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Truck Buying First Steps
A Success
Guide to Buying Your First Truck
So you’re going into the trucking industry. You’ve
weighed the pros and cons and you’ve decided that this is
what you want to do with rest of your life. What I’ve included
in this guide / tutorial is no-nonsense advice that I have accumulated
over my years in trucking and in business. Many of these hard won
pieces of advice are in the form of questions that you should have
the answers to before ever purchasing a truck. Also these pieces
of advice will DRASTICALLY improve your chances of achieving your
goals in truck ownership and trucking success.
First things first.
- Have you decided what you’re going to do
with this truck? Are you going long haul or regional or local?
- Have you decided what kind of commodity you’d
like to haul? Reefer trailers? Flatbeds? Dryvans?
- Have you found some haul sources that would bring
you on as a lease? (This is really important, as you’ll
find out later in this guide!)
- Will you need a trailer as well as a truck or will the haul source
provide the trailer for you?
It is a little known statistical fact that truck
owners who actually own their own trailers do far better in the
long run than those
who don’t. If you can swing it you can add tremendous value
to your operation from the “get go” by having a truck
and trailer (not to mention more money to your bottom line!)
- Have you written a business plan? This is the
single most important thing you can do ensure your success in
getting a truck and keeping
it! There are many books as well as software on the market that
will help you. Also the Small Business Administration can help
you and many of their services are FREE! Oh and if you think
you’re going to purchase a truck with a SBA loan…FORGET
IT! It ain’t gonna happen. I’ve been in this business
almost ten years and of all the people who told me they would
get a SBA loan to purchase a truck I have met ZERO people who
ever swung it. Your best bet is a standard lender and we’ll
get into that a little later in this guide. Having a written
business plan in place can mean the difference between getting
the loan and not getting it.
Here is an excellent online source for help with a business plan
and your business in general:
http://allbusiness.businessweek.com
Yes this is the magazine BusinessWeek and their
website. You can get their business tools including their business
plan writer
for as little as $10.00 a month! Now that’s a great investment
in your future.
http://www.sba.org is also an excellent resource for free assistance
in starting your own business.
So you’ve got all of the questions listed
above answered to your satisfaction and you have a formal written
business plan.
Where do you go from here?
If you’ve gotten this far then it is obvious that you are
determined to own a truck. Your next step is to determine the costs
of ownership. No I’m not talking about the truck payment.
That is just one of many components. Here are some things that
you definitely need to consider:
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Insurance: Most lenders require comprehensive coverage for the
vehicle in the amount of the loan (that is the minimum they will
accept). Many also require 1,000,000.00 in liability / general
liability depending on the lender. You may also be required to
carry cargo insurance. The good news is that many of the carriers
that hire owner operators will help with the insurance and can
assist you in acquiring it through their carrier. My advice?
Ask your haul source a lot of questions about the costs and what
you can expect to pay for your insurance. If you have to get
your own I can recommend some very good insurance sources that
are reasonable and give excellent service.
- Registration: Are you running single state
or eleven western states or are you running forty-eight states?
This will determine
your
registration costs. A lot of guys like to try to save money
by doing all of this themselves. My advice? DON’T! Find a
good third party registration company to do that for you. They
pay for themselves in the time and headache they will save you!
Yeah they are a little more expensive than going to the DMV yourself
but do you really think standing in line for a day or two getting
your registration taken care of is a good application of your
valuable time? I don’t. By the way, many carriers also
help with the registration of your vehicle and can apportion
plate it in no time flat. They can even carry the costs of
that over a period of time while you are out making money with
your
truck! If you want to get your own registration / authority
I have some good resources for you.
- Fuel: This is THE major expense for a guy
running a truck. If you don’t think so then you might want to get a job as a greeter
at some of the larger retail stores and leave trucking to the
professionals. It has always fascinated me that truckers automatically
gravitate toward the “long and tall” trucks. What
I mean by that is the trucks that have good eye appeal. Lots
of chrome and a long square hood may look good in a truck stop
and might get you compliments but that’s all you’ll
get. These trucks are fuel hogs. They aren’t aerodynamic,
they don’t get good fuel economy, they are ticket magnets,
and they cost significantly more money than their less attractive
counterparts. In fuel consumption the old adage “A penny
saved is a penny earned” is never more true than it is
here. Just ONE mile per gallon difference in fuel economy over
a year’s time will mean the difference of over $8,000.00
in YOUR pocket. Folks that is potentially EIGHT truck payments!
Don’t get sucked into the hype. If you have deep pockets
and don’t care if you make money or not then go ahead and
buy the fuel hogs. Otherwise you’ll want to look at some
trucks that I recommend later in this guide that WILL get you
significantly improved fuel economy in the long run. While we’re
on the subject I want to address the old: “My carrier is
paying for the fuel” routine. Yeah so what? Do you think
they’re going to run you much if you’re getting four
miles to gallon? I wouldn’t keep you. Would you? Also what
if they fold their tent six months into it and you have to go
out and find another haul that isn’t as gracious? Can you
see the ice starting to crack? This guide is designed to get
YOU to thinking like a businessperson and NOT like a trucker.
The old school truckers are the guys that are out there having
Dr. Hook pull their trucks back to the lenders. You don’t
want to be in that group I hope. If you do then I recommend
the greeter job we mentioned earlier.
- Maintenance: Next to fuel this is going to
be your largest yearly expense. I recommend that you set
up an account with
your carrier
that automatically takes a certain percentage from your settlement
each week and places it in a discretionary fund for you to
use in case of emergencies or necessary maintenance. I’ve seen
percentages that worked nicely at around 7-10% of your settlement.
That way when the rainy days come you’ll be prepared. If
they don’t then you’ll have a nice chunk of cash tucked
away at the end of the year. Did somebody say “Bahamas”?
- Accounting: Guess what? Uncle Sam wants his
share of the pie too. Hey I didn’t say trucking was going to be easy. It’s
tough. But if you are tough too and have some smarts you’ll
make out really well and have the lifestyle that others envy.
Find yourself a good tax accounting service that specializes
in truck
accounting. These folks know the ins and outs of the business
and can help you save thousands of dollars in deductions if
you use
them. If you want a very strong resource that can do all of
your accounting as well as your end of the year returns then
give me
a call.
If you are still with me then you are truly
determined to own your own truck. Dad always said “Its hard to stop a man with
a purpose.” I’ve done my best to show you ways that
you can stack the odds in your favor. Trucking is a hard business
but if you play it right you could be laughing all the way to the
bank. In my next issue I’ll tackle the intricacies of
truck finance and how to get financed for your first (or next)
truck.
Thank you for reading and please feel free to pass this along to
anyone you know who is considering investing in a truck.
-Doug Shields is actively engaged in heavy equipment consulting
in the Southwestern U.S. He has extensive experience in the transportation
industry with over ten years in the business. If you would like
more information on trucks then feel free to call Doug at 480-238-3873
or 800-273-8309.
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