albion:
Or maybe Harry paid himself 40k and still made 16%. Without knowing Harry’s pay, we are all sticking our fingers in the air and guessing.
No.
Assuming Harry followed driver’s hours regulations he could only drive 90 hours in 2 weeks.
That’s 2,340 hours per year maximum.
Even if he drove all those hours at 60 mph (very unlikely) he would’ve driven 2340 X 60 = 140,400 miles per year.
Even if he got £1.40 per mile for every mile, his total turnover would’ve been 140,400 X 1.40 = £196,560 per year.
If he made 16% profit on that (highly exaggerated turnover), his profit would’ve been: £196,560 X 16% = £31,449.60
Keep in mind that all these are all maximum possible numbers, highly unlikely in reality.
Harry didn’t say whether that was pre-tax or after-tax profit.
Whether or not we assume that it was pre- or after-tax, it looks like even with these maximum possible numbers, Harry’s return on investment was NEGATIVE.
Maybe Harry doesn’t work for £1.40 a mile. Without figures we don’t know anything. His accountant does though. His accountant even went to accountant school. His accountant should know if he made 16% or not…
Can’t believe you went to all that effort to ‘prove’ you are right based on complete guesswork.
Maybe you can tell me what I earn and my profit if I tell you £1.40 wouldn’t get me out of bed, I feel my remuneration packet is just fine, my drivers got 3% pay rise but only work on average 26 hours and I try not to work Sundays. Give the Crystal ball a bit of a rub.
I believe you are right that he didn’t do 60 mph all the time. Or even ever…
dimitri:
Whether or not we assume that it was pre- or after-tax, it looks like even with these maximum possible numbers, Harry’s return on investment was NEGATIVE.
I’m happy doing what I’m doing.
If I wasn’t making a reasonable return on my investment I would have gone bust long ago.
albion:
Or maybe Harry paid himself 40k and still made 16%. Without knowing Harry’s pay, we are all sticking our fingers in the air and guessing.
No.
Assuming Harry followed driver’s hours regulations he could only drive 90 hours in 2 weeks.
That’s 2,340 hours per year maximum.
Even if he drove all those hours at 60 mph (very unlikely) he would’ve driven 2340 X 60 = 140,400 miles per year.
Even if he got £1.40 per mile for every mile, his total turnover would’ve been 140,400 X 1.40 = £196,560 per year.
If he made 16% profit on that (highly exaggerated turnover), his profit would’ve been: £196,560 X 16% = £31,449.60
Keep in mind that all these are all maximum possible numbers, highly unlikely in reality.
Harry didn’t say whether that was pre-tax or after-tax profit.
Whether or not we assume that it was pre- or after-tax, it looks like even with these maximum possible numbers, Harry’s return on investment was NEGATIVE.
albion:
Can’t believe you went to all that effort to ‘prove’ you are right based on complete guesswork.
Harry Monk:
2) If I wasn’t making a reasonable return on my investment I would have gone bust long ago.
Harry probably confuses “return on investment” and “income as a driver”.
Perhaps Harry would venture to prove my calculations wrong by posting a scan of his accounts here.
Then we would know for sure who is right and if Harry is making any return on investment.
dimitri:
Harry probably confuses “return on investment” and “income as a driver”.
Perhaps Harry would venture to prove my calculations wrong by posting a scan of his accounts here.
Then we would know for sure who is right and if Harry is making any return on investment.
Congratulations on passing your Operator’s CPC exam. Good luck for the future, let us know how you get on.
I seem to recall a tread on here a couple or so weeks ago where the OP was trying to impose on all what he insisted was right and everyone else was wrong, it all went ■■■■ up big style for him and likewise for this one and I reckon soon the OP here will spit his dummy out and ride of into obscurity well I hope so 'cos he’s talking cack !!
And I would believe what Harry says before some amateur …
dimitri:
Harry probably confuses “return on investment” and “income as a driver”.
Perhaps Harry would venture to prove my calculations wrong by posting a scan of his accounts here.
Then we would know for sure who is right and if Harry is making any return on investment.
Congratulations on passing your Operator’s CPC exam. Good luck for the future, let us know how you get on.
Isn’t he selling his cpc course books, because "you can look everything g up on the Internet "?
dimitri:
To calculate your return on investment (in your truck) you need to deduct a salary you could’ve earned working for someone else. You need to do that because you can make that salary without any investment. And if you make an investment you’d expect it to work for you and generate some income on top of your salary. So, if you deduct let’s say £35,000 (or more, which you could’ve earned as a hired driver) from that profit that your accountant told you you’d made last year and what’s left will be what your investment in your truck generated for you. It is probably very small.
‘Profit’ is what’s left after paying the driver’s wage.What does it matter who gets the wage.If the owner/operator works as a driver for someone else then the operator obviously still has to pay for the driver in either case and the revenue,before wages,earn’t by the truck remains the same.
Harry can go out and get hired as a driver and earn £35,000.
Harry instead decides to buy a truck and drive it himself.
Harry made £36,000 driving his own truck.
Harry’s return on investment is only £1,000 (not £36,000).
‘Harry’ can work as an employed driver and earn £35,000
He then buys a truck and pays a driver £35,000 to drive it.
Harry’s return on investment is the same whether he drives it himself or pays someone else.
dimitri:
To calculate your return on investment (in your truck) you need to deduct a salary you could’ve earned working for someone else. You need to do that because you can make that salary without any investment. And if you make an investment you’d expect it to work for you and generate some income on top of your salary. So, if you deduct let’s say £35,000 (or more, which you could’ve earned as a hired driver) from that profit that your accountant told you you’d made last year and what’s left will be what your investment in your truck generated for you. It is probably very small.
‘Profit’ is what’s left after paying the driver’s wage.What does it matter who gets the wage.If the owner/operator works as a driver for someone else then the operator obviously still has to pay for the driver in either case and the revenue,before wages,earn’t by the truck remains the same.
Harry can go out and get hired as a driver and earn £35,000.
Harry instead decides to buy a truck and drive it himself.
Harry made £36,000 driving his own truck.
Harry’s return on investment is only £1,000 (not £36,000).
‘Harry’ can work as an employed driver and earn £35,000
He then buys a truck and pays a driver £35,000 to drive it.
Harry’s return on investment is the same whether he drives it himself or pays someone else.
Or have I missed something.
But if he pays another driver, where does his income come from?
Carryfast:
‘Harry’ can work as an employed driver and earn £35,000
He then buys a truck and pays a driver £35,000 to drive it.
Harry’s return on investment is the same whether he drives it himself or pays someone else.
Or have I missed something.
Yes, that’s correct. Return on investment is the same regardless of whether he drives his truck himself or hires a driver to drive it (assuming he pays the driver the same salary as what he could earn himself as an employed driver). Looking at it this way makes it easier to understand if it makes financial sense to buy a truck and become an owner-driver or if it’s better to be an employed driver.
the nodding donkey:
But if he pays another driver, where does his income come from?
It puts him in exactly the position that Dimitri was trying to describe.In erroneously thinking that return on capital has any connection whatsoever to a hypothetical wage which he could earn driving as an employed driver while paying someone else to drive his truck.
the nodding donkey:
But if he pays another driver, where does his income come from?
It puts him in exactly the position that Dimitri was trying to describe.In erroneously thinking that return on capital has any connection whatsoever to a hypothetical wage which he could earn driving as an employed driver while paying someone else to drive his truck.
Meanwhile, tomorrow Harry can sell his truck, and stick the cash in his pocket. I like to see an employed driver do that…
Carryfast:
‘Harry’ can work as an employed driver and earn £35,000
He then buys a truck and pays a driver £35,000 to drive it.
Harry’s return on investment is the same whether he drives it himself or pays someone else.
Or have I missed something.
Yes, that’s correct. Return on investment is the same regardless of whether he drives his truck himself or hires a driver to drive it (assuming he pays the driver the same salary as what he could earn himself as an employed driver). Looking at it this way makes it easier to understand if it makes financial sense to buy a truck and become an owner-driver or if it’s better to be an employed driver.
Maybe but it proves that any hypothetical employed driver v owner driver wage figure has no connection to return on Capital.In it’s simplest form the idea of being an owner driver is to at least earn the type of return on capital you’d get by investing the money in a safe investment account ( sfa at current rates ) and a decent wage.
The incentive for main contractors to sub out is to take advantage of the former while not defeating the object from the driver’s point of view of the latter.It’s that decent wage issue together with at least a nominal return on capital which is the deal breaker in most cases in the current trading environment of crippling fuel costs and over capacity and under demand.
Who actually buys a depreciating asset like a truck outright? Most operators, myself included will put a deposit down and pay the rest through cash flow in the most tax efficient way, either via lease purchase, contract hire,or hire purchase. So the business owes the entrepreneur about £7000. A busy year would re-coup that, the £35000 and a healthy profit too. Not from a haulage exchange though. Also, if you use lease purchase and keep the asset at the end of the deal, you have a ready made deposit for your next truck.
