TO BUY NEW OR USED?

By Dana Smith

BECOMING AN OWNEROPERATOR

SEEMS TO BE SOMETHING EVERY NEW PROFESSIONAL DRIVER DREAMS ABOUT AT ONE TIME OR ANOTHER. BEING AN OWNER SOUNDS LIKE A GREAT THING. THE PRIDE OF OWNERSHIP IS SECOND TO NONE.

However, there are a lot of things to think about before you do. Getting experience is the first thing that needs to be done before anything. There is nothing like real life experience. The “been theredone that” scenario. This will prepare you for ownership down the road.

As a company driver, you have the ability to keep track of the expenses and costs of the truck you operate. This will be a huge eye opener for you. This will give you real time costs and usages of what a truck can cost if you own it. You will experience breakdowns, and understand how those breakdowns affect your bottom line. When your truck breaks down, find out why, and what was done to fix the issue. Then research how much that would cost to repair it. You will find a wealth of knowledge by using the internet and/ or asking owners themselves. They are pretty forthcoming about costs.

There is a saying out there to keep in mind, “you are either earning or learning”. Use this time to learn everything you can.

So, now you have been driving for five years and have been learning all you can about trucking and the costs associated with it. Now you have decided to become an owner-operator. Remember that you will now transition from a company driver to being a business owner/driver. You must think as a business owner-driver in order to be successful. This requires you to think differently. Obviously you need the equipment to do the job, along with setting up your business, and also need to find work for the truck you plan to purchase.

Make sure the work you are planning on doing is the work you actually like doing. Otherwise you may not last long at it. If you are doing work you don’t like, it will become very stressful to continue that work. Because you are leased to a carrier, you either will have no choice to continue, or leave for another carrier. This will add costs to your business every time you jump ship. Not only physically, but mentally as well.

Finding work is the easy part these days, as every company out there is looking for drivers and/or owners. But beware, not all deals are the same, or are good for your business. Do your due diligence and research. Ask a lot of questions.

Moving forward, you have found work for a truck. Now that you know what type of work you will be doing, you will be able to spec out the right truck you need, and can make the decision as to whether to buy new, or used. This is a big decision that shouldn’t be taken lightly. Most people want the big flashy truck that looks and sounds nice, but remember, you aren’t out there to be cool and flashy. You are out there to make money, and have a successful business for years to come.

There is a trade off when deciding to buy a new or used truck. Here are a few of the pros and cons of both:

Typically when buying new, you can get a lower interest rate and a full war- ranty. / It is expected that because the truck is new, you will not have any issues with it for a while (This couldn’t be farther from the truth). / You can usually negotiate a maintenance program for the deal, so the dealer will look after the smaller things for you for a period of time. / You will typically need a larger down payment on a new truck. / You can spec the truck exactly for what you need it to do.

Newer trucks are way more expensive than a used one. A new truck can depreciate as much as 40% after the initial purchase. Can you afford to buy a new truck? Your new truck will get a better mpg rating, which will put more money in your pocket. There is the depreciation tax deduction to consider to offset taxes.

You could be buying someone else’s problems. / You will get a less expensive truck, and have lower start up costs. / Easier to get into the business buying used. / You may not have any warranty on the truck. / Breakdowns will be more frequent and costly. / Your insurance costs are typically lower with a used truck. / Trucking companies typically will only take trucks that are no older than 7 years old when starting out. / The truck you buy could be worn out, and worth nothing by the time you pay for it.

Remember when starting out as an owner, make sure you have a cash reserve of at least $15-20 thousand on hand in case something unexpected happens, and/or to pay yourself a wage for the first month of operation. Otherwise you could find yourself stuck in a pinch.

Of course there are many other things to do before you start your own trucking company, such as setting up and registering your business with the government, registering for HST, and having an accountant and banker at your disposal in case anything goes wrong. For repairs and maintenance on your truck, you will need a trusted mechanic, unless you’re mechanically inclined and can do the work yourself.

So at the end of the day, if you’re deciding to become an owner-operator, please make sure you do your research into buying new or used before you get into a hole you can’t get out of.

To read more of Dana’s stories, visit: themindfultrucker.com.