Switching careers. Is O/O worth it?

[Steve0]

Hello, I'm seriously considering a change in career to OTR trucking with an eye towards being an owner/operator within a year or so. I was wondering, with the cost of fuel and insurance, is it worth being an owner or is it better to just be a fleet driver?

[joerockhead]

Steve, if EVERY O/O was failing lots would be fuller than they are with re-popped trucks. Certainly times have been better, that being said many are doing very well. Some carriers have excellent fuel surcharge programs in effect, their customers are paying it and they are passing it on to their trucks.
The big mega carriers can't do it all. They can't grow to handle the workload so O/O's will always be here and surviving.
I'm a HUGE proponent of workig on a % basis, just my opinion. I also don't work with people that have a forced dispatch. My truck, my expenses...my choice.

Just some of my thoughts.

[Big_Dave]

I concur 100% with the above reply.

I would however spend at least 1 year as a company driver to get the feel of how this industry works. Trucking seems to be more of a cut throat industry than almost any other industry out there.

During your time as a company driver, you'll have many opportunities to talk with O/O's from many different companies.

Take notes.......LOTS OF THEM!

As much as you can, do research on the different types of trucking........dry van, reefer, tank, etc...... That way you'll get an idea of what you think you'd be happy doing.

As far as becoming a O/O, there are good companies out here to lease a truck on with.

If you want to be completely independent and have your own authority, that's very doable also.

Feel free to ask questions here. The only stupid question is the one that isn't asked.

Enjoy your time here and Welcome aboard. :)

[DrivingZiggy]

And whatever you do, stay away from "leasing" a truck from the company you're working for. Also stay away from SelecTrucks.

[plow150]

I will never understand all of the politics.

[blackf3504dr]

OK ... A lot has changed since this was posted ... Have any of you changed your minds on being O/O as opposed to being a company driver ?

[Admin]

BEFORE YOU WASTE YOUR MONEY , YOU SHOULD DRIVE FOR A COMPANY FOR A YEAR OR SO.
IF YOU STILL LIKE IT AFTER THAT YEAR THEN THINK ABOUT THE NEXT STEP.
TO MANY NEWBIES WENT DOWN THE RIVER AND LOST ALMOST EVERYTHING.
JUST MY 2 CENTS ;)

[blackf3504dr]

BEFORE YOU WASTE YOUR MONEY , YOU SHOULD DRIVE FOR A COMPANY FOR A YEAR OR SO.
IF YOU STILL LIKE IT AFTER THAT YEAR THEN THINK ABOUT THE NEXT STEP.
TO MANY NEWBIES WENT DOWN THE RIVER AND LOST ALMOST EVERYTHING.
JUST MY 2 CENTS ;)

I sold the truck in 2002 and retired ... but I'm getting tired of being retired , and am thinking of doing the O/O thing again .

[magicman]

The best advice I can give you is simply this:

On each and every load, account for every penny your company spends on you and the truck, ie: fuel, maintenance, tolls, etc. When you add these expenses up, divide the amount by ACTUAL ODOMETER MILES to get your cost per mile.

Don't forget that when you own the truck, you also pay the employer's share of FICA, which amounts to an additional 7.65%.

If you decide the O/O is for you, remember to keep a Maintenance Account set aside for maintenance, tires, tractor washes, etc. Right now, I put 8 cents per mile aside, using odometer miles.

Your yearly expenses are going to be similar to the following, adjusted for different states:
License $ 1750
Permits 250
FHUT 550
Annual Inspection 50-75

You'll also have the following Monthly expenses:

Payment $ 1200-2000
Cell phone 200
Insurance 200-300
Worker's Comp 300
Fuel/mileage taxes 100-175

Also, don't forget to pay yourself as much as you GROSS, now at the very least. Let's face it, if you don't make as much or more as a company driver, there's no reason to become " THE BOSS".

[Scarlet_t72]

Hi All
My Husband has just become an O/O. He leased his truck through the company he had been driving for the last 2 years. ( saw someone say this wasn't a good idea in one of the other posts but too late now) He is now in the second month. I am the one that has been nominated to keep track of expensis and to go over and under stand the settelment sheets. I have accounts set up for service($150.00 WK) and taxes(10%gross) I feel like a fish out of water. :wacko: I thought I had a handel on the settelment sheets untill the last two there is a charge for FHUT.. What is FHUT???? And fuel/milage tax?? Isn't that paid at the pump?? Who do I pay the Fuel tax to? Is it a write off? Now someone has told him he could get more money for the fuel surcharge if he paid for is fuel in cash rather than using the comdata card. I have been all over the net looking for information about the fuel surcharge. What little I have found has only confused me more. If what he has been told is true how is the surcharged paid to us? Who pays it? how is it figured? I need HELP from someone with experience that is neutral. Is there anyone out there??

[Admin]

I am sure you get the answers here :)

[Foxfire]

Hang tight Scarlet..... I'm trying to get the answers for ya and will put in what I find out for sure. I've been out of the O/O business for a while now and things have changed a whole lot.

[LSMR]

Scarlet_t72-First of all WELCOME.Lot's of good people here who give lots of good info.In regards to the FHUT -how much were you charged?It may have been the Heavy Highway Use tax the federal government charges annually (form 2290).

I understand your husband leases to a company.I have my own authority.I used a service I found here on the internet.They do a good job and they're priced reasonable.They may be able to help you.If you want their name & phone# please PM me.

[joerockhead]

www.ooida.com

www.43truck.com

[Big_Dave]

I thought I had a handel on the settelment sheets untill the last two there is a charge for FHUT..
What is FHUT????
FHUT is the Federal Highway Use Tax. Form 2290. Every commercial vehicle must pay this prior to being issued a license plate. www.irs.gov/pub/irs-pdf/i2290.pdf Here's the Search Results (http://www.google.com/search?client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial_s&hl=en&q=form+2290&btnG=Google+Search) from Google
And fuel/milage tax??
Yep, as a O/O or a L/O (lease operator like your hubby), you are responsible for paying the Quarterly Fuel Taxes. Most companies have what's called an 'escrow account' that each leased operator pays in to. Usually this amount totals about $1,500- $2,500. This money is then used to pay the Quarterly Fuel Taxes and other items (tractor license plate) that the company may file for him. This escrow account also provides a buffer in case there is an accident with the truck or trailer. This usually covers the insurance deductible.

The company I used to be leased to kept 5% of each settlement until my escrow account reached $1,500. After 'they' paid my fuel taxes, 5% would be withheld each week until the $1,500 balance was reached.
Isn't that paid at the pump??
Yes, but only to the state the truck is fueled in. Fuel taxes are collected by each state the truck runs in, based on the average miles per gallon = the quantity of fuel that the truck would have used traveling in that state. Example; Fuel truck in MN. Travel to TX, refuel in TX and go back to MN. No fuel was purchased in IA, MO or OK. Fuel tax owed will be figured based on the state fuel tax rate and vehicle mpg average.
http://www.taxadmin.org/fta/rate/motor_fl.html
Who do I pay the Fuel tax to?
Fuel Tax monies is paid to the United States Treasury. Most likely the company your hubby is leased to files these for him and pays it from his escrow account.
Is it a write off?
Yes, it's a cost of doing business.
Now someone has told him he could get more money for the fuel surcharge if he paid for is fuel in cash rather than using the comdata card. I have been all over the net looking for information about the fuel surcharge. What little I have found has only confused me more. If what he has been told is true how is the surcharged paid to us? Who pays it? how is it figured? I need HELP from someone with experience that is neutral. Is there anyone out there??
Fuel surcharge is far different from Fuel taxes.

If your hubby's lease agreement has provisions for fuel surcharge, he will be paid that amount based on what the company charges its customers.

Is your hubby paid by the mile or by percentage?

[Scarlet_t72]

Thank you all for the info. :D You guys are FANTASTIC!!! We knew about most of the costs of being an O/O but the things I had questions about were either not clear or we did not know about them at all. I have talked to an accountant as well and hadn't been made aware of these additional costs.

[Big_Dave]

Thank you all for the info. :D You guys are FANTASTIC!!! We knew about most of the costs of being an O/O but the things I had questions about were either not clear or we did not know about them at all. I have talked to an accountant as well and hadn't been made aware of these additional costs.
Make dang sure that your accountant 'knows trucking'! As in, find out if the accountant does have trucking company or O/O's as customers. Get their names and numbers, then stop by and talk to them about their satisfaction with the job that the accountant does for them.

[LSMR]

Thank you all for the info. :D You guys are FANTASTIC!!! We knew about most of the costs of being an O/O but the things I had questions about were either not clear or we did not know about them at all. I have talked to an accountant as well and hadn't been made aware of these additional costs.
Make dang sure that your accountant 'knows trucking'! As in, find out if the accountant does have trucking company or O/O's as customers. Get their names and numbers, then stop by and talk to them about their satisfaction with the job that the accountant does for them.

Couldn't agree more Dave.A good accountant & lawyer who knows this business is a major asset.

Glad you got the help you need Scarlet_t72.Stick around and post some more.You'll learn a lot plus have some fun here.The members here have educated me about a lot of the "little things" that you need to know in this business. :)

[HSLD]

I'd have to agree on driving for a company first. During that time as a company driver, you'll learn a lot about the biz, make contacts and meet people that can provide a wealth of information.

I'd also suggest finding a "niche" to be an O/O in. Something that you're not competing against the big boys (who'll cut the rates in that division of the company, take the loss to drive you, the little guy out), and is more specialized than what most of the big companies are willing to put the effort in to provide the service for.

And ditto on the accountant that knows trucking. That should almost be step number one when you set up your biz as an O/O

Run it like a business. Don't go buying toys and other crap when you start getting your settlements. To many are tempted to spend money like wild fire when they start getting checks larger than they've seen or dealt with before in their lives. Then, crumple when something happens like a repair, whatever, and they don't have the money to cover it.

HSLD

[Mad Dog]

I have been an O/O longer than I can remember. I'm just a little quirky about jumping into this side of the business before you pay your dues to the company side.

I always recommend at least 3 years as a company driver. Why? This first year you are still honing your skills, second year you have finally relaxed and are enjoying yourself and by the third either you think O/O was the stupidest idea you ever had or you join the ranks.

Is it worth being an O/O, well to me and my partner it is. Nobody tells us how fast I'm going to drive, we don't run qualcomm (can't track us), we have the sweetest contract with a mfg. for the next 5 years .... can't go wrong.

Your best money in the O/O business is being paid % and if you can hook up with a mfg. you miss the middle man (eg..CFI, Werner, Prime, etc). We don't share any of the money with another company.

The four most important things to have when you start into this venture (not necessarily in this order):

Accountant
Mechanic
Lawyer
Stock Broker (Financial Advisor)

[tommy]

Mad Dog has real good points there, only forgot 1 thing.


Need A couple # - 5 Months of money in bank to pay bills and get it rolling

[Big_Dave]

we have the sweetest contract with a mfg. for the next 5 years .... can't go wrong.
Contracts are a good thing to have, but like all good things, there is always the possibility of the 'rug' being pulled out from underneath you.

What happens if your main customer closes up unexpectedly? You know, files bankruptcy, raided by the IRS, raided by immigration, etc, etc,etc..... :yikes:

Do NOT put all your eggs in one basket. Keep your options open for emergencies.

[Mad Dog]

we have the sweetest contract with a mfg. for the next 5 years .... can't go wrong.
Contracts are a good thing to have, but like all good things, there is always the possibility of the 'rug' being pulled out from underneath you.

What happens if your main customer closes up unexpectedly? You know, files bankruptcy, raided by the IRS, raided by immigration, etc, etc,etc..... :yikes:

Do NOT put all your eggs in one basket. Keep your options open for emergencies.

Usually I would agree with you.....but the mfg is a food producer, very stable company, we haul 90% of their product and on occasion they have us pull someone elses goods. Yes, this is a new "marriage" we have only been with them since April, but I drew up the contract, they refused I walked, never made it to the front door.

If they would go belly up we would have no trouble securing a reefer load. I know enough people in the business to keep us very busy. But then that comes with the years I have in the business too. I new person starting out ..... yes should have a back up plan, I agree.

As far as money in the bank....you have been working as a company driver you should be saving for your future. I started with a slightly used KW and when my partner joined me we bought our first new truck finance through the bank.....this year we order a new KW and are paying cash. We able to run our business with cash. Of course, we are very tight with our money, what we spend a week on necessities would shock most drivers.

[Big_Dave]

....you have been working as a company driver you should be saving for your future.
I was before and am still. In fact, I recently sold a very used 95 Pete 379. I was getting tired of the headaches associated with owning a truck. :wtf:

One thing about pay days now, I don't have to share any part of my settlement checks with the truck, a bank, a repair shop, etc, etc, etc.......... ;)

[HSLD]

[quote
One thing about pay days now, I don't have to share any part of my settlement checks with the truck, a bank, a repair shop, etc, etc, etc.......... ;)

I'd be afraid of what would happen to the local economy if I got out. ;) At least the refrig guy, the tire guy, the truck shop etc...... I think they'd miss me, or at least my money.

v/r

HSLD

[Capt._Chaos]

Like Dave, I have no regrets about getting ut of the O/O biz.

I miss my old Eagle, but I have a lot fewer worries now, and I sleep better at night too.

Spending several years driving a company truck to get acquainted with the industry is the best thing anyone can do.

Anyone who would just run out & buy a truck with no firsthand knowledge of this industry (especially now) is simply setting themselves up for disaster.

[Rehabber]

I'll give ya my story. I was a 2 week wonder from Schneider. I had my CDL for 4 months and I bought a truck to go o/o. Punkin had forced dispatch so I didn't stay, JB Hunt promised miles that never appeared so I didn't stay, CRST Malone was better than the other 2 but wasn't as promised by the recruiter so I didn't stay. Finally I found a decent company to lease on with. I run a dedicated account and get home every evening at 4:30. Paid cash for the truck, my old accountant from my previous apartment building business is also a trucking accountant and I have a short list of very good mechanics that bend over backwards to keep my old truck running. I've now had my CDL for just over 2 years and so far I'm pretty successful at being an o/o. I'm probably an exception to the "be a company driver for at least 3 years" thing but I do have alot of experience in owning and operating businesses so maybe that was the key. I've talked to alot of drivers in my two short years of truck driving and from what I've gathered, most of the company drivers need to stay company drivers and a good percentage of o/o's need to go back to being company drivers. My next step will be to buy a trailer, get my authority and run independent. 2009 when this dedicated contract expires will be the starting point. Truck should be totally rebuilt by that time and the trailer will be paid for. Wish me luck... Ron

[Mark-the-Spark]

From the outside looking in, I've run the numbers six ways to Sunday, and have talked to a lot of people about it, including people I trust that have been in the trucking business for decades to people I trust who have hung it up and gone the company driver route.

The bottom line is that the profit margin if very slim on a good day for a person that has a very good business head on their shoulders and are willing to roll up their sleeves and get dirty if that is what it takes. This means, in my opinion, that about 98% of the truck drivers (or 98% of the general population) should not be in business for themselves.

The remaining 2% will put business sense ahead of personal lives (wife/kids/friends) or personal preferences (the mega-chrome triple-digit W900). And as is the apparent case with any millionaire these days, at least half of them -- even though they are smarter than average and willing to go the extra mile -- will probably go bankrupt at least once due to unforseen circumstances.

To quote Dirty Harry: Do you feel lucky? ;)

To quote myself: Can you pick yourself up if you crash and burn, and you you have a backup plan for that eventuality? Is anyone other than yourself going to suffer?