Should A Rookie Driver Become A Lease Operator?

Looking closely at the settlement statement note the "negative settlement from prev week" line. If I interpret that correctly that means that the statement he posted was essentially for 2 weeks because he was in the negative the week before.

Now since he's not fully disclosing what the prior week was for me to figure out what mileage he ran, I'll assume for the sake of comparison that he didn't run any miles the week before which is probably not correct but for the sake of argument I posted below a 2100 mile plus pay statement.

My gross is $1380 Which is less than the roughly $2,000 per week revenue that he is showing.

But a more typical for me is a 2500 miles a week which equates to about $1,650 gross.

Even assuming that he is actually grossing approximately $350 more per week on average, I dont bear the risk he does.

I get paid my cents per mile for both loaded and unloaded miles and I also don't bear any cost for repairs to the truck.

Tim, I love what Sid advised you. Remember he is an owner operator. That is why I like what he said when he encouraged you to...

be honest with yourself.

That is very important when you are in business. I used to have a lot of people coming to me for advice during my prior business career. One of the things I would tell people is that they were stealing from themselves without realizing it. That is why it is important to know your business and understand the numbers you are dealing with. Otherwise we are shorting ourselves while we think we are doing well.

We all want you to do well. We are not trying to scare you or criticize you as you have suggested several times. You brought up a subject that we feel strongly about and it gives us an opportunity to teach about it. There is no intention of embarrassing you or shaming you. We understand the pressure you felt. You even made this statement...

ALL the other drivers I know at my company are lease ops. All the trainers, all the more senior drivers I know, all of them.

I was going to ask you if your trainer was a lease operator, but I think you already have answered my question. It is all too common for that to be the reason why a new driver like yourself takes that plunge so willingly. The company you are at has a business model that works well for them. What I mean is they have figured out how to make the most profit by using a certain model. That model uses contractors instead of employees. I know they have company drivers too, but you have indicated that most everybody you have come across are contractors. How do you think the company makes more money that way if their drivers are making a lot more money that way? Wouldn't that mean their expenses are higher?

The national average for trucking company profits has a mean average of 3 to 5%. That fluctuates at times, but it is pretty much a consistent mean average. In business there is a term we use that explains how we can't just have runaway profits. That term is "Return To Means.": It is simply the concept that profits may go up and down, but they always return to the mean average over time. Here's my point: If that mean average is true for the trucking industry, then you simply don't have that much extra money you can make as a lease operator. There may be an extra 3 to 5 percent, but in reality, it is highly unlikely. That is why the company likes for you to be a lease operator. They understand their fixed costs. They will always have those, but when you become a lease operator you are signing on to absorb their variable or unexpected expenses that arise. They can actually make more money while you take the hits that they cannot calculate as fixed costs. That is a perfect solution for them.

Chief Brody already pointed out what was screaming volumes to me. The fact that you said this showed you misunderstood it...

Last week I ran 4315 miles

Nobody runs that many miles per week, at least not in any consistency. It is physically impossible while running legal. That is basically two weeks worth of driving, but you had a long trip in the mix which made it so all your miles were turned in on the same pay period. When you got all encouraged about making five grand or 4,100 maybe, it was actually two weeks worth of settlement. Here's how you have to look at your pay Tim. Always try to come up with an average for each quarter. That will give you a realistic number that reflects expenses, home time, and all the many things that affect your ability to run this new business you are in. Make sure you figure in your taxes and any benefits you had to forego to be a lease operator. What I mean is do you have insurance provided by the company now? If not, then that is a new expense you have to allow for. What about Social Security payments? Are there things like bonus money that company drivers get that you gave up to lease the truck? I would assume there are all of these sacrifices and more. To be honest with yourself in this endeavor you have to calculate those things you are giving up as expenses.

I want you to succeed. I have spent countless years trying to help others learn how to succeed. Most of my former employees have gone on to be successful entrepreneurs simply by being exposed to the realities that I taught them when they were working for me. I enjoy the challenges that come from being in business. I just have never seen that leasing a truck had much upside to it. I can never make it come out right. I hope you can.

I started this with my admiration for Sid's advice. It is good. I just keep trying to get you to look at it from a perspective of understanding and honesty. I know it feels good to get a 4,000 dollar check. It feels a lot better than the goose egg you got the week before, but it has to be averaged into the whole quarter for it to mean anything relative to your success.

So since everyone here is so critical of the deep end of the pool I've jumped into, what are you suggesting I do? Go back to being a company driver and making less than I can afford to make? I've been very clear that $900-$1000/week is barely enough to pay my bills. If that's the case trucking is not worth the sacrifice. Because I only see 3 options here... company (not enough money), lease (too much risk), or owner op (don't have the credit). So instead of telling me I made a mistake how about telling me either how to succeed or to get out while I can!

I know none of you know me but I'm not stupid. I'm not some naive 25 year old that thinks $4100 a week is sustainable or that it didn't start during the previous week. It was a perfect storm. The week before I was just starting out and made a couple mistakes and only had one load on payroll. The next load started before payroll ended and spilled into the next week and really helped the next week out. Do I care? Nope! More money! As long as I start the week paying my expenses then the other loads are towards my profits. I'm running this like an owner op so I need suggestions on how to be the best one I can.

Tim, the one thing you’re constantly missing here is the one lesson many have learned the hard way. The majority of companies offering lease purchase have no intent in allowing you to succeed. Regardless of how well you run your truck, they’ll give you just enough confidence to think you’ve got the bull by the horns but in reality, they’re still in control and hiding money from you while padding their own wallets.

Tim,

If you're doing well in the prime lease I would say stick with it and put all your focus on your goals. I've heard of people completing the lease and did pretty well.

What you should and need to do is to be an adult and pay off all your debts immediately. Save all the money you can. Save save save.

Pay off the truck, make double payments, do anything you can to get it paid off. Once you get it paid off, start saving for your next truck.

You are working off of percentage. Well right now the industry is doing great and loads are paying a lot. But I remember a time about two years ago when prime (and everyone) didn't have enough loads to keep their trucks moving and started booking loads off the spot market at very cheap rates.

Tim,

If you're doing well in the prime lease I would say stick with it and put all your focus on your goals. I've heard of people completing the lease and did pretty well.

What you should and need to do is to be an adult and pay off all your debts immediately. Save all the money you can. Save save save.

Pay off the truck, make double payments, do anything you can to get it paid off. Once you get it paid off, start saving for your next truck.

You are working off of percentage. Well right now the industry is doing great and loads are paying a lot. But I remember a time about two years ago when prime (and everyone) didn't have enough loads to keep their trucks moving and started booking loads off the spot market at very cheap rates.

This, exactly this. That time is coming quickly and anyone who watches the economy and takes part in investments is guarding for what’s coming.

Tim, you barely even tried being a company driver. You gave it a couple of weeks and decided they were giving you short dinky runs with long waiting times which were keeping you from making any money. I keep trying to stress that you are a rookie. You keep coming back with how old you are and how you are not naive, which means nothing in this career. I'm going to give you some advice like you are asking, but you have got to realize there is a steep learning curve to this. I don't care how smart you are or how old you are. I had thirty years of business experience when I started this. I was 53 years old. It meant nothing. I had to get in here and get my hands dirty learning how this business works. There are no shortcuts. I have never met a rookie trucker who didn't suffer the learning pains associated with this career. If you don't want or are not willing to have a difficult year at the beginning then walking away would be your best option. I don't know any way you can avoid the learning curve.

Chief Brody made more than 70 grand his first year. Would that work for you? He certainly didn't average that kind of money his first three months out here. He made a lot of mistakes. We call that educating ourselves. Experience is the sum total of your mistakes. We live and learn. It doesn't matter if we are old enough to have grandchildren, we still have to learn our way in this industry. I don't even like that phrase you keep throwing around about paying your dues. This is not some good old boys club that doesn't allow the newbies to make money until they have put in their time. This business is all about personal performance. That is how Chief Brody did so well. He figured out he was going to have to bust his butt to make it happen. He did it, and he has enjoyed it so far. He has a law degree. He's a smart guy. He also has a strong work ethic. All of which come together to make him a successful trucker.

I told you how I don't even like the business model of leasing. Robert is right. The company is still in control of your business. You are the one paying for the truck and you don't have much of a say in how much you get paid for a load. You get 70%. That's what the company says. Here's what you have to do to make this work. You cannot be dispatched like a company driver. You need to have choices of loads to choose from. You need to see the rate those loads are paying and you need to consistently be picking the loads with the highest rates. You are working off of a percentage rate now. You have got to maximize what is coming your way. You can't be working loads paying pathetic rates. Trust me the rates are highly flexible and negotiable. You are not getting in on any of that action.

You need to make sure your driver manager understands what the minimum rate is that you will work for. Do you have any idea what that is? He needs to be finding you loads that are profitable to you. I have pulled loads as a company driver that paid pitifully low rates just to get me out of a certain area of the country so we could go find something worthwhile. That is the nature of the business, but it never affects me as a company driver. I get paid the same for empty miles, loaded miles, or non profitable miles. Does your company have a class for new lease operators? I think something like that might be helpful. You have got to get a new mindset. You are not going to make money off of mileage now. You have got to find out how to work for the best rates.

At a company like yours it is decided by the managers who gets what loads. Guess who gets the loads with the highest paying rates? Why wouldn't they direct those load to their company drivers? That way the company makes more money. You have no say in their decisions, but you only benefit from the higher rates when you are working for a percentage of the load. Remember those short loads you despised as a company driver? Those shorter runs pay higher rates. The company does better off of them. The best way for you to succeed as a lease operator is to understand the rates being paid and making sure you are getting a fair shake at the good loads. That all boils down to communication between you and your driver manager. You are going to have to build a solid relationship with them. They will have to trust you and you them. Trust is really important in this business. The onus is on you to develop it with those folks in the office. If you can do that (it takes time and really solid performance records) you can be more selective about your loads. I see that ability to select your loads as key to success as a lease operator.

I have built a solid foundation at my company as a company driver. I get to pick my loads every week. Yesterday I was given a list of ten different loads to choose from for this weekend. This kind of thing doesn't happen for rookie drivers, but drivers who have built a reputation can enjoy these types of perks. You have got to build a reputation of safety, productivity, reliability, and integrity. That will turn your trucking career into a mega success story. The only problem is that all this takes time. You seem to be in a big hurry. Settle in and make yourself into a professional. It is the only way I know for you to succeed at trucking. Put in the effort and make things happen.

It makes no difference to me if you are a lease operator. You are convinced it is best. Do what it takes to build yourself a solid career of being reliable and responsible.

I can tell you quick and easy how to figure your expense/revenue. Kevin Rutherford developed software for trucking and he charges 19.00 a month. I have been using it for almost 4 years. You set it up and input your numbers and it calculates everything for you all the way to how much per mile you pay for everything. My accountant loves the reports it makes.

You have to know your numbers to make it.

OS is correct short hauls pay a higher rate than long hauls. Every load pays different. You have to learn which ones at your company are the good ones. Sometimes I take what I refer to as my charity load for the week to get back into better paying real estate. Just a fact of life. Remember the total dollar amount being higher is not always the best. Look at all deadhead miles plus the loaded miles. They all count.

All the info so far offered is spot on. Educate yourself. You have a ton of learning to do, until then you are just praying you do well.

Trainers that lease do it because every mile the student drives puts more money in their pocket. I have had L/O’s from your company flat tell me they wouldn’t make it without the extra made from training. I don’t know about you, but that isn’t for me.

In fact I have turned down jobs making much more than I am now by my company. They don’t like it, but I’m doing and making what I want. I found a niche that has worked well for me.

I wish you the best and if you have any questions just ask.

Tim you are tapping into the predominant mind-share on this subject. You’ve received the attention of the very best resources Trucking Truth has to offer. Although you might not like the message, it’s highly accurate, and void of emotion or judgement. It’s the truth. Please listen to them! We all want you to succeed.

That said; I’m 62 years old and was a career computer professional for 30+ years before entering the trucking industry about 9 years ago. I’ve met and worked with dozens of successful business owners throughout my career. They all have one very basic, common component; incredible expertise in their chosen field; service and or product. Knowledge, skill, motivation and of course experience are all part of this expertise. Vital to their success.

Like it or not, as of this very moment you are at the very beginning of your trucking career as an entry level owner of a transportation business. Like others have said; and I will place an exclamation point on their suggestions... get busy and become an A student of this business.

Laser your focus on becoming an expert. Short of throwing in the towel, I believe it’s your best and only option.

Best of luck.

Two can play the OP's game.

If you ain't running at least 5,000 miles a week you're skackin'.