The Two-Truck Transition
As Bruce Barton, owner-operator of the Idaho Roads small fleet, says: “It never stops.”
Best practices: Real world examples
Advice from four owner-operators who’ve dealt with expanding:
LINE UP FINANCING. Take a conservative financial approach to expansion, says Doug Bench, owner of Blackfoot, Idaho-based Crossline Transportation. He advises having funds to cover at least two months’ operating capital for fuel, maintenance, insurance, licensing and driver wages. To add one truck and driver in a long-haul application, those expenses could easily total up to $18,000 for two months.
“You should get a line of credit at a bank or find a good factoring company, because you’re going to need that cash flow to operate,” he says.
Bench says he used to depend only on his own cash flow, but now he works with a factoring company on part of his receivables. He also works closely with an accountant, who has helped plan depreciation schedules for his trucks.
FIND MULTIPLE CUSTOMERS. Owner-operator Bruce Barton says he learned the hard way not to devote too much business to one account. When the economy tumbled and the housing market collapsed, Barton’s Idaho Roads lost a construction materials contract that had been keeping the five-truck fleet afloat. “We had to reinvent the company and what we were hauling,” he says.
Barton says of about 50 customers, he has about a dozen steady ones. “We’re not making a profit now,” he says. “We’re still digging our way out of the hole [from] when the economy crashed.”
HIRE RELIABLE DRIVERS. Jerry Kissinger has managed trucks and drivers in his Madison, Wis.-based Independent Operator fleet for many years. Finding reliable drivers who will stick with you is paramount, says Kissinger, whose fleet owns seven tractors and 19 trailers.
Not only is it hard to recruit drivers, but it’s expensive when they turn over quickly. “If you put a guy in a truck and he lasts only two weeks or so, it still costs us $3,000 to get him legal and pay for drug testing.”
DISPATCH YOURSELF. Marty Keim, president of Dodge City Express in Kansas, says expansion requires knowing what each truck is doing, and he recommends arranging to take the dispatch yourself, even when leasing to a carrier.
If you self-dispatch, you can keep tabs on your trucks’ whereabouts, availability and deadhead miles. Also, leasing to a carrier can help you handle administrative duties, Keim says. “If you lease on there’s more security and you take on the business you can handle. Carriers take on some of administrative tasks of your trucks that you don’t have to worry about.”
Two cautionary tales
Tilden Curl tried working a second tractor and trailer for about two years. He paid the driver 30 percent of the truck’s gross. After the driver left, Curl sold the truck and trailer to a driver who leased to him. That driver ran under Curl’s authority for three years, until the equipment was paid off.