Note: Added 03/09/11. …..
When I wrote this I was still in the dark about how much my carrier was screwing me. Let me revise the carrier portion this way… Do not lease to a carrier. Ignore the old advice given here in this posting and get your own authority. The paperwork is daunting, but leasing is giving the carrier free license to work you over. Trust me on this one.
And now to the original posting…….
As of today, I’m three full months out of truck driving school and into this new gig. Meaning I’m broker than I was when the new year dawned, but starting to make money and learning multiple lessons along the way.
I think I’ve actually learned something new every day during this initial start-up process, and expect to keep learning for as long as I operate this company. There is just a never-ending stream of variables to learn to deal with and it takes energy and attention to detail to keep up!
I thought I’d review all the hoops we’ve leapt through getting started, the equipment we’ve had to pony up for, and the ropes I’ve been learning as we go along. And it’s some undertaking, for certain!
Let me interject here that any type of business start-up is not for the easily discouraged or the weak of heart. Businesses that are successful have to go through growing pains, and most of those pains come with a hefty price tag. But being experienced in business operation helped me tremendously and I knew up front that it would be a combination of scary, pricey, and frustrating at times. The big thing is to just get going and get over the humps with as little pain as is possible. Which is about where I am right now.
One of the first things anyone wanting to start a hot shot or trucking company needs to know is that it’s not just as simple as getting a CDL, buying a truck, and slapping on a sign. There are dozens of details that have to be attended to, and everything is so regulated by the government that every I has to be dotted and every T crossed.
There is no room for sloppiness as being careless will cost you!
The second thing is that it takes a substantial financial investment. Trucks aren’t cheap, the equipment needed for cargo securement isn’t cheap, the parts to fix broken trucks aren’t cheap, and now fuel is just going sky high, and all of the equipment has to be constantly maintained. So if you’re thinking of getting into this business, make sure you can afford to pay the piper first! I don’t think anything would be more disappointing than going to the time and trouble to get started, then to run out of money and not be able to make back the investment.
Right now I’m somewhere in the ballpark of $55,000 into this game. The truck was $41,000, but my trade-in shaved about $12,000 off of that. The trailer was about $7,000. Chains, boomers, straps, auxiliary fuel tank and truck bed set me back about another $5,000.
I just went out yesterday and bought extra chains and some ratchet boomers. I found out the hard way that lever boomers can be pretty persnickety, especially if you aren’t a big old guy with muscles, and the ratcheting type should make my loads a little safer and easier to secure.
Those babies are not cheap by anyone’s standards. Oh, and 1″ clevis shackles are just about worth their weight in gold when you go to buy them, anyway. So plan for a lot of extra expenses that may not be obvious before you see what you’ll be hauling!
Keep in mind that anything and everything involved in trucking is priced as if we make a whole lot more money than we actually do. One trip to the heavy truck supply store can easily pluck a thousand bucks from your pockets!
Looking back, the first phase was finding the right truck and trailer. That took time and we really shopped around. It helped tremendously that my carrier knew what equipment was needed for the loads we haul. Still, I over-did it on the truck and am extremely happy I did!
If I’d have gone with a 1-ton instead of the 2-ton, I’d be restricted down to a whole lot less weight. As it is, I’m permitted for 45,000. With the truck and trailer (plus equipment, full fuel, and driver) weighing in at about 20,000, I have 25,000 left over in cargo capacity.
A hint to would-be hot shots… get the biggest truck you can! You will need that extra cargo capacity if you want to keep your trailer loaded and moving.
Your standard 40′ gooseneck float trailer will eat up about 8000 lbs. of weight empty, so get a truck that you can load heavy. After getting into this a ways, I’ve developed the opinion that a 1-ton is just not quite enough truck for the job. I know, everyone uses them, but still, they’re overloading their equipment in doing so and cutting down on the useful life of the truck.
So, in a nutshell, my advice is think big!
And another hint… shop around and don’t be afraid to travel to get a deal. The Dodge 5500 crew cab & chassis I got was actually priced $10,000 less at the dealership I ended up going to than our local dealership because they had a lot full of them that they were trying to get rid of. And I mean ten-grand less than the 1-ton single cab version!
After that, the paperwork flurry began, and that took another month just to get things all licensed and permitted. This part is where attention to tiny detail pays off! If you don’t have all of your ducks in a row when you go to get your permits, you get sent home empty handed. A lot of folks hire professionals to do the paperwork part, and if you don’t like filling out forms, it may pay to do just that. In my case, it worked out for me to just do it myself. I had the time to do it and things did go through fairly smoothly.
Just expect the paperwork to take time! I was impatient about it, but in retrospect, it wasn’t too bad. It helps to know things move very slowly in governmental operations. Just allow the extra time for all of that to be approved and don’t sweat the waiting! It’s a lot less stressful if you know up front that it’s just the way it works, and worrying/fretting/being impatient just makes you miserable. It will not speed up the process!
I lucked out and stumbled into a job before I ever bought the truck. I have one bit of advice in finding a carrier to lease on to… NETWORK! Don’t just go running to a big company. Check around locally and see if there are any carriers you can work with close to home. Talk to people!
My carrier is a small company, they have an open door policy, and I can take any concerns or questions straight to them. And get an answer! Their yard is 4 miles from my driveway and I have the cell phone numbers of the owners on speed dial.
The advantages to leasing to smaller carriers are that they know you as an individual, they actually care about their leased owner/operators being happy and making money, and, in our case, they actually get higher rates on the cargo we move than the bigger carriers. They have relationships with all of our shippers and we move locally produced goods.
Another thing to think about is the rate you can get with a carrier. Because my carrier charges the same price for hot shot trucks as big trucks, I can run at a fairly high rate of profit, and their policy is not to book back-hauls for every hot shot run. As a small carrier they have limited time to be looking for loads, and the big-truck rate offsets my deadhead time.
With this in mind, I talked to my carrier and arranged specifically to get their OK on me booking my own back-hauls, and I pay them a small percentage of my self-booked loads to cover their costs for paperwork and insurance. It’s a great arrangement and I foresee making the very most of my time out by trying always to have a back-haul. Even if it’s a short run, those back-hauls can pay a big chunk of my operating costs and up my profit margin substantially!
As to being a carrier myself vs. leasing, I’m at this point… It’s well worth the percentage I pay to my carrier right now so I can concentrate on the hands-on end of the business. If I had to do the paperwork and keep records required by FMCSA, I wouldn’t have time left to drive. So it’s a trade-off. I get all the work they can throw at me, can get my own back-hauls to supplement my income, and the carrier takes care of everything else. The last thing I need as a new owner operator is to have to stress out over getting a paperwork audit!
Which is why I put getting my own authority on hold. I may or may not ever need to get it. At this point it’s just not necessary and I don’t foresee having to go that route in the near future. But it’s not a door I’m closing and locking. As time goes on things may change and that’s an option to keep open.
As a last note, think of operating costs up front!
Right now with diesel at about $3.45 locally, my basic operating costs are about .61 per mile. And that’s just fuel, DEF fluid, oil changes, basic maintenance… running costs. That doesn’t take into account motel bills and food or unexpected expenses like flat tires and such.
So know your operating costs and talk to prospective carriers about their rates before you lease! Make sure they pay enough to keep you running and financially afloat! My carrier does really well at getting us somewhere around $2.50 per mile, fuel surcharge included on the majority of our loads. Of course, that fluctuates some and isn’t set in stone. The rule of thumb for a flatbed is that you should get at least $1.50 per mile or $1.55 if the load has to be tarped.
Alright, I think that’s about it. I better quit messing around here and go find a back-haul for my next run.