Ok I'm getting everything lined up to make the jump into this business. So far I have contacted two local companies and both said they would sign me on. One pays 60% of the load the other pays 1.05 a mile. Both companies are 90% local work. I have estimated my cpm and have started working on a business plan. Is there anything that I missed?
Making the Jump
- Thread starter Toby
- Start date
Ok I'm getting everything lined up to make the jump into this business. So far I have contacted two local companies and both said they would sign me on. One pays 60% of the load the other pays 1.05 a mile. Both companies are 90% local work. I have estimated my cpm and have started working on a business plan. Is there anything that I missed
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Just based on your limited information, I would have alot of questions.
Have you talked to any of their current and past drivers?
How many miles per week, per company?
If percentage, 60 percent of what? In other words, what does a load pay gross? On a 50 miler, 100 miler, on so on.
What about return pay, or is the $1.05 for all miles or just loaded....big difference. If you do a 100 mile trip and come back to your starting location, you aren't making $1.05, you are making 52.5 cents per mile.
Also, other items come into play. Insurance, qc if needed, personal comp insurance ect. What is in their contract with regards to escrow and other items.
You want to be careful and look at all of the situation you are about to enter. A business plan has little value unless you know you will be turning a profit.
You are right on target with knowing what your CPM roughly is. So many don't, but it is a real value to know. Alot of bad decisions can come without knowing and tracking that number.
Davekc
owner
21 years
PantherII
EO moderator
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Just based on your limited information, I would have alot of questions.
Have you talked to any of their current and past drivers?
How many miles per week, per company?
If percentage, 60 percent of what? In other words, what does a load pay gross? On a 50 miler, 100 miler, on so on.
What about return pay, or is the $1.05 for all miles or just loaded....big difference. If you do a 100 mile trip and come back to your starting location, you aren't making $1.05, you are making 52.5 cents per mile.
Also, other items come into play. Insurance, qc if needed, personal comp insurance ect. What is in their contract with regards to escrow and other items.
You want to be careful and look at all of the situation you are about to enter. A business plan has little value unless you know you will be turning a profit.
You are right on target with knowing what your CPM roughly is. So many don't, but it is a real value to know. Alot of bad decisions can come without knowing and tracking that number.
Davekc
owner
21 years
PantherII
EO moderator
Talking to some of the drivers is on my list as one of the next things to do. I don't have a van yet but I have a truck with a camper shell that I will be using until I get a van. Both companies said around 1500 miles a week. When I asked about backhauls both said they try but it's not always possible. Thats one bad point I understand when your empty your not making any money. The 1.05 a mile is loaded miles only, the 60% is gross. I didn't think about escrow account I need to call and ask about that. I have another question I have been calling insurance companies and getting quotes ranging from 800.00 to 2900.00. Whats the average that most people have to pay.
Toby
Toby
I am not sure on the insurance for vans if you are paying for it yourself. I only know the numbers for tractors & straights. Most will depend on their (carriers requirement) It could be $500,000 or a mil in coverage. Make sure you understand what coverages you have.
If they say they will find you a backhaul, that may mean at a less rate if they find it. Can you obtain frieght on your own using their authority? If so, at what percentage?
Keep in mind that LTL frieght or partials is somewhat limited for small vehicles.
Talking to other drivers as mentioned will tell you how viable their backhaul plan is. No information.....you have to figure it doesn't exist or is very limited. That brings the 52.5 cents back into the picture. Maybe higher if, and only if they pay a fuel surcharge as well.
Davekc
owner
21 years
PantherII
EO moderator
If they say they will find you a backhaul, that may mean at a less rate if they find it. Can you obtain frieght on your own using their authority? If so, at what percentage?
Keep in mind that LTL frieght or partials is somewhat limited for small vehicles.
Talking to other drivers as mentioned will tell you how viable their backhaul plan is. No information.....you have to figure it doesn't exist or is very limited. That brings the 52.5 cents back into the picture. Maybe higher if, and only if they pay a fuel surcharge as well.
Davekc
owner
21 years
PantherII
EO moderator
HI
For insurance its best to get $1 mill coverage.Im paying $950.00 per year on a $10,000.00 van.Make sure to ask ins. provider about automatic adjustments in truck value.I was self insured through Conn.Indem.Ins. for 8 years and they never adjusted the van's value so I always payed $118.00 per month.These van depreciate rapidly so I was paying ins for a $32,000.00 vehicle that was only worth $3000.00.
Ins. for a $3000.00 van should of been $31.80 per month.If they don't adjust automaticly make sure you call at least every year to get value readjusted. Hope that helps?
For insurance its best to get $1 mill coverage.Im paying $950.00 per year on a $10,000.00 van.Make sure to ask ins. provider about automatic adjustments in truck value.I was self insured through Conn.Indem.Ins. for 8 years and they never adjusted the van's value so I always payed $118.00 per month.These van depreciate rapidly so I was paying ins for a $32,000.00 vehicle that was only worth $3000.00.
Ins. for a $3000.00 van should of been $31.80 per month.If they don't adjust automaticly make sure you call at least every year to get value readjusted. Hope that helps?
The biggest drawback to a system as you've described is you will only be making approximately half the stated rates. You are talking about what I think of as a hub system. No matter where you drive to you have to drive back to the hub, like drawing a line from the axle to a point on the wheel. You aren't allowed to draw again until you backtrack to the starting point. In true expediting you are running a point to point system. You still have deadhead but not 100% of the loaded miles. What you are really talking about, as mentioned already, is a 30% of gross or 52.5cpm compensation level. In a hub system you generally will run a lower overall average speed as well because you'll be around town more often. A really big day might be 200 paid miles. I don't know what you've come up with for operating cpm but with 200 paid that's 400 driven at no more than 30cpm after expenses or $120 for the day. IF <<<big if, you could do that every day that's $600 a week for driving 2000 miles. Look very carefully at your numbers. They don't sound too strong based on the limited information currently available. Good luck.
I might be inclined to go in and tell them I need 72cpm for all miles or something similar to that.
Leo Bricker, owner trucks 3034, 4958
OOIDA 677319
73's K5LDB
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
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Support the entire Constitution, not just the parts you like.
I might be inclined to go in and tell them I need 72cpm for all miles or something similar to that.
Leo Bricker, owner trucks 3034, 4958
OOIDA 677319
73's K5LDB
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
----------
Support the entire Constitution, not just the parts you like.
I have estimated my cpm and have started working
>on a business plan. Is there anything that I missed?
While EO's editorial calender is too slow for your schedule, you may nevertheless be interested in the Business Planing for Successful Expediters series.
http://www.expeditersonline.com/artman/publish/business-planning-expediters.html
See also: Introduction to Expediting
http://www.expeditersonline.com/downloads/introduction.pdf
>on a business plan. Is there anything that I missed?
While EO's editorial calender is too slow for your schedule, you may nevertheless be interested in the Business Planing for Successful Expediters series.
http://www.expeditersonline.com/artman/publish/business-planning-expediters.html
See also: Introduction to Expediting
http://www.expeditersonline.com/downloads/introduction.pdf