Scaling up
As the economy continues to improve, your one-truck operation is doing really well. Should you consider adding a second truck?

By Clarissa Hawes, staff writer

After a few years of low freight rates and few good paying loads, it appears the economy is on the rebound.

Some small-business truckers are reporting that they have more business than they can handle right now and are having to turn down loads.

When business is too good, owner-operators have some tough decisions to make, whether to continue as is or decide to expand their business by adding a second truck.

Margo Fries, who has worked in OOIDA’s financing and insurance departments for many years, says there is a lot to consider before adding that second truck.

She says there are “many variables” to take into account from a financial standpoint before buying that second truck.

Fries says the “golden rule” in trucking is that you have at least two to three months of revenue set back, which includes all of the money you need to pay your household bills as well as your trucking operation bills, before making the leap.

She says it’s also imperative to have enough money in your reserves to account for your insurance premiums for that second truck. She says while many say they thought they would get an insurance discount for adding a second truck, that isn’t the case in the trucking industry.

“If we insure you and you add a second truck, our exposure has doubled as well, so there is no discount for adding another truck,” she says.

Another important step is making sure you have the reserves on hand in case you have mechanical issues with your second truck and it needs repairs.

She says many buy the second truck first before calling in to find out what their next moves should be, and may miss a key element.

“Having a good driver who is going to work hard for you and take care of your truck as if it were their own truck is hard to find,” Fries says.

Making sure you will have the revenue necessary to pay yourself and that second driver must be taken into consideration.

“While some make the decision to add a second truck thinking they will make twice the revenue, they must remember that they have to pay the driver a living wage and take into account all of the other financial responsibilities that go along with adding a second truck,” she says.

Dale Watkins of OOIDA’s Business Services Department went a step further, saying that before adding a second truck to your operations, it’s most important to have the perfect driver lined up first and then look for a truck to put the second driver in.

“Finding a good driver to run that second truck is the hardest part about expanding your operation,” Watkins says. “That second driver will either make you or break you.”

At one time, Watkins had nine trucks on the road in 2000, but has since scaled back his operation to just two grain hoppers. Coming from an agriculture background, Watkins says he learned to work on trucks and does the repair work himself, which saves him on costly repair bills.

He says drivers you put in that second truck must have trouble-shooting skills and must be able to make quick decisions regarding the truck without constant supervision.

Watkins says owner-operators looking to add a second truck must wait for opportunities to come up. If you have a multi-year dedicated contract that calls for a second truck, Watkins says it makes sense to add another truck to your operation.

“I have seen many owner-operators get a good deal on a second truck, but then it sits, not making money, while they find a good fit to put behind the wheel of that second truck and figure out how they are going to make money and pay that driver,” he says.

He says it’s hard to find a driver who will treat your equipment as if it is his own, who takes pride in being on time, and who builds a strong relationship with your customers.

A final consideration when hiring a driver is to be competitive with the rates and maybe even benefits offered by the larger fleets. Fries says that can be tough for some owner-operators trying to expand their business.

Watkins says some shippers are finding it hard to get straight answers about loads and rates when dealing with the larger carriers. Those shippers are looking for a small-business operation to make one phone call to. Again, he says to look for those direct contract opportunities before deciding to add a second truck.

He says the struggle to find loads and negotiate rates for one truck is often hard and frustrating, and owner-operators should take into consideration the extra time you will have to spend finding loads for that second truck.

“Having someone at home, whether it’s a spouse or an office manager who handles the paperwork, is so important,” Watkins says.

“I hear from many who dream of becoming an owner-operator and owning their own business, but haven’t done their homework prior to making this decision,” Fries says. “This is no time to fly by the seat of your pants. You have to account for all of the different variables first.” LL