just do this as a side venture, if you were short on the net income part but were at least operating in the black, you wouldn't be any worse off, except for the stress of dealing with your team and the company. Will you be able to deal with this side biz while still maintaining your regular job?

 

[Humble2drive]

On the other hand........... if you are going to remain employed at your usual gig, and just do this as a side venture, if you were short on the net income part but were at least operating in the black, you wouldn't be any worse off, except for the stress of dealing with your team and the company. Will you be able to deal with this side biz while still maintaining your regular job?

There are 2 other people and their families to think about when starting a venture like this.

My wife and I met a FedEx team at a truck stop who had a million questions about how to succeed at this business.
As we got deeper into the discussion it turned out that they were down to their last few dollars. They had no idea what they had gotten into. One had a pregnant girlfriend at home that cried everytime he called because he was unable to make it back home. The other driver had a wife and children and was about to lose his home.

This was the fleet owners one and only truck and his only research was what the recruiter told him. He promised the drivers that they would make 30K per year and they believed it.

We bought them dinner that night and then the breakfast buffet in the morning. This experience had a huge impact on the lives of those two drivers who were gullible enough to trust the truck owner who was dumb enough to trust the recruiter.

This is just an example of how buying a truck and becoming an "employer" should be taken with extreme care and thoughtful research.

 

[pjjjjj]

There are 2 other people and their families to think about when starting a venture like this.

............ One had a pregnant girlfriend at home that cried everytime he called because he was unable to make it back home. The other driver had a wife and children and was about to lose his home.

This is just an example of how buying a truck and becoming an "employer" should be taken with extreme care and thoughtful research.

I agree with all that.. to a point.. but just as going into biz for oneself, and extending employment opportunities to others should be well thought out and researched, so should accepting any given type of employment, with any given type of employer. Gone are the days of guarantees and 'forever jobs'. This is definitely not the type of business or occupation one should have if they MUST have a steady income of a certain amount each month, and MUST be home a certain amount of time each month. If that truck owner you mentioned had done more research than speaking to a recruiter, he surely wouldn't have hired drivers who had those types of circumstances to deal with.

Many many moons ago in another life, I had a partner who left his steady, long-term, good-paying job for what he felt was a golden opportunity with a start-up business. The employer was highly respected in the industry and the community, starting up a well established (in other areas) franchise of sorts, and he hand picked the best players for each position he needed to fill. All the employees left excellent jobs on good faith, full of excitement and commitment to succeed. The employer folded after only 6 weeks because his faith in himself was less than that of those he'd hired and when he found himself over his head financially, he wasn't willing to put his own house on the line. About 6 people were suddenly jobless and the economy was just starting to take a turn for the worse. As much as it felt better to blame the ignorance of the employer, it was much more honest to blame our own ignorance in taking such a gamble and making a poor decision for ourselves. But such is life, no pain no gain, no risk no reward, we can always work at McD's if we really want to be safe, but stuck.

Btw, that was nice of you to treat these co-drivers