END OF YEAR #'S; few thoughts for the newbies

[SquareOne]

Thought I would share some info from a new O/O's perspective from the end of my first calendar year. Just to reiterate the word 'new' ---- As of Jan 2019, I didn't even have a CDL, had never been in trucking, never wrenched on trucks solely (heavy equipment, yes...but not trucks), never owned a truck or any equipment related to the industry, etc. etc.

I have some detailed info floating around on here about how I started in this industry, but the Cliff's Notes version is simple. I saw an opportunity back in mid 2018, did a ton of research, put together a business plan once I realized the opportunity could pay out given the right expense management, found this forum BEFORE I purchased a truck, and have been diligently on top of all the items of a business (and a truck) which can take money out of the account if not properly managed.

So, I started my CDL at the end December 2018. I got fully licensed at the end of Jan 2019 (in fact, before I went to meet Rawze --him and I made the vid inspection series on a 13' Cascadia-- I had to wait to take my road test for my CDL completion). After months of searching finally bought a truck/trailer in Feb 2019 and spent a month+ cleaning, repairing and replacing items to make it fully roadworthy. The first paying load was on March 31, 2019. The numbers here are from the last 9 months....


Total miles - 70,864 (thought this was higher, but the numbers don't lie)
Revnue/mile - $1.78
Expense/mile - $0.84
Profit margin - 212%


IFTA Q2 - 8.54mpg
IFTA Q3 - 9.01mpg
IFTA Q4 - 8.12mpg (I literally filled up the last day of the quarter, so there was no miles on the fill-up. Maybe I filed this quarter wrong, but if you added the actual mileage that tank produced, my IFTA average would've been 8.61---hoping for more, but I guess there is something to that cold dense air lol)

Obviously there are many more numbers, but for the sake of simplicity, those are the most important in the end. When I put together my business plan, I made some ambitious, but achievable goals. These are a few of those ---

1.) 175% profit margin (since I would be starting in the 2nd quarter thus losing 3 months of revenue)

2.) 6.5mpg -- After absorbing as much info as I could, I wanted to be realistic in my expectations of fuel milage since I had never operated a truck, thus not knowing what power my right foot had on this expense.

3.) Return the entire 70k initial investment of the equipment in the first operating year. I thought this was very ambitious considering I could only plan for so much. This should be surpassed when an actual operating year comes by on March 31, 2020.

4.) Manage my time at home as well as I manage my business expenses. (This is difficult for me, especially given the nature of my prior business. I can honestly say this truck has slowed me down and allowed me to breathe. I'm grateful).

5.) Take off work when my kids are off school for holidays. (This was very important to me. My entire life has been wide open. Hustle, hustle, hustle.... it was time to change gears. Kids grow up once---- and if you position yourself right, the money can wait. It's not worth what you lose in the long run. Work life will never be satisfactory if there isn't happiness at home. Happiness will help you focus, and focus will inevitably payout dividends in the end anyway.)

6.) Take the last 2 weeks off for mental / truck maintenance. (This goes with the statement above. Getting from behind the wheel for a couple weeks, clearing my head, spending time with family, and doing some wrenching helped tremendously. I was honestly excited to get back in the truck this week).


These were just a few of the initial goals...but you get the picture. As far as the numbers are concerned, it really doesn't matter what you're bringing in if you can't keep it there. I really wanted my expense per mile to be closer to the .70 range, but I did repair or replace many items on this 'new to me' truck this year. Many of the larger items will hopefully not have to be purchased again for the next 150-200k miles. Here's just some items I replaced on the truck:

-10 Virgin tires for the truck (2 new Alcoa rims for the steer axle)
-New shocks, air bags, 5th wheel, 4 brake cans
-4 new batteries
-EGR tune-up, pyro/boost gauge, HPFP internals
-CAC boots

Much of that, with proper maint, should hang around for awhile.

Of coarse, can't forget to mention the insurance that costs over 10k/year and the 3k I had to spend on a driveway for this big bastard lol!

^^^------ With all that being said, I'm fairly certain this year(2020) my CPM can drop substantially (given I have no major breakdowns).


The real purpose of this post is to inform anyone else interested in this work that it can be done in a profitable manner. When I started doing research on the O/O topic, you would've thought I was trying to reincarnate Hitler with all of the negative feedback I was getting. "Thats crazy!...you're gonna do what...Are you serious!.....You'll lose your a$$! I know (insert number here) people who have tried and failed miserably!"...etc, you get the picture. Many forums are filled with guys who have lost their families, their homes, their business.... basically bankrupted themselves because of this industry. At least....that's how it's portrayed with a simple search. I know not all of the areas of the country have the same opportunities, but that's where your due diligence comes in as a prospective business owner or career changer.

I.E. - Down here in the south, commercial fishing is a major/very profitable industry. You want to be a commercial fisherman? The gulf south is likely your best bet.... Moving to Nevada to build a 75' double rigger with the hopes of making it in the seafood industry will 99% be a recipe for disaster. Just an assumption...

Just thought I'd share one hopeful story for anyone looking to get into this industry. I am by no means a 'trucker', I'm just an infant in this trucking world. All you guys that run back and forth across the country and you guys who haul oversized, overweight, etc...I have the utmost respect for you all and anyone looking to get into this industry should too. It's a difficult and demanding job which requires great care, pride and attention to detail. However, with proper research, planning, due diligence, and clear goals.....you can succeed in this industry.

[Nostalgic]

One thing I don't get what you're using for your profit margin? When I think of the term, it's Net/gross, making your profit margin 47%.

[Magard]

His income is 2.12 times his costs. I’m not sure what those costs are. He’s calling it 212%. Seems like a retail sales method of looking at things. He’s looking at how much he marked up his costs. We look at how much of our gross did we keep through tight management.

[tree98]

$126,137 gross minus $59,525 of expenses works out to about 52% profit.

[Nostalgic]

Ahh, I never really played with the retail sales methodology. It's funny how you can make the same numbers into 47% profit margin, 52% profit, and 212% sales margin and still all be the same numbers lol. Not discounting SquareOne at all - those are pretty healthy numbers, and flat out impressive for a first year newbie in every aspect of trucking.

[SquareOne]

Magard is correct...I had a retail business and that's what I applied to the trucking side. I love numbers and breaking it down to the brass tax. I want to know how much EVERY mile on the truck costs.

For me, each mile cost me $0.84. However, my revenue came out to $1.78 for EVERY mile traveled. Thus leaving a $0.94 profit for EVERY mile I put on the truck last year. So, from a retail perspective, the goods (miles) cost me 0.84 and I sold them for $1.78/pc. There's the mark-up....(again these are 9 months of numbers)

EVERY mile means deadheads, trips to the house, trips to wash, or any other trip where there was nothing on my back. I want to know the TRUE costs per/mile and base my next goal off those costs.

Large gross numbers mean absolutely nothing if you can't control what's going out. Much of that control comes from knowing all the little details which eat up your profit. Basically 'death by a thousand cuts'.

My dealership was a consistent 7 figure a year GROSS, but I assure you, I'm no millionaire lol! What's more important....the money that passes through, or the money you keep?? I'll take the latter any day of the week. Less really is more when you learn to money manage diligently. By knowing the CPM and keeping it low as possible, less gross can actually NET you a much greater return.


This method keeps ME on track. Allows me to see in real time where the money is being applied. When you get 'X' amount of miles out of a part or tires you put on 250k ago, you can truly break down the CPM of that particular brand or decision you made last year. 'Was it worth saving the few bucks on aftermarket? What did it really cost you?'. Thats the stuff that travels through my head. Not saying it's ideal.....it's just what works for me. Helps evaluate the condition of the ship BEFORE it begins to sink in these ever changing waters!

[Magard]

How ever you look at it is cool. The big part is your looking at it in proper terms and not making excuses for costs. Most people don’t actually look at costs. All they see are big numbers and start thinking there rich and costs out weigh profits when a major expense hits.

[Mattman]

Your fuel mileage is real good!!

[SquareOne]

(01-07-2020 )Mattman Wrote:  Your fuel mileage is real good!!

That’s a direct result of this forum and it’s members!