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The text above is a follow-up to ...
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Hi Bob,
My husband and I are going to try and start a truck company. We are now trying to buy a truck in which he will be going from a company driver to an owner operator. After we purchase our first truck, he was,planning on driving for some months to try and pay off the truck and I was gonna go to broker school to learn more about the business part of it. My question is to you is, is there anything we need to know and are we going about it the right way? Any advice that we need to do to prepare?
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Hi Kim,
I've answered very similar questions to yours and am glad to help. First thing, when you buy that truck, make sure you get an engine warranty! I've seen countless, and I mean COUNTLESS guys go out of business because "the engine in the Pete blew" and there is no money for a rebuild! Back to company driving! Oh, and don't forget, you still have that truck payment on the first of the month. I don't want to sound harsh, but beg, borrow or steal so you can get an engine warranty.
Next you have to decide what your ultimate goal for the company is. If you want to run your trucks, and broker loads for other companies, then some sort of broker training is for you.
You will need very good credit so that you can get a Surety Bond. An individual's credit, and/or financial strength, is investigated with extreme thoroughness. Only then is a "bond" issued. Costs vary depending on your personal credit history. For as little as $550 per year to as high as a one-time fee of $10,000.
Accordingly, if for some reason the broker fails to pay the transportation company, the bonding company must pay. As you can imagine, the bonding company is very careful about who they insure.
You will also need to be licensed with FMCSA (Federal Motor Carriers Safety Administration).
Most brokers carry contingent cargo insurance to pay shipper loss or damage claims if the carrier and its insurance company refuse to pay. Contingent cargo coverage provides shippers a second level of protection, as long as a claim is valid. You should be carrying liability insurance as well as 'errors and omissions' insurance.
Licensed property brokers who belong to the industry trade group Transportation Intermediaries Association (TIA) are required to abide by a strict code of ethics when dealing with shippers and carriers. You should look into this, www.tianet.org. Also look into www.nitl.org.
Now, after that long-winded explanation you say "No, Bob, I just want to find loads for my truck(s)", then it's a different situation. You don't need to worry about being a broker because your not a "middleman". What you need to do is some sales work. If you want to build a successful company, I always tell people to drop in on local businesses. Sure you can go through other brokers, but why pay them? I use sites like www.getloaded.com when I have to find a load. Most of the time I call companies that I have built a relationship with. Those relationships come from countless sales calls. Most of the time, I had to get past the "gatekeeper", that is, the person in charge of keeping salespeople away from the boss. Sales isn't easy, but if I didn't cold call, I wouldn't have some of the dedicated runs that I have today. That simple. Keep knocking on doors, sales is hard, but they will eventually open!
Next, look into getting some accounting software. There is some great software geared (no pun intended) towards the trucking industry. You need to know where the money is going and what is coming in, not just a balance in the checking account.
To learn more about the business end of trucking, go to sites like www.ooida.com. www.fleetowner.com or www.etrucker.com. I haul a lot of reefer loads, so I like www.refrigeratedtrans.com too.
Now if you need help getting your DOT/MC numbers, permits, etc. There are many sites that can help you with that. www.dotauthority.com is one, but price shop around.
Finally, kind of going full circle, buy good used equipment. When I started, I bought used fleet trucks and trailers from big companies. I knew the maintenance was always done and my problems were always minor. Don't get caught up in all the "chrome and lights" that guys like me gravitate for. Putting money into a truck that isn't necessary only hurts your bottom line. When your better established, then get the perks. For now, be humble with your equipment.
Finally, write out some sort of business plan. It will help you stay focused on what you want to achieve and when.
I hope I helped, Kim. If you run into and problems, feel free to ask!
Good luck!
Bob Stephens
Hi again Bob,
I also wanted to ask you besides all the insurance fees, how much would all this "out of pocket cost"? I'm a little discouraged because you need $6-$8,000 for a down payment and we done have that kind of money just laying around. I know it takes money to make money but I know there has to be some company that will help us get our first truck without the BIG down payment. Our credit isnt excellent but decent. I'm just getting a lot of doors closed on me. Basically I need money to get going on our first truck. With the kind of money owner operators make that truck can be paid for within a year buit no one seems to have the faith in us. HELP...
AnswerHi again Kim.
Your down payment will depend on your credit, but also companies are going to shy away because this is your first truck. I know of guys with really good credit who had trouble getting their first truck. Freightliner has a $999 down with their Selectrucks for new owner-operators. Also, check out www.freightlinersflorida.com. I know some people who didn't have good credit and got good, used trucks from here. Besides that, keep searching dealers. Sites like www.truckpaper.com list a ton of trucks, some dealer in there will help out, you'll just have to make some calls. Don't give out your credit information to every dealer. Every credit inquiry will lower your credit score, so be selective.
When you get that truck, you may not have that engine warranty that I was preaching about. Don't focus on paying off the truck within a year. Focus on building a slush fund. Put as much into an emergency account as possible. $10K is kind of a average. It will take you a little while to do that, but when repairs come do, now your covered.
Finally, join OOIDA (www.ooida.com). Check out their deals on insurance. Next, attend the Mid-America Trucking Show in Louisville this spring. You said earlier that you needed to learn the business end of trucking and here is a great start. I've attended numerous times and love the show. They'll have many seminars that will help you out. Not only that, but almost every top player in the trucking industry is present. It's a great place to talk to other experts in trucking, pick their brain, make contacts and most of all, learn! I can't stress this enough, try to attend. www.truckingshow.com. They have online registration now.
Getting started is the hard part. If you don't have family or friends that can help you financially or co-signing on a truck, then keep pounding the pavement! As bad as it sounds, you may have to tighten your belts, lower your debt ratios, and save more money. Maybe your husband has to drive a company truck for a few more months while you work on raising your credit score. I had to sell my new car and some "toys" to get my first truck. It's hard, but worth it in the long run. Don't get discouraged. You know where you want to be, now just make a plan that will get you there.
Good luck and keep me posted!
Bob Stephens
