Need your guys advice on expanding.

jzalesky · Sep 28, 2014

Hey guys and gals. Needing your advice on what you recommend I should do so I will cut to the chase. I currently have a small business running a 26' box truck doing pick up and delivery for an airfreight company in the DFW area. Pay is good I am averaging about 2k or more a week. Now here is my issue. Back when I was in the service I was diagnosed with Ulcerative Colitis. Well 13 years later its now starting to affect my health enough to cause me to miss work. This lastest episode has put me down for over a month. Luckily the company I have been working with has been understanding and working with me.

My question to yall is what do you think about me expanding and getting into running tractor trailers? I am not sure how much I can drive myself and looking to hire and put someone in my box truck but that would not pay the bills for me having to pay for a driver. I have been looking into running a semi with a guy in it for the last year but dont have any experience with it. I would like to run a truck regionally out of Dallas that way I could get my guy home most nights of the week if possible. So I was wondering if I you guys think this is a bad idea or would it be worth it? I am not afraid of the hours and work and dealing with customers etc. I have some customers already just would have to fill the gap off load boards until I build a larger base. As for gross revenue per year I hear a large difference between different owner operators. Im not sure if its the driver or what some tell me they do 250k plus a year and others do 180. Anyway and advice or input on this would be great. Just want your input on what you think about the industry now and if its a good move or not.

Thanks,
Jason

davekc · Sep 28, 2014

It is hard to answer because of all the variables. Like how much can you drive? Currently and projected in to the future. Can you find a good driver to run for you? Selling loads as a broker may be your best bet because the investment is minimal and you can control your hours and availability.
If you have a driver, do you have enough in reserves to cover the truck costs and maintenance?
Same with being a broker. Depends on your knowledge, time, and sales ability.

Mailer · Sep 28, 2014

jzalesky said:
Hey guys and gals. Needing your advice on what you recommend I should do so I will cut to the chase. I currently have a small business running a 26' box truck doing pick up and delivery for an airfreight company in the DFW area. Pay is good I am averaging about 2k or more a week. Now here is my issue. Back when I was in the service I was diagnosed with Ulcerative Colitis. Well 13 years later its now starting to affect my health enough to cause me to miss work. This lastest episode has put me down for over a month. Luckily the company I have been working with has been understanding and working with me.

My question to yall is what do you think about me expanding and getting into running tractor trailers? I am not sure how much I can drive myself and looking to hire and put someone in my box truck but that would not pay the bills for me having to pay for a driver. I have been looking into running a semi with a guy in it for the last year but dont have any experience with it. I would like to run a truck regionally out of Dallas that way I could get my guy home most nights of the week if possible. So I was wondering if I you guys think this is a bad idea or would it be worth it? I am not afraid of the hours and work and dealing with customers etc. I have some customers already just would have to fill the gap off load boards until I build a larger base. As for gross revenue per year I hear a large difference between different owner operators. Im not sure if its the driver or what some tell me they do 250k plus a year and others do 180. Anyway and advice or input on this would be great. Just want your input on what you think about the industry now and if its a good move or not.

Thanks,
Jason

Really, this question should be discuss with your doctor first, but I'll throw in my opinions.

I have to give you a thumb up for for still being able to work and willing to work with the diagnosis of UC attached. Apparently, your last flared up that put you out for a month could be the signal for some serious change of plan in your current career. Really, check with your doctor.

In expediting, most of us do not have regular sleep, rest, eat, or bathroom breaks, etc. All of these will certainly creat more stresses to your body and could worsen UC symptoms.

You've mentioned that you were diagnosed while in the military, I hope you've been seen and evaluate by the VA. If not, please do so.

In my opinion, I would not make any big change unless I get an OK from the doctor.

Good luck and wishing you the best in health.

jzalesky · Sep 28, 2014

Sorry think I didnt explain what I was trying to do well enough. Im looking to get out of the truck all together and hire guys to drive my trucks. Im currently still out of work but really not sure how this latest flare up is going to affect me stomach once im fully better. Im having more trouble with having to go to the bathroom to much with each one etc.

As for money how much reserve money would you have running a tractor? My box truck can do 2 thousand plus a week gross revenue. I would plan on putting someone in that as well to keep it going and it would also let me still have my contract with my current company which would allow me to park my tractor and trailers on their property. I currently make about 65k profit a year with my current truck. Im just trying to figure out if owning a tractor and puting a driver in it is worth the money or not. I know some local guys who claim to make 250k gross a year doing local work or just one overnight stays. They claim a lot of their loads come off the boards. Then I hear others who act like they never can find a load for some reason which doesnt make sense. Anyway was going to get your guys opinion if it would be a good idea and worth while. I would plan on learning to drive the truck as well just to fill in as needed. As for the driver I know a few guys but still looking for someone that would have the same game plan as me. Im willing to take less profit for a great driver if he/she helps grow my business with me. Thanks for all the responses.

davekc · Sep 28, 2014

It is again, a hard question to answer when you say "running a tractor". What does that mean?
Do you already have a truck, buying one, leasing one etc. It is hard to put a number to it with limited information. I can comfortably tell you that it would not be recommended to start a venture with little capital.

jzalesky · Sep 28, 2014

Ah ok yea sorry I am looking to purchase a used one. Im looking to expand my current business and im considering buying a tractor and hiring a driver and running loads regionally.I would not be the driver. I would be just setting up the loads for my guy to run. Im just trying to do all the homework to make sure this is the right route to go. I have capital for operating costs for at least 3 months so should be good there. I am more concerned on the true ability to make a profit with one. My goal is to have 3 or 4 running in the next few years if all works out. Just figured I would get input of others who are already doing it.

davekc · Sep 28, 2014

I guess everything is relevant. Probably going to depend on what rates you are running at, are you providing the trailer, and what is the age of equipment you are trying to buy. If you are buying used, you may be purchasing someone else's problem. Truck repairs as you know can get into the thousands really quick. All kinds of crash and burn stories through this site. Undercapitalization is a underlying theme to better than half of them.

jzalesky · Sep 28, 2014

Yea true I have had my share with my box trucks. I have a couple places that sell used trucks that havent done me wrong yet but you can always get a lemon I guess thats always a risk. I would have my own trailer or two as well. Im just trying to get input from people about getting loads off load boards etc. From what I see I could easily get a load going to and from Houston almost daily look at the boards right now. Costing about 300 in fuel for the trip i would estimate. So if I could do 1k plus a day that would not be bad. The going rate for just local runs around DFW is about 300 plus a load. I know two guys who just run 3 or 4 loads around town everyday. I figured it would be easier to start running a couple loads a day going to Houston or something. On paper it looks like if you do 230k plus in revenue and run regionally keeping gas costs a little less you could profit about 50k plus a year after paying your driver etc. Thats estimating for maint and cost of trailer and payments. My concern is having enough work because I run into guys a lot who act like they cant keep loaded. But again that doesnt make sense to me either since there are more loads than trucks out there now days.

Daffyduck528 · Sep 28, 2014

jzalesky said:
Ah ok yea sorry I am looking to purchase a used one. Im looking to expand my current business and im considering buying a tractor and hiring a driver and running loads regionally.I would not be the driver. I would be just setting up the loads for my guy to run. Im just trying to do all the homework to make sure this is the right route to go. I have capital for operating costs for at least 3 months so should be good there. I am more concerned on the true ability to make a profit with one. My goal is to have 3 or 4 running in the next few years if all works out. Just figured I would get input of others who are already doing it.

We are a small fleet and we run with FedEx so it's a little different than what your doing, but 3 months of capital to me seems very low. We recently discussed cash on hand for the future as we grow and I believe it's quite important to keep a healthy reserve. We keep enough cash for 6 months of down time for each truck and we are with a carrier that keeps the trucks moving. I have a friend who believes 1 year of reserves as a minimum.

All kinds of things can go wrong in this business and it drowns companies all the time. It's not just truck repairs, which on a class 8 truck can easily hit $10k or more, but also if a driver gets hurt and you can't replace them quickly or that great contract you land decides to move to the other guy for a nickel less and you don't have enough freight to keep the trucks moving. And I'm sure people on here could name 100 other things that can drown an under capitalized trucking company.

I don't want to sound discouraging but this is a very volatile industry and these forums and classified ads are full of people trying to sell off their equipment to get out of bankruptcy or keep from going under and one of the biggest reasons is the unexpected happened and they didn't have enough capital to weather the storm.

I would reevaluate the capital side of your business and also consider doing the broker thing as was already mentioned. You could still run your 1 truck that you already own and as you build up capital maybe buy another. By then you'll know if the freight volume is there to support your growth.

jzalesky · Sep 28, 2014

Daffyduck528 said:
We are a small fleet and we run with FedEx so it's a little different than what your doing, but 3 months of capital to me seems very low. We recently discussed cash on hand for the future as we grow and I believe it's quite important to keep a healthy reserve. We keep enough cash for 6 months of down time for each truck and we are with a carrier that keeps the trucks moving. I have a friend who believes 1 year of reserves as a minimum.

All kinds of things can go wrong in this business and it drowns companies all the time. It's not just truck repairs, which on a class 8 truck can easily hit $10k or more, but also if a driver gets hurt and you can't replace them quickly or that great contract you land decides to move to the other guy for a nickel less and you don't have enough freight to keep the trucks moving. And I'm sure people on here could name 100 other things that can drown an under capitalized trucking company.

I don't want to sound discouraging but this is a very volatile industry and these forums and classified ads are full of people trying to sell off their equipment to get out of bankruptcy or keep from going under and one of the biggest reasons is the unexpected happened and they didn't have enough capital to weather the storm.

I would reevaluate the capital side of your business and also consider doing the broker thing as was already mentioned. You could still run your 1 truck that you already own and as you build up capital maybe buy another. By then you'll know if the freight volume is there to support your growth.

What would you consider 6 months capital to be? Im just estimating what I could put forward but not sure what exactly what numbers you guys are thinking or talking about. What kind of capital would you guys suggest? I actually could buy into a fedex route right now from someone who I know is wanting to retire. Seems like steady work for his trucks but a little less income than being stand alone. I mean you can buy a brand new rig for 140k. As for the tractor being down for some great length of times I guess that would be an issue.

Another question I would have is would you buy new vs going used? I mean you can get a truck for 40k on a 3 year loan or get a brand new one for 120k on a much longer loan term. No business comes without risk just weighting in all the options and risks.

Daffyduck528 · Sep 29, 2014

jzalesky said:
What would you consider 6 months capital to be? Im just estimating what I could put forward but not sure what exactly what numbers you guys are thinking or talking about. What kind of capital would you guys suggest? I actually could buy into a fedex route right now from someone who I know is wanting to retire. Seems like steady work for his trucks but a little less income than being stand alone. I mean you can buy a brand new rig for 140k. As for the tractor being down for some great length of times I guess that would be an issue.

Another question I would have is would you buy new vs going used? I mean you can get a truck for 40k on a 3 year loan or get a brand new one for 120k on a much longer loan term. No business comes without risk just weighting in all the options and risks.

6 months to me = all my expenses, truck note, insurances, carrier fees, avg. maint expenses (although minimal if the trucks not moving), plus living expenses for 6 months. It sounds like a lot but after a major break down (which will happen) you'll be very glad you have the resources to get through it. Plus running as the carrier you'll need to rent or lease a truck should one of yours go down or give the business to another carrier that could steal your customer. That will be a cost to you that I don't have a risk of having to do.

I started out buying used trucks. With the expediter trucks the used market is pretty small. We lucked up on a couple good used ones but we are only purchasing new trucks now. Having a warranty and the better fuel economy of the newer trucks is our main reason for going this route. Also, keep in mind a new truck can have a major breakdown as well. Don't bet on buying new to keep you from having a truck go down.