Thinking of Crossing That Thin Line Driver?

I did a retention workshop a couple of weeks ago with a 350 truck fleet and after I learned their numbers, I shared with them this editorial that I wrote previously, as I think it’s worth another look by trucking companies with lease programs and drivers tempted to take a chance

Would anyone like to guess what the real success rate is of the many Lease Op programs that are offered in this industry today? Unfortunately, I do not believe that overall, the percentage rate of success over failures is all that great. I am aware and have been involved in a few that have good numbers, but they are the exception and not the norm. It’s proven to be an attractive option for many company drivers to become an Owner Operator since the company or an affiliated company will provide you with a beautiful truck that is well specked for the work they are offering, and all the driver needs to do is sign on the dotted line to become an Owner Operator.

If this sounds ridiculous, unfortunately, in many cases it is very close to the truth. Other companies feel strongly that entrants into their Lease Op program should put some skin in the game in the way of a down payment as a sign of commitment so, if you are a decent company driver and your credit is in good shape, you are in! All this really demonstrates is that the individual has access to the down stroke and not much else. Here is a revelation I have repeated many times; “Good drivers do not make good Owner Operators; good drivers who are interested in running a small business and have an eye for detail can, but don’t always make, good Owner Operators.”

So here’s an idea for both company drivers considering this move and for trucking companies who offer these programs. Why not spend some up-front time and do a little role-playing to test the waters first? What better way to check the likelihood of success of the candidate than to do a dry run of the program being offered? If you are an existing company driver or an outsider who wants into a program, this idea will work for you:

First, find out precisely what the pay package is for the company you are considering entering the Lease Op program with. The company you are considering should offer all the details of the program very willingly and if they don’t, cut and run fast. Once you have this information, create a cheat sheet of all the pertinent information such as rate per mile, all the deductions that might happen including plates insurance, fuel tax etc. Determine how the fuel surcharge is calculated, what the pay cycle is for cash flow purposes and if there is a balloon payment at the end of your lease. If there is, then take the amount you might owe, divide it by the term of the lease and put it aside each month. Factor in breakdown insurance, accounting and business service costs etc. All these expenses are readily available with a little investigation. Budget for three months for any and all operating expenses that need to be available for any illness. Plus budget for your maintenance cost which will depend on the age of the truck you are being offered. What you are doing here is creating a simple business cash flow. Is all this sounding a little overwhelming? You should know this… it is. If you’re not sure you are going to remain committed to these types of details then you should stop right here – because if you aren’t prepared to budget and track all these items, your likelihood of success just plummeted.

If you’re still with me, here is the next step. If you think it over for a while, you will come to realize that as an Owner Operator you are no longer rewarded for the miles you drive multiplied by a mileage rate for your paycheck. You now will be rewarded by what is left on your statement. Remember some of my previous articles, it is not what you gross in dollars that count as an Owner Operator, it is what is left over for you. By no means do I suggest that you will still not need to work very hard and get your miles in, because you will. It’s just that now your attention needs to be equally divided between maximizing revenue while at the same time minimizing your expenses.

If you are a company driver considering entering a Lease Op program and you are armed with all the knowledge as described above, you have the tools needed to determine if you will be successful. For now, start driving the company units as though you are an Owner Operator. Track the miles per gallon as the fuel cost should be available to you or easy to determine. Apply the fuel surcharge. When you have scheduled maintenance, ask the mechanic the normal cost of the service or repair. Apply the Owner Operator rate to the miles you have driven. By the way, you might want to mention it to your company that you want to try doing it this way for a month or two. By going through this exercise, you can easily compare what you would make as an Owner Operator versus your regular paycheck as a driver.

Those companies that may be reading this article who have an existing Lease Op program or are thinking of offering one in the future should consider this idea as an effective way to screen for success. Think of it this way; rather than have a suffering Lease Operator, you might keep a very good driver. As a sidebar, there are also behavioral testing tools that can measure if an individual has the tools to become an independent business person or whether they are better suited to remaining an employee. Feel free to contact me to learn more about them.

Driver, I would also strongly suggest that when you are done with all your homework, you take your findings to a qualified, trucking industry business advisor who can review your homework and troubleshoot any errors or omissions you may not have seen. As always, do your homework. It is the first step to success and remember that an informed decision is always the best decision!

Safe Trucking and Merry Christmas to all,

Ray J. Haight
Co-founder
tcaingauge.com