The Dream Continues
How To Become An Owner Operator Chapter 2
Well, in the first article we went over the first couple of steps
in becoming an O\O. Keep in mind that even if you have been an O\O for years
these articles can still be very valuable in making your operation more
profitable. How many times have you found yourself saying,” I wish I knew then
what I know now”? We all say it, but what we fail to do is realize that now is
the only time we can do anything. We can’t change the past, and we can only
plan for the future but we can make real changes right now. If you are already
an O\O look for the things that can help you be more profitable. Last month we
went over choosing your type of operation and finding a carrier. This month we
will continue on spec’ing and financing your equipment. We are going to do an
overview on both of these topics and just hit on the general ideas.
Remember last month we talked about choosing the type of operation you wanted
to run. Now you should have a good idea what you are going to be using the
truck for. This brings us to step three, deciding how you want your truck to be
set up. Most people only think of spec’ing new equipment however, you should
look at buying used equipment the same way you would approach buying a new
As a new O\O you really shouldn’t be looking at new trucks. We don’t recommend
new trucks or trailers for first time O\O’s. You just don’t have any kind of
track record to know whether or not you will have the income to support new
equipment. One of the things you need to avoid is shopping for a truck like you
would shop for a car. Most of us, when we buy a car, may spend a day or two and
look at 5 – 10 cars in the local area and then buy one. That’s just fine for a
car, but it really won’t do for a truck. I have taken as long as 6 months and
driven over a 1000 miles to get just the right truck and it can really pay off
in the long run. The internet is a terrific tool to use for this step. It
allows you to check out trucks all over the country. Don’t limit yourself to
the dealer down the street. If you are willing to pay $60,000 for a truck, does
a $200 plane ticket really seem like an unnecessary expense? No, it doesn’t.
Remember to keep things in perspective.
When you sit down to plan your truck purchase, pretend you are ordering your
truck custom built just for you. Make a list of exactly the kind of equipment
you need to be efficient in your operation. Our philosophy on what to spend
extra on is this, If it will save money on fuel or maintenance costs, or add to
driver comfort and safety it may be worth spending extra on, if not do not get
it. There is nothing wrong with having pride in your rig, but a lot of chrome
and goodies won’t make or save you money. After you have a general idea of what
you want, start at the front of the truck and work back being even more
specific about the things you are looking for. You are probably not going to
find a truck with everything that you are looking for, but your list will be
kind of a score sheet to help evaluate each truck.
After you have your ideal truck down on paper then you need to make a list of
questions. These will be the questions you want to ask the dealer when you are
looking at specific trucks. This list will include things like:
*Who owned the truck? If it was a fleet, how much can you find out about their
*What part of the country was the truck primarily operated in? Trucks running
in the south and southwest have fewer rust and corrosion related problems.
*Are the maintenance records available?
*Is the mileage on the odometer accurate? A little research can help verify. If
you are familiar with the fleet who owned the truck you might know that they
run a team operation. If so, you can figure 200,000 miles a year. You can also
have the engine diagnostics checked for total hours.
Speaking of having the engine checked, there are three inspections to have
completed before buying a truck. These should be set up by you, not the dealer,
at a garage of your choice. They are:
1)Engine dyno and oil sample. Have this one done by the engine manufacturer.
2)Front end inspection. Preferably at a good alignment shop.
3)Bumper to Bumper Inspection. Performed by an independent shop.
Depending on how motivated the dealer is to sell, you may get them to pay for
part or all of these inspections. But if the choice is getting them done free
by the dealer or paying to use your choice of shop, spend the money and use
your shop. It will be worth it in the long run. Remember this is a business
OK, on to step four. You should now have the perfect truck picked out. The
question is, how are you going to pay for it? The market for truck financing
has been changing in the last year or two. When looking for financing you want
to shop around for the best interest rate. If you have strong credit and a good
relationship with a bank or a credit union, check with them first. If you do
not have any luck there, let the dealer’s finance department help you. Don’t
always take the first deal they offer you, though. Ask them how many companies
they sent your application to and get as many quotes as you can. That way you
can be sure you are getting the best rate.
How long should you take the financing for? Our rule of thumb is not to finance
a used vehicle for more than 42 months. 36 months would be even better if you
are comfortable with the payment. 48 months should be the maximum on a new
truck. What this means is that if you can’t afford the payment in these time
frames then you can’t afford the truck. This will lower your interest charges
and will give you equity in the truck after about two and a half years which
will give you more options on trade ins. Financing can be complicated and can
have many implications. Make sure to get your financial advisor or tax preparer
involved in this decision. Let them look over any deal you are offered before
you sign the dotted line.
Well, that should give you plenty to keep you busy for now. Remember these are
only guidelines, if you have specific questions feel free to call our office
and we will be happy to help you through the process. We have also written a
manual that covers everything you need to know to get started and run a
profitable business. You can call our office for details at 866-438-7825 or
visit our website at www.43truck.com
Click the chapter bar to go to Chapter 3.