Don't Be Fooled By Owner Operator Math - Old School's First Podcast!!

We have one of the most special treats we've ever had here at Trucking Truth. Old School has put out his first podcast!!!!

I'm super excited about this, as you can imagine. For anyone who isn't familiar with Old School's background, he's been a Top Tier Driver for quite a few years now and he also owned his own sign design and manufacturing business for about 30 years before that. So he has all of the trucking experience and business experience needed in order to understand that becoming an owner operator is a fool's game. "Owner Operator Math" is an expression we use to describe the crazy numbers owner operators like to throw out there to make you believe they're making a fortune.

Old School's message - don't let them fool you!

Check it out his first podcast here:

Episode 20: Don't Be Fooled By Owner Operator Math

Here's the description of it:

Owner operators like to talk about how much money they're making. The trick is they're trying to fool you (and themselves) by talking about revenues, not profits. You'll rarely hear the truth about the actual profits an owner operator is making, and for good reason; they're rather pitiful. Don't be fooled by what we call "Owner Operator Math" here at Trucking Truth. Learn the realities of owning a big rig and why you shouldn't waste your time considering buying your own truck.

Episode 20: Don't Be Fooled By Owner Operator Math

Enjoy, and leave your comments here!

I know practically nothing about the trucking industry, and even less about the money end of it.

But my first thought on seeing a company willing to help me lease a truck and pay half the load or more to run it, was, "why in the world would they give up that much of the money if it is such a good deal? Why wouldn't they just lease the truck themselves and pay me to drive it?".

The second was "if a company is willing to pay a 1, 2, or 5 cents a mile or more fuel bonus, it must cost a fortune to fuel those trucks".

Then I thought about how much it costs to maintain and insure my little work van, and thought God, it must cost a small fortune to insure a truck, maintain it, etc.

Then I thought about the risk of lawsuits, medical, disability, etc. There is no way that being an OO makes more sense than simply driving. Sure, some people do it, and make money, but they aren't getting rich on one truck. They are probably making a slightly larger paycheck than if they simply drove, but with the added work and stress of being a business owner. If you can afford to buy a fleet of trucks and hire other drivers, you might make those 6 figure salaries. You might also go bankrupt.

People see what I do and think I'm getting rich, and work way less hours than someone with a 40 hour job. The part they don't see is the late nights doing paperwork, the money going to taxes, equipment, training, etc. There is way more to business than simply collecting the check and tossing it in the bank.

I see little companies pop up every year to compete with me, and then shortly after tax time, they are gone. Once they find out how much they owe in taxes, they realize it isn't how much you make, it is how much you are able to keep.

I took a trip to help my brother recently, and I passed a flatbed hauling two trucks that looked almost brand new, with signs painted on the doors all nice and pretty, and thought "wow, someone is buying two nice trucks, but I didn't realize they shipped them on flat beds". Then I passed the truck pulling the flatbed and saw it was owned by a repo company. The trucks on the flatbed didn't look more than a few months old. Every time I see an ad to lease a truck and drive, that vision pops in my head.

They [owner operators] are probably making a slightly larger paycheck than if they simply drove [a company truck]

This is something most people seem to think but I have no idea why they would guess that.

Does it just seem logical that they wouldn't own a truck if they couldn't make more money than a company driver?

Do people just assume business owners make more money than employees?

Does it seem like a business owner would have more opportunities to make more money because they're in control, so naturally they must find ways to make more money?

I mean, if people assume business owners must make more money than employees then why doesn't everyone start a business? And why do 75% of small businesses fail within the first few years if everyone is raking in the dough like so many claim to?

Also, think about this. Walmart has over 5,000 stores in the United States. Companies like Prime, CR England, and Swift have well over 5,000 trucks. Both retail and trucking have very slim profit margins and companies can gain economies of scale and financial stability by growing so large.

That being said, would it stand to reason that you could buy one department store and compete with Walmart? Does it stand to reason that you could buy one tractor trailer and compete with Swift, CR England, and Prime?

There is a long, long list of reasons why owning or leasing a truck makes no sense and I don't want to put them all in this one comment. Over the course of this conversation, which is inevitably going to turn ugly as they always do, we'll throw a bunch more out there.

One big thing that nobody ever seems to want to talk (or think) about is taxes. As an O/O, or any other small business owner for that matter, there's the little detail of the Quarterly Estimated Tax. Every 3 months, you have to guess how much money you're going to make for the *next* 3 months, and send the appropriate taxable amount to the IRS. If you overpay over the course of the year, you'll get a refund, but if you guess wrong and underpay? Be ready to write another big, fat check in April.

I don't know about anyone else, but I'm not too keen on playing guessing games, especially not where the IRS is concerned.

One big thing that nobody ever seems to want to talk (or think) about is taxes. As an O/O, or any other small business owner for that matter, there's the little detail of the Quarterly Estimated Tax. Every 3 months, you have to guess how much money you're going to make for the *next* 3 months, and send the appropriate taxable amount to the IRS. If you overpay over the course of the year, you'll get a refund, but if you guess wrong and underpay? Be ready to write another big, fat check in April.

I don't know about anyone else, but I'm not too keen on playing guessing games, especially not where the IRS is concerned.

There is also self employment tax. That part of SSI that your employer pays? Guess what, you are the employer, so now you get to pay it.

There could be many other taxes as an OO, I'm not sure. Is Sales and Use Tax applicable?

Great podcast, I remember a guy who was in my class at school.. He kept talking about how he was lined up to buy a truck right out of school, and how he did all the "math" and how much he would be making, etc. I couldn't help but laugh a little bit, although I'm very new myself. Here was a guy coming out of school, planning to buy a truck( not least) and had it all figured out with no experience.

From now on, providing a link to this Podcast is the absolute best way to respond to anyone considering L/O or O/O.

Brilliant presentation Old School. Thanks for investing your free time in putting it together.

Really don't understand the negativity towards someone who would want to be an owner operator or small business owner for that matter. I know of two personally that are very successfull. That would be the American dream to me. If they can figure it out good on them. There are certainly both successful O/O's and small business owners. The small business association has said that "According to data from the Census Bureau's Annual Survey of Entrepreneurs, there were 5.6 million employer firms in the United States in 2016. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses."

So

I know of two personally that are very successful.

How do you really know that?

Please define what you consider very successful and for the purpose of this discussion, back it up with accurate facts and numbers.

Sure, one started with a small supplement store in the Chicagoland area who now has 3 locations set to open another 2 in the next few years. Another owns a gym that's been open since the 80's I'll take that as a success. I'd say that speaks for itself