Driver Lifestyles
The Owner-Operator Commitment
By Jeff Jensen, Editor
Apr 2, 2008 - 8:08:10 AM

Entering the expediting business as an owner-operator can be as intimidating as owning any other form of business. At times, it can seem as though there are more questions than answers and fear of the unknown and failure are ever-present.

Many prospective expediters have discovered expediting from a relative or a friend, so they have a rudimentary grounding on what the business is about, while at the same time, they have a mentor to help them over the bumps in the road.

Others come to expediting from other segments of trucking, possibly over-the-road, local delivery, etc. These folks have a background in transportation and probably have a handle on what this business demands of it's people.

Another route that many prospective expediting owner-operators have taken is that of driving for a truck owner or fleet owner. Long recommended as a sensible entree into the emergency freight business, driving an owner's truck for six months or a year is the least financially "painful" way to gain the experience and knowledge of this industry and it's lifestyle.

And, as we'll see, this experience will also weigh heavily in the prospective owner-operators' favor during the truck loan process.

Adam Walter is Ohio-based Panther Expedited Services Recruiting Manager and he states, "I'm an advocate of testing the expediting waters by driving for an owner first. We've had a number of couples who have experienced great success in the business and who started driving team for an owner or fleet owner. They used that experience to their advantage and are now owner-operators."

There are also those people who discovered expediting through word-of-mouth, a magazine ad in Expedite NOW, ExpeditersOnline.com, an Expedite Expo or Expediters Workshop.

They possibly have spent their working lives in non-trucking related professions and, as retirement approaches, are looking for a second career to supplement their retirement income. Many of these folks are attracted to the idea of being a "paid tourist." For them,living and working in an expediting truck is a fascinating, yet daunting prospect.

Let's assume that the prospective expediter or expediting couple has paid his/her dues in an owner's truck and is ready to make the leap into truck ownership. Or, throwing caution to the winds, the absolute newbie to expediting sees the opportunities available in the business and wants to jump into a truck of his own.

The checklist

A Business Plan
If you're planning on starting your own expediting business, but haven't created a business plan yet, put that on the #1 priority list.

An expediting truck is probably the single most expensive component of the expediting owner-operator's business, but it still is just a tool of that business. It's vital to the enterprise, but business lenders want to see evidence of planning in other aspects of the expediters' business.

A business plan precisely defines your business, identifies your goals, and serves as your company's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions.

Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.

Glen Rice had an extensive career in truckload trucking before moving into the expediting world. He and wife Janice designed and operated their well-known Lil' Deuce Coupe - a working show truck leased with FedEx Custom Critical's White Glove division until they were injured in a tragic accident a few years ago

He states, "A business plan is very important to show what your expectations are and what your goals are. It's critical to prove to a lender that you can make a go of it - after all, why would anyone invest many thousands of dollars in you without a likely return?"

"When I've put together business plans in the past, I've based my numbers on what other owner-operators have been doing and my own experience."

"As part of a good business plan, you want to have three to six months of expense money put aside. It would be the same if you were opening a barbershop or movie theater, you've got to have that operating capital."

John Lalonde of Fyda Freightliner of Columbus says, "I think an owner-operator has to have a bare minimum of three months of operating expenses - money for the truck payments, fuel, insurance, repairs, etc. Actually, in expediting, many of the potential truck buyers have good credit and cash reserves."

Veteran expediter Phil Madsen has authored a multi-part series of Business Planning articles published in Expedite NOW magazine.

These articles are available online.

Selecting a carrier or buying a truck - which comes first?
It would seem that the logical way to proceed would be to buy the truck and then find the carrier to lease it with, right?Actually, according to the experts, you should reverse that process. Or, they say, it can be done simultaneously.

Jon Mosier is the Expediting Truck Specialist at Freightliner of Knoxville and he also has a background in recruiting with several expedited carriers.. He says it's best to contact the carrier first and find out what that company's owner-operator requirements are, particularly if the prospective expediter(s) has no experience in expediting.

"They can use the truck shopping experience as an information gathering process as well," says Mosier. "Generally, the people selling the trucks will have some knowledge about the expedited carriers and how they operate, their equipment requirements., etc."

John Lalonde says that the truck salesman is often called upon to give the first-time truck buyer some advice:
"I would say that with maybe half of the people I see, they have their carrier choices narrowed down to about three companies. Quite often, they ask for my opinions on the companies. Unless they're coming to us because of a referral from a carrier, they want our input on the carriers."

"You can do both at the same time, but talking to the carriers is probably first on the list," says Panther's Adam Walter. "The recruiter can help answer those questions about equipment."

"Don't commit to buying a truck until you have solidified the deal with the expediting company. The carrier can give you information about getting tags for the truck, securing insurance, etc. , so it's important to find a carrier who's willing to work with you during the buying process."

He continues, "When dealing with a prospective owner-operator with Panther, I make sure that they have three to six months of working capital before they enter the business. We find that too frequently, people tend to put all their money in a truck and then they have no money to run with. That's a road to disaster."

"We try to find out what the prospective expediters' needs are and what they're looking for. The lifestyle that they desire will dictate whether they'll be in a cargo van or straight truck. Of course, if they have the experience, they might want to run in a tractor."

Selecting a truck - What size?
What size, indeed! This is a question that is always a topic of discussion whenever expediters gather. The question should probably be phrased - What size truck will be profitable for me and what size would I feel the most comfortable with?

For the purposes of this discussion, we're going to narrow the choice down to cargo van and straight truck. This is because the prospective expediters who have an interest in operating tractor-trailers will, in all likelihood, be coming to expediting with training and over-the-road experience in that size truck. The expedited carriers will require verifiable over-the-road experience in a tractor anyway, so that leaves out our neophyte expediter.

The first choice for the prospective expediter unfamiliar with professional driving is usually the cargo van. It's less expensive than a straight truck, it's similar to driving the family car and there are fewer regulatory issues.

The flip side of the coin is that the cargo van is, of course, limited to the smaller size loads and the fact that it's not dock high. Because this size vehicle is such a popular size with which to enter expediting, a driver can expect to find more competition for loads, particularly with the larger carriers. Comfort can be an issue, especially for a husband/wife team.

The remaining choice of vehicle is the straight truck, which has become the expediting standard. A husband/wife team in a straight truck with a 22-foot box is considered "golden" by most expedited carriers. This size unit has much to recommend it: It can handle a wide range of loads, it can be outfitted with very comfortable sleepers and the expedited carriers are quite partial to the straight truck.

Glen Rice says, "Select a carrier first. You need to know what kind of equipment your company's work will require. If you're going to stay regional and run just a few states, you can probably get by with a smaller motor size. If you think you might need to run to the west coast, you'd probably be happier with a larger engine, bigger sleeper, etc."

Experience
This component in selecting a carrier also has ramifications in obtaining credit which is addressed in the next section. As far as a carrier's requirement regarding experience, it's probably easiest say that some do and some don't, but the company will look at an owner-operator's credentials on a case-by-case basis. Check with the carrier.

Credit
John Mosier says, " The main thing that the lenders want to see is experience in the field. I encourage customers to check their own bank or local credit union to see if they do commercial loans."

John Lalonde states, "Expediting attracts many second-career or retired people who are financially comfortable. If the buyer is totally new to expediting, the finance company is going to require A-1 credit and a substantial down payment."

Adam Walter cautions, "It can be a temptation, particularly for those couples who have had success in a previous career, to want to start out as owner-operators with that expensive truck.

There's a lot to learn about this business and I think it's important to keep the expenses down as much as possible at the outset I would rather see someone buy their first truck without all the bells and whistles and run that truck before they go out and buy that $100,000 straight truck."

Expediting lifestyle adaptability
"It's a different lifestyle, even from truckload trucking," says one expedited recruiter. "There is the downtime of expediting and there is a learning curve in finding the busy areas of each company."

"I just had a couple in the office the other day. They had taken a load to Washington State and he said the only reason he took that run was because he had never been there. Expediters enjoy those opportunities. It's whatever you make of it There are many who carry their golf clubs and fishing poles in the truck."

The transition into expediting
"Our orientation is pretty thorough," says Panther's Adam Walter, "and when they come out of class, the new expediter's head is spinning and we understand that."

The carriers cram a great deal of information into the orientation proces and hat's a lot for anyone to absorb. Many "new hires"are nervous about accepting that first load, especially if it involves Canada. They remain apprehensive until they get out on the road, do it and start to feel comfortable.

There's a lot of on the job training along with trial and error experiences. They have the basics down, but until they go through it, it can be a little unnerving.

Adam Walter states, "Many of the prospective expediters that we see at Panther Expedited Services are quite often somewhat familiar with the business; they have friends or family members in expediting. The husband/wife teams usually know someone in the industry and that makes my job easier."

"Expediting is a lifestyle, as well as a career."