QuestionQUESTION: Hi Bob Stephens, I am fairly new to trucking, about 6mos now; my main goal is to eventually start my own trucking biz, that is, after a while with my current big truck company as an OTR Reefer (Dry Van) driver. In your opinion, which area(s) of trucking is most lucrative now? ...and Why? I have heard about a few fields, but pls tell me about them also: car-hauling, garbage trucking biz and/or dump truck biz. Main challenge is the need to stay close home or have a fairly-responsibly decent weekly home-time. Should I buy my tractor or dump truck from a dealer or the auctions? I understand its a lot cheaper at the auctions, and thats where most of these dealers buy theirs from anyway. Whats your take on this? Also, what should I get ready to start and stay successful in trucking 6months from now? Pls I need your advise. Thanks!
Sam'
Texas-U.S.
PS: I pray you don't miss any of my questions, Bob.
Smiles ;-)
ANSWER: Hi Sam.
In trucking, the more specialized you are, the more money you can make. It also depends on what part of the country your in. Hauling garbage here in Florida barely pays for fuel, but in New York, the pay is great. In car hauling, it depends on who your hauling for. The pay is bad for small, used car dealerships, but is great if you haul for Mercedes. It all depends and there are a lot of variables.
With 6 months under your belt, I'd run another 6 to get that 1 year OTR experience. Then you may look into buying a truck and leasing out to a company. Perhaps feel it out before you go head first into your own company. You may not like running dump, or hauling cars. This will help you out when it comes time to buy your own trailer and start your company. Whatever you do, I'd write up a business plan. Know all your expenses, fixed and variable. Know your income. Then find out where your going to get your customers, what's your target market, etc.
In Florida, the auction prices are more than what you could get the truck at a dealer! It sounds crazy, but I see it all the time. This is usually because there are buyers from South America buying trucks as fast as they can. Then they export them. This may not be the case in Texas, but I like working with dealers. They are the ones that can give me an engine warranty. The auction won't. I've seen countless O/O go out of business because they bought a truck without an engine warranty. Five months down the road, the engine blows and CAT wants $10,000 for a rebuild. Most new drivers won't have that kind of money and back in the company truck they go. Meanwhile, your still making payments on a non-running truck in your yard! Also, I can find a lot of history on many dealer trucks. Maintenance, rebuilds, etc. Good luck finding anything out on an auction truck. Once you bid, it's yours.
In the next six months, I would start writing out a business plan, like I said before. I've attached a link to help you out. It's generic, but will help. I see most guys fail because they don't have any idea on their expenses. They run out and buy a new Peterbilt, Incorporate and say "I'm open for business". You have to do your research.
Study sites like www.ooida.com also. They have a wealth of information and you can learn a lot.
Finally, save your money. Down payments for first time O/O can be big. Even on used trucks it can be $5,000 to $10,000 or more. Save, save, save.
Keep your eyes open, because an opportunity may arise for you. I could tell you to look into pulling heavy equipment on a lowboy, and the gravel pit up the road is paying top dollar to dump operators. Something will rise above the rest in the next 6 months.
http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html
Good luck!
Bob Stephens
---------- FOLLOW-UP ----------
QUESTION: Great response as always! Thanks, Bob.
Gotta couple of more please. Can you tell me more about the idea - "pulling heavy equipment on a lowboy", that is, the prospects and all? Also, what are the trucking concepts that can work for me profitably-well in Texas, esp. those that would afford me my preferred weekly, or even, daily home time? Pls advise me on contracting for the govt as a minority biz owner - esp. trucking. Note, credit's been shattered in previous real estate biz. Thanks!
Regards,
Sam'
-Texas-
AnswerHi again, Sam.
Hauling heavy equipment can get very specialized. You need to figure out what direction you'd like to go. Then you can look at trailers. If your going to haul heavy bulldozers, you may want a 100 ton lowboy. Hauling lighter machinery or equipment, you may only want a 35 ton lowboy. Obviously, the cost on these trailers can get real expensive, real quick. There are 100 different trailers for 10,000 different applications. In Texas, I know there is a lot of hauling for oil fields. I would research that.
You could probably make good money auto hauling, dump hauling, or running a reefer in Texas. With so many big cities, you have a lot of good choices. I like hauling flatbed here in Florida because there are so many loads. Call some brokers in your area and see which loads are plentiful and pay good. This will help you out. You can also "mock" plan loads and see how your home time would work. You should be able to keep busy locally, or statewide.
Being a Government contractor can be a good deal. Many times you have to bid on a run, or job. I would go on the State of Texas' website and start looking for bid opportunities. You may have to call the state for help in finding them. The bid opportunities can be hard to find, but keep searching.
I would look into becoming a Corporation. You'll have to use your credit as backing as first, but over time, the business will get it's own credit. Talk to a lawyer specializing in corporations and get some advice. Then find a good trucking accountant, they will get you more deductions then you can ever find on your own. Mine pays for himself, and then some.
Good luck!
Bob Stephens
