The next topic that I would like to discuss with all of the owner operators out there is budgeting. With the economy being as tight as it has been the last couple years, many people have become a lot more aware of their expenses. Trucking is one business where you can analyze and plan all day, and it might not do you a bit of good. At the end of the day, you need to make sure you are planning to be ready for the worst case scenario, not expecting and hoping for the best case scenario. Some things, like the rates you are paid and the miles you run are somewhat predictable. But the one variable that is nearly impossible to predict is the amount of money it is going to take to maintain your truck.
You might have a truck that has a million miles on it that runs like a Swiss watch, and you might have a brand new truck that never seems to get out of the shop. Sometimes it’s just the luck of the draw. However, like any machine that runs every day, eventually it WILL break. When it does break, it’s usually tough to get through the shop and back on the road for less than $1000. This is why you need to be prepared for these instances. If you’re ready, these repairs are a business setback instead of a business killer.
At Lone Mountain Truck Leasing we include a one year/100,000 mile engine warranty on all of the trucks we sell that are 2005 and newer. These warranties cover a lot of the major components that are going to result in what we call a “catastrophic failure.” Typically these repairs are going to be in the neighborhood of $5,000-$25,000. While these failures don’t happen very often, there will be other smaller things that will threaten to put your company underwater if you aren’t prepared for them.
A good rule of thumb to follow is to set aside at least five cents per mile for maintenance. This, of course, varies depending on how many miles are on your truck, how old it is, and how many miles you’re putting on the truck during a given year. Five cents per mile is definitely a good place to start though. If you don’t set anything aside, and hope to only change oil for a year, you probably aren’t going to make it very long as an owner operator. Like any business, you need to build up a cushion when times are good, and you need to diligently monitor all expenses and try to keep that cushion intact when times are bad. That way, when repairs come up (and they will come up) you will be ready for them. If you are financially prepared for these setbacks you will be able to get back on the road and rebound quickly.
Lone Mountain Truck Leasing