So, yesterday, I described how we learned about trucking and logistics.  That is exactly why we now know how to help our clients in these endeavors.  Whether it’s a common carrier (conveys freight for other firms)  or private carriage (only carries freight for their own business), we understand the factors, the hidden issues, and the need to manage “the lone wolf” (the long-distance trucker) effectively.

So, when we hear about truck drivers considering their own operation, we can suggest approaches.  We know these folks are sick and tired of driving someone else’s rig, for long hours, to be paid all of $ 40K a year.  The problem really is that running their own single tractor/trailer doesn’t make them much more than that- but, with proper operation and systems, the after tax income could be much higher.

Most of the folks who decide to be an owner-operators will do so without forming a corporation or an LLC.   But, we suggest they all reconsider that idea.  No, we really suggest they throw out that idea.

But, even if a formal corporate structure is engaged, they are still going to be a solopreneur.   Because it’s going really just them and their rig.  Maybe, if they’re lucky enough to be married, the business can include their spouse.

Until they start really raking in the dough, they are not about to buy another rig and/or hire an employee, so they need to  keep things real.

And, the very first consideration before starting any business is where one will acquire the funds needed to cover living and business operating expenses until revenue (and profits) start to flow.  At the very least, that means there needs to be about 90 days of expenses in the bank- now.  So, the bills are paid,  the firm’s plans and systems can be developed, and no one worries from where their meal is coming.

Not surprisingly, your startup costs are probably as high as those who want to start a new restaurant.  Because you are going to have to buy a tractor- and maybe a trailer.  The question between new and used is shaded by how much money you have- and how easy it is to find a really great used rig.

But, nowadays, we only suggest the purchase of a new rig.  Not something I would have suggested (nor have I suggested to my clients) in years past.  But, now?  You bet.  Why?

Because the trucking industry is about to be changed in a very big way- and in less than 24 months. That’s just two years.  And, a used rig probably won’t be able to help anyone accommodate the required changes.

What’s the big change?  Autonomous driving.

No, I don’t think we are going to have driverless trucks operating in our cities, in our towns, or making deliveries to customers.    But, autonomous trucks are going to replace us – you and me- for those cross-country trips, for driving on interstate highways and multi-laned state roues.  (By the way, you are going to need an automatic- not the 12 or 15 geared manual transmissions- to allow the retrofit autonomous kit be used on the tractor.)

Part of the problem is that our business- truck driving- is the ideal choice for autonomous driving.  Interstate highways rarely have dangerous curves, the lanes are clearly defined,  and there are no pedestrians or bicycles with which to contend.  All of these are the bane of autonomous systems.  Couple that with the fact that trucks are big, they are heavy, and they are very expensive- so it’s easy to retrofit (or build them new) with the sensors and computers that are needed, without doubling the cost of the vehicle.

Oh, yeah.  There’s also federal laws that stipulate that drivers can’t drive more than 70 hours over 8 consecutive days.  (That hour stipulation doesn’t reflect that fact that truckers are paid by the mile, not by the hour.  And, if stuck in traffic, or performing paperwork, those paid miles go down- way down.)

All that means, we can rant and rail, but we won’t stop truck driving from becoming more automated.  So, we need to plan for it.  And, be ready.  That means we need to put money aside from each trip.  (Should the pay be  by the mile, consider a nickel of that to be the minimum.   If the new venture manages to drive 60,000 to 100,000 paid miles (that’s about 1000 to 1800  hours of driving time), then that means some  $ 3000 to $ 5000 can be squirreled away for the retrofit kit.  The problem is that kit will cost $ 30K or so.  The goal has to be to get enough money for at least a significant down payment, so that you can get a small second loan, on top of the rig payments.  (But, if the time frame for adoption is five years instead of 2, we can probably purcahse the retrofit kit outright.)

If that isn’t what happening, your investment in the rig is going to be for naught.  Because you will have to accept much lower payments for each load- and probably be shunted aside by the newer trucks.  Without drivers.

We’ll continue this discussion on Tuesday…