[JMI]

Me and my partner have been looking into the trucking industry as a way to make money. Him and his father created a successful trucking company a little while back, however, due to family complications, they no longer talk anymore and my friend was cut out.

His mother currently drives a truck, and she told us she spends $1500/week on gas averaging about 3200 miles. Currently, diesel gas goes for 3.50-ish here where I am.

Well, we looked up a local trucking company online, then we gave them a call. They pay $1.15 per mile, and they reimburse $1.40 per gallon of gas.

Also, we just happen to have a truck driving academy within a mile of where we live, giving us a constant source of available drivers. Starting drivers make on average $0.28 - $0.30 per mile I've read.

We will assume that our truck gets 5 miles to the gallon (very lower end), and that we pay our drivers $0.35 per mile (Additional $160/week above $0.30/mile). Currently, gas goes for $3.50 a gallon, and the company reimburses $1.40, so that puts gas at $2.10 per gallon. We'll assume gas costs up to $2.50/gallon (after reimbursement) considering rising gas prices. We'll put monthly maintence at $1,500, after oil, tires, etc..

Weekly:
Gross: $3680 (3200 miles avg. x $1.15/mile)
Gas: $1600 (3200 miles / 5mpg = 640 gallons) (640 gallons x $2.50 = $1600)
Driver: $1120 ($0.35 per mile x 3200 avg.)
Net: $960/week

With the extra 2 - 3 days per month, we can call it $4,000 per month.

$4,000/month - $1,500/month maintenance = $2,500 per month.

That is with paying an additional $0.40 per gallon on gas with a generous $1,500 per month for maintenance.

If we go with the current $2.10 for gas (after reimbursement), we come to:

Weekly:
Gross: $3680 (3200 miles avg. x $1.15/mile)
Gas: $1344 (3200 miles / 5mpg = 640 gallons) (640 gallons x $2.10 = $1344)
Driver: $1120 ($0.35 per mile x 3200 avg.)
Net: $1216/week

Figure $5,000/month net income minus $1,500 monthly maintence = $3,500 net profit. This is also still under the assumption that we find a truck with a low 5 miles per gallon.

So say we average that out to $3,000 profit per month per truck. We can get a nice 2002 - 2004 truck (especially, as a general rule of thumb, the more time we spend looking, the better deals we are likely to find) easily for $30,000 or less. We will, within the next few months, have the capital to be able to walk up and set 20, 25, even $30,000 down on a table and negotiate a MUCH better price.

So, assuming we pay $30,000 cash for the first truck, we'll likely have a truck worth more than that in our names.

Here are my two main questions:

1) Does anyone have any trucking experience or knowledge, or know any good websites with good information (I've been unable to find a great deal among all the bad sites)? I'm looking for information that will either tell me this is a bad idea, tell me my figures are right, maybe even show better figures than what I'm estimating here. Also, information about mileages on different trucks, etc.

If you know of any websites that contain this or other information which would be useful, I would appreciate it greatly if you could share.

2) Assuming we paid off in full the first truck, would we essentially be able to go to a bank the next month, show that we are making some odd $3,000 per month off one truck, and take out a loan against the first truck to purchase a second? Then we would be making roughly $5,000 - $7,000 per month, and we would be able to pay off the loan within a few months (we would have it stretched out over a few years and pay it off within a few months, but they don't need to know that). On top of that, our current ventures (the ones bringing in the original 30k) will also help us to pay it off even faster. I'm just wondering if this sounds feasible to anyone but myself?

[stand856]

I would say, the best way to go about it is get yourself owner operators to cut down on insurance and unnecessary expenses.
The trucking company that you looked up, i assume they dispatch the jobs to the drivers?

[JMI]

Yea. Thats the main drive behind all this. We have a school giving us fresh drivers all the time, and we have a company that will provide all the work for us.

[stand856]

Any idea how much they are taking off the top?
Also what would stop them from taking your drivers?
If I was you I would search directly for companies that need their freight moved.

[ADVERTISE HERE!]

Having worked in insurance defense for a couple years and actually dealt with accidents involving trucks, I can tell you that Stand touched on a very important and expensive part of the equation that you're leaving out: insurance.

[JMI]

Stand857:
I am not sure how much they are taking off the top. We are looking into other companies right now, but my partner says that it is a respectable and trustworthy business. I am more interested in making some money while shifting the majority of the work responsibilities off my should. My goal is to have a diverse variety of passive income sources. This allows me to free up my time for other things, and then when I get to the point where I am making enough money, I can hire someone to take care of things for me while I still collect my passive incomes.

Looking back though, I didn't even realize what you said about insurance in your first post. Could you go into a bit more detail about the O/Os and how it relates to insurance?

JMenq2:
Insurance is something I haven't covered yet. I'm going to assume that since it was not brought up to me, that the company covers it. I'm in school right now, but I'm going to call them again today and inquire about it later. If the company does not cover it, by your emphasis on expensive, I'm guessing that this venture is no longer going to be as profitable as I had hoped.

Thank you both for your quick and helpful responses, but keep them coming

[stand856]

Good luck with the venture, keep us posted.
Like I said to get away with cheaper insurance, you have to hire owner operators.
Also the other thing would be not that company taking your drivers, but the drivers knowing about that company and going directly to them, because they understand you take a piece for yourself. Unless that company does not directly hire drivers.

[JMI]

Alright, with miracle timing, my partner actually just called me. We discussed things and here is some new information:

1) The company pays for insurance. The driver is given a gas card on the company's account, he/she pays for gas throughout all these trips with this gas card, and then at the end of each trip, the amount for gas is taken out of the gross pay, minus the $1.40/gallon reimbursement. I found that the insurance is covered through what we pay out of our gross take.

2) Also, drivers could go with the company, but they would have to go finance their own truck, or buy one like we did. We provide them with a job and a means, all they have to do is drive.

[stand856]

OK so basically you gotta take care of the truck breakdown expenses.

[Ahern & Brucker]

I'd spend a few hours in a truck stop restaurant and talk to some owner operators... ask them if your numbers add up and what is their experiences... find a guy having a bad day and you might just be driving out with your new truck.

also, listen to the company drivers, what do they like about their companies etc...

I know just looking at the numbers it sounds like easy money but I think your going to need more capital than 30k. And, their is a major shortage of truck drivers so, how are you going to compete with other trucking companies who have deep pockets and great resources?

If the truck breaks down in the middle of the night who you gonna call? what if the driver doesn't get to his drop off on time, man, for a start up? your dealing with two elements that are reliably unreliable... man and machine. add inexperience and 30k and it sounds like a disaster waiting to happen...

I hope that doesn't sound negative I'm just thinking you should be careful as stepping into an area where you have little or no experience as their is always a steep price for admission.

THe problem with the admission price is... you don't know what it's going to be and you are usually over your head when it becomes due.

[JMI]

Thank you very much for your advice. I am keeping it in consideration, but there are also some things I briefly touched down upon, but not really.

Firstly, my partner has already started a successful truck driving company. Him and his father started out with one truck, ended up buying several more, and things were going good until, as I said, complications within the family arose, and he was cut out. His father ended up selling all the trucks, trailers, everything, and leaving.

Second, we already have one guaranteed driver already, a friend of the family who would be willing to drive our truck rather than someone elses. We also have two more potential candidates, but we haven't made any offers yet.

See, the thing is, this won't be happening for a few months, but I'm looking into it now because I'm looking ahead with my investments. In a few months when I have the funds, I'm not going to check my bank statement, see I have it, and then go right to buy my first truck and trailer. I don't want to go offering people jobs that I might not be able to provide.

I know a few other actual truck drivers, and I plan on talking to all of them too, getting everything together, but for the most part, this is really going to be my partner's area. I'm basically just proofreading the plan right now, seeing if I can work out all, if not all then most of, the problems in advance. If it continuously looks like this will be a bad investment idea, then I'll scratch it. However, if after I get all my facts straight, I speak with people experienced in the industry, I do all the homework, and the risk looks as if it is justifiable through the gains, then I am going to proceed.

And if the truck breaks down in the middle of the night? AAA lol. Seriously though, you are right. That is another element that I have to look into, and I'm glad you brought it up. However, I'm sure that we won't be the first, or that the situation is rare enough that a solution has not been found already. Besides, being an entrepreneur, I can't let "What if's?" hold me back from an opportunity, because each opportunity has them. I understand that they are warning signs which should be acknowledged and respected, but still.

Anyways, thank you all for your help, comments, and critique, but again, keep it coming lol.