More value than just a truck…

[lugnut1]

More value than just a truck…

I want to press upon an aspect of asset value most expedite wanabees, newbies, o/o, fleet owners will never achieve in their trucking careers. That valuable asset is a salable trucking company.

Clearly most expedite drivers do not have goals much beyond their day to day truck driving jobs as a source of income, regardless of whether they perform as drive/owner, or as driver of a vehicle they do not own. Determining the many reasons for the majority staying the status quo as driver/owner or driver is more numerous than I could list here. Instead, the focus is upon those who have moved beyond only driving, beyond just having their own trucking authority, but to those who started with wannbee truck knowledge and have created what they believe has a value beyond their truck or themselves as experienced drivers.

Who amongst the EO posting masses can comment, do you believe you have a salable expedite trucking company? Is it for sale?

Additionally, is anyone working toward being independent of leasing yourself and your truck to a truck company? Do you want to buy a truck company? Assuming you had the needed funding to buy a small trucking company (1-100), what most scares you, or, what do you think scares most driver/owners from moving on to owning their truck company?

 

[chefdennis]

I have been on vacation for almost 5 yrs now....why would i want to own a trucking company!?!?

 

[lugnut1]

I have been on vacation for almost 5 yrs now....why would i want to own a trucking company!?!?

Dennis, you have the basic asset that defines a trucking company, your truck. What keeps, or has kept you from moving to the next level?

My question as to the level of involvement in trucking you, or others have chosen, are not pretentious, just a bit of fact finding questioning. Aside from the rhetoric that my goals in trucking are this or that, why wouldn’t you want to own your own trucking company, even if it is simply a 1 truck expedite company?

 

[wimpy007]

Lugnut, this is not ment to be a smart alec answer to you question, but an observation. Let me list just some of the negatives to owning a Trucking Company:

1. Cash flow & accounts receivable
2. Insurance
3. DOT requirements & State filing
4. CSA
5. Driver recruiting & retention
6. Asset or nonasset based equipment
7. Office and parking
8. Maintenance facility if asset base
9. At least twelve other areas
10. Well Funded

But if you own 1 truck, drive with care and smarts, you maybe able to survive the current situation. Just my take.

 

[Rocketman]

I've considered the same things over the years. As a solo o/o, when you buy your truck, your really just buying a job. There is very little to be sold if/when you decide to move on. The only thing you will realize out of the time spent in this business as a solo o/o will be the living provided during the time you were in the business and whatever amount you were able to save and possibly invest elsewhere.

I'm not knocking what I and most others here do. I personally am very happy to not have the headaches that would come with growing past where I am now. I do believe there is opportunity in the industry to build a viable business like you describe. But, I'll keep what I've got. It's very comfortable not having a comittment to a business.

Before considering this or any other business, you also have to consider very carefully the cost of opportunity. Once you get involved with a business of any size, you are probably going to have most of, if not all of your available capitol invested. The business will more than likely consume most of, if not all of your time. The cost of opportunity comes about when you consider that level of commitment to a business and think about what you could have done with that same amount of money and same amount of time if you had invested it in a different business or just simply invested in the markets or real estate, etc, etc. It's a matter of picking your best shot. Honestly, I'm not sure if the transportation industry is the best shot to pick or not. I'm not doubting it, I just haven't researched it to that depth.

I do feel that the trucking industry offers an opportunity to grow. Any business that can be profitable on it's own with minimal investment and grow from that is worth looking into. My little truck has always been fairly profitable, but to grow to more than one truck, I would have to find better revenue somehow. It would take more revenue than I generate now to pay drivers, absorb the cost associated with owning the business (mentioned in the post above), and make a profit worth pursuing. But, all that can be done with the right skill set and some good old fashioned determination and elbow grease.

 

[Tennesseahawk]

Been there, done that authority thang. No thanx! I'll be the first to admit I'm not organized enough; not to mention all the gubmint buttkissing one has to do with paperwork. Some peeps were just meant to let others do the dirty work, and I'm one of em.

As far as the truck goes, I'd rather own it. Yeah, that can be a pain in the butt, but it's worth it. My company is my truck (if I have one), and that's it.

 

[lugnut1]

Lugnut, this is not ment to be a smart alec answer to you question, but an observation. Let me list just some of the negatives to owning a Trucking Company:

1. Cash flow & accounts receivable
2. Insurance
3. DOT requirements & State filing
4. CSA
5. Driver recruiting & retention
6. Asset or nonasset based equipment
7. Office and parking
8. Maintenance facility if asset base
9. At least twelve other areas
10. Well Funded

But if you own 1 truck, drive with care and smarts, you maybe able to survive the current situation. Just my take.

Well lets have a look at your negatives and see if there may be less negative than you might think.

1. Cash flow & accounts receivable…
Cash flow for most will translate to operating cash. Most if not all senior posters on EO recommend ample soft or slow time moneys be available for when freight is slow. That nest egg will do for your company for operating cash.

2. Insurance. Sure you will need to acquire and pay the needed levels of liability and cargo insurance. Some freight customers will want you to have works comp insurance. You do pay insurance now don’t you? Simply stated for your own truck company your insurance policy will be a bit more costly and thicker.

3. Requirements for satisfying the FMCSA and state DOT are more knowledge based than paper work. As example, gaining your authority, which will include your MC number and your DOT number, is only slightly more than a walk in the park, plus 300 dollars for filing. Setting up your own authority files, segregated properly and ready for your new entrant inspection is actually little different from being ready for a level 1 road side inspection. An extensive, downloadable “New Entrant Manual” is available at the FMCSA website with examples of how to set up your bookkeeping to satisfy an FMCSA inspection. State filings are simple, setting up IFTA when getting your plates for your truck is obvious. Most states recommend new entrants select all states for their first year of having apportioned registration to get a feel for where and what states they will eventually run in. The knowledge of most CMV operators with interstate experience is sufficient to get your FMCSA authority truck company up and going; at least most on EO seem knowledgeable enough about the rules by which a trucking company operates to take care of your #3.

4. CSA. Sorry so many are overly concerned about the CSA program. I’m satisfied I will be able to work as a driver for as long as I wish to drive a CMV regardless of CSA. I’m a safe driver, driving safe equipment and though I own the trucking company I work for there is little doubt I could be fired if I think I have too many points. CSA is simply a moot program if you were a safe knowledgeable driver before CSA’s inception. If anything CSA should encourage you to own your own company, you wouldn’t really fire yourself, would you?

5. Driver recruiting & retention. When you start up your truck company I do hope you will recruit yourself first. If you lead by what you want and expect for yourself, retaining you will be easy unless you are disappointed by your performance, let’s hope that does not happen.

6. Asset or no asset based equipment. I recommend you start out with your own truck first, unless you are well funded as you point out below.

7. Office and parking. Virtual offices are your answer. We have one; it has a mail box, conference rooms, training rooms, projectors/TV, and a girl who answers calls. Also includes a storage room. Costs are small.

8. Maintenance facility if asset base. I like the fact you are leaning to more than one truck. But performing CMV maintenance and documenting/recording it is necessary whether you own the trucking company or just your truck. Your personal safety and often others sharing the road depends on your inspections and maintenance of your vehicle. If you have a truck company, having a maintenance facility is optional.

9. At least twelve other areas. I cannot say I get this “twelve other areas”, but it seems to imply owing a truck company is overwhelming in your minds eye. Certainly there are areas of knowledge you will need to learn and either dictate to others or perform yourself, but none are overwhelming. Or maybe you refer to new entrant requirements.

10. Well Funded. If you own your truck, I would estimate you are funded three quarters of the way towards owing your own expediting Truck Company.

 

[ATeam]

Who amongst the EO posting masses can comment, do you believe you have a salable expedite trucking company? Is it for sale?

As a one-truck owner-operators, Diane and I do not believe we have a salable expedite trucking company. We have a salable truck that will be priced at the then current market value if and when we decide to sell it.

Our business plan does not focus on what our business will be worth when we exit the business and the truck is sold at some date in the future. It is focused on generating profits in the present, banking those profits and managing the money well.

Assuming you had the needed funding to buy a small trucking company (1-100), what most scares you, or, what do you think scares most driver/owners from moving on to owning their truck company?

Among other things, the failure rate scares people from owning their truck company.

Starting a business of any kind is a risky endeavor in which the majority of people who try it fail. Trucking is no different.

I would not even call it scaring people from owning their truck company. I would call it rational decision making by people who accept that they lack the skills, desire and drive to do what it takes to begin and succeed in business.

You can explain away on paper the lists of negatives (or challenges) all you want. That does not change the fact that starting a business and growing it into a viable entity is difficult. It's difficult and most people who try get crushed.

Now, while that may scare most people. It does not scare me. I do not shy away from starting a trucking company because it scares me (or because I lack capital or skills). I shy away from starting a trucking company because I enjoy the simple life and other opportunities that Diane's and my successful one-truck owner-operator business provide.

 

[nightcreacher]

Here is one more for the list of negatives.Unless you have time to find your own freight,not useing Logistics companies,you may just as well stay with the company your with.By the time you pay the logistics company for your load,and the other stuff you have to have to be legal with the DOT,you may as well just be least to a company.
Had my own authority,be leased makes my life much more simple.Especially when the DOT wnats to come check my records,and I have to take a day off work.

 

[tenntrucker]

I have been on vacation for almost 5 yrs now....why would i want to own a trucking company!?!?

Amen, I wouldn't want to own multiple trucks for the same reason I drive solo, don't want to get along with someone on a daily basis.


Sent from my DROID X2

 

[Moot]

I shy away from starting a trucking company because I enjoy the simple life and other opportunities that Diane's and my successful one-truck owner-operator business provide.

I'm with Phil on the "enjoying the simple life". I'm content with driving my little van around and with the money and freedom it offers me. (insert famous DaveKC quote here)

 

[greg334]

Maybe I am looking at the title of the thread as literal but I don't see the value of having a company or the idea of an asset as a purpose but a part of the business.

What I mean, as I wake up, is that the assets that you count as a value are intangible, but those assets you see - like the truck - are tangible. AND the intangible ones are what makes your company move forward.

Starting the trucking business is easy, if you want to call it a trucking business but the hard part if organization - an intangible value. T-Hawk eluded as to the problem he had with this and it is what brakes 90% of all businesses.

The value to the customer is also another intangible thing, you can always get a truck and haul the freight but it is the service you provide that matters more than the truck. So many miss the one factor involved with service - being there to service the customer in the first place.

Then the list that was listed, all insignificant when you really come down to it because all of it depends on one thing - the ability for one to organize and be proactive on every item to insure it is done, not in that order but in an order of importance. There is a cross over to being an O/O, like insurance and accounting of your business. I can't see the importance of parking or maintaince facilities, that isn't as important as audit preparation or legal advice.

The one thing that is missing that is both intangible and very important is a desire to make the business a success. Many go into it as making big bucks and are impatient in building the business up, many get discouraged and let it go to the way side when things get rough so you have to have that desire to do better than just to drive.

 

[chefdennis]

Ok, yes i own 2 vans and "rent" one of them to a Driver...as Phil said, my business plan does not consider a "salable" Busines when I leave...Yes my business is setup as a Company, but that is strictly for Tax purposes....

As the the Van's being a "asset", yea a "depreciating one", they serve to haul freight , be deappreciated for Tax purpose and they are worthless at the end of their life cycle...

So yea, I do own a "Small Trucking Company" and i also own 2 other businesses at this time and my wife owns 2 other businesses also....out of all of them, only 1 is Salable because it has a customer base that could be sold to a new owner, but then it would be their issue to continue to service those clients and keep them....I would never buy that company just because it has a client base...its a "service industry" business and the fact is, my wife is really the business...its her services that keep her clients...

Why wouldn't i want to grow and become bigger...1st, i am 60 yrs old...2nd I don't do this as a why to contribute to the household income. and as with Phil, I enjoy doing this as a simpler way of enjoying life, hence being on Vacation for the last 5 yrs.....No reason to complicate the simple...

 

[mcavoy33]

Ok, yes i own 2 vans and "rent" one of them to a Driver...as Phil said, my business plan does not consider a "salable" Busines when I leave...Yes my business is setup as a Company, but that is strictly for Tax purposes....

I understand that you don't want to. But don't you agree that the sum of your parts could be worth more than individually?

I agree there is little market out there for a company as small as you but I think that potentially you can make more money selling all of your vehicles as a company if you sell the fact that included are the drivers and the carrier contracts.

 

[ATeam]

When a service business is sold, the seller does not determine the price, the buyer does. Customer relationships are loosely held in the transportation business. When presented with a customer list, you may not need to buy the business at all. The customers can be gained by offering the first two loads free if you are willing to offer that deal as a loss leader. There is nothing secret about a customer list. It takes little effort to figure out who ships freight in a given community and who to contact about it. If a customer list is worth anything at all, it is worth only what someone else is willing to pay; which would be very little, I believe. Nor would driver retention be somethign to count on if a business was sold. Turnover in trucking is high even without the business being sold. And you may not want the drivers the previous owner hired anyway.

 

[chefdennis]

Ahh 2005 GMC 3500 with a half a million miles has no resale value. I cannot sell MY lease that I have with Load 1...it doesn't belong to me and i am leased to them at their pleasure, and I do not have any of my own customers...so it has no retail value...yes if i left the business tomorrow, the Cargo Max has resale value, but that ain't happening...so no, the sum of the totals are not worth anything.

As for my other businesses, they are "service" based and again have no regular customers under contract so again nothing but the name of the Business has any worth other then name recognition....there is no inventory or assets to sell.

All of my businesses (since I closed the fitness center) while they do provide a service, are nothing more then setup to take advantages of the Tax codes and allow me to have next to nothing in tax liability....

When I closed the Fitness center, I put all of the equipment in a storage locker and kept that business open for the required yrs to depreciate its worth to -0- then turned into "personal property" so that if and when it is sold, their is no income for the business to report, it is all personal money and it certainly will not be reported....so again, nope, there is no value for me to own a trucking company....BUT, that doesn't mean its a bad idea for others....it all depends on what you want out of the venture....me, as i have said, its a vacation, RV expediting....

 

[cheri1122]

Hey Lugnut: ever hear of 'The Peter Principle'? It 's what happens when people keep moving up to the next level in business until they reach the level of incompetence. [In a big corporation, or the government, they get to stay there.]
Not everyone is qualified to move up, and not everyone who is qualified wants to move up, and it doesn't make them slackers [your wording implies that wanting to move up is both natural & universal] - it makes them smart to stay where they're happy.
BTW: why do you ask? Seems like more than idle curiosity asking....

 

[lugnut1]

A bit of summarizing of your comments;
=======
Quote from Rocketman
Senior Member
“The only thing you will realize out of the time spent in this business as a solo o/o will be the living provided during the time you were in the business”
“very happy to not have the headaches”
“very comfortable not having a commitment to a business.”
“Any business that can be profitable on its own with minimal investment and grow from that is worth looking into.”
========
Quote from Tennesseahawk
Senior Member
“I'll be the first to admit I'm not organized enough; not to mention all the gubmint buttkissing”
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Quote from ATeam
Senior Member
“Our business plan does not focus on what our business will be worth when we exit the business”
“I shy away from starting a trucking company because I enjoy the simple life”
=========
Quote from nightcreacher
Senior Member
“By the time you pay the logistics company for your load, and the other stuff you have to have to be legal with the DOT, you may as well just be leased to a company. Had my own authority, being leased makes my life much more simple.”
=========
Quote from tenntrucker
Senior Member
“I wouldn't want to own multiple trucks for the same reason I drive solo, don't want to get along with someone on a daily basis.”
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Quote from Moot
Senior Member
“I'm with Phil on the "enjoying the simple life".”
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Quote from greg334
Senior member
“Starting the trucking business is easy, if you want to call it a trucking business but the hard part is organization”
Greg, you hit one the most important successful traits of any business owner. To quote you “the ability for one to organize and be proactive on every item to insure it is done, not in that order but in an order of importance.” Well said Greg.
=========
Quote from chefdennis
Senior Member
“So yea, I do own a "Small Trucking Company"”
Why wouldn't i want to grow and become bigger...1st, i am 60 yrs old...2nd I don't do this as a why to contribute to the household income. and as with Phil, I enjoy doing this as a simpler way of enjoying life,


Quotes from most of you would indicate your desires are for the “simple life”. That you’re being leased to your chosen truck company provides the structure to provide that simple life style.

 

[lugnut1]

When a service business is sold, the seller does not determine the price, the buyer does. Customer relationships are loosely held in the transportation business. When presented with a customer list, you may not need to buy the business at all. The customers can be gained by offering the first two loads free if you are willing to offer that deal as a loss leader. There is nothing secret about a customer list. It takes little effort to figure out who ships freight in a given community and who to contact about it. If a customer list is worth anything at all, it is worth only what someone else is willing to pay; which would be very little, I believe. Nor would driver retention be somethign to count on if a business was sold. Turnover in trucking is high even without the business being sold. And you may not want the drivers the previous owner hired anyway.

You’re kidding I hope. A market for anything and I mean anything can be developed by a seller at a price determined by the seller whether for services or goods. Cost points determined by the seller are based on the cost of providing or creating the goods based on necessary volume of units sold to reach profitability. Cost point variables of anything sold is apparent when broken down into their price points to determine end volume of units to be sold. A potential buyer ultimately either consumes or does not, but price entry point is always determined by the seller. The math can be applied to anything, and yes including your service. Feel free to disagree though, I do not expect you to buy the idea. The fickleness of human consumption when price is concerned never amazes me anymore, people buy crap everyday simply because their perception is “it’s cheap, what a deal” however they certainly do not determine the price as it is offered.

 

[Tennesseahawk]

I wouldn't call trucking the "simple" life, by any means. But if you mean "simpler" than running my own company, which I did, then I'll take the simpler life. These days more than ever, it seems, it's putting dollars after cents.

While running for C&M, I ran into an independent who was on C&M's board. We compared rates, and he came out 5-10 cents higher than I was making for the truck. Not worth it!