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LOSE
'Cowboys', bad debts and low rates combine to force owner-drivers to throw in the towel. But others are convinced there is a living to be made using sound business principles. CM spoke to two who have opted out and one who has opted in.
Murgatrux is about as new as a haulage business can be. It began trading last month with one vehicle, a second-hand Renault 310. A second 310 took to the road last week.
The Oldham-based business is headed by Pam Murgatroyd, a former distribution manager, who gave up her job in February to prepare for a future in haulage, including taking an international CPC. She also took a 10-week, part-time course in book-keeping and marketing with Oldham Enterprise Board.
Murgatroyd will soon take her HGV test. The firm has two drivers but she wants to avoid the cost of paying for relief drivers by taking some loads herself. The drivers are both directors — the more experienced of the two, Tony Harvey, was a driver at OCE, Murgatroyd's former employer. Harvey approached Murgatroyd with the idea of setting up in business, wanting to marry his driving skills to her administration skills.
The other driver, Johnny B, is Murgatroyd's son. He turned his first professional wheel last Monday, when Murgatrux's second Renault hit the road.
Murgatroyd says the business is going "reasonably well". The company picked up a spread of general haulage work, including shipments of plastic granules. She is grateful to the Transport Users Group (TUG) for providing a list of reliable companies using sub-contractors.
The help from TUG was particularly valuable as Murgatrux began trading earlier than anticipated. The chance to buy the 1987 Renaults at a bargain price came unexpectedly. Both tractor units had belonged to a company which went into liquidation. Murgatroyd snapped up both units for a total of £14,000, getting a £1,000 discount for taking the pair.
PROBLEMS
The business encountered problems getting insurance and renting trailers. Murgatroyd's broker contacted eight large insurance companies — half would not even quote for a haulage business. Eventually, Legal & General agreed to insure the vehicles and Sun Alliance the goods in transit.
Renting trailers was just as tricky. Central Trailer Rentco asked for trading references — an impossible request as the business had not begun trading. Murgatroyd's offer to supply bank references was refused. She was astonished when CTR then suggested she go elsewhere for her first trailers and come back when she was able to supply references from another trailer company. She was having none of it and CTR relented after two days. "They've been very good since — we paid six weeks rent up front and payment then switches to a weekly basis," says Murgatroyd.
Murgatrux has been financed by the directors with Murgatroyd the largest shareholder. When Harvey suggested forming the business, Murgatroyd put out feelers and found there was a lot of work around. "It's going the owner-drivers' way because we can offer keener prices," she says. "In the end we convinced each other — it was now or never."
Unlike many owner-drivers, Murgatroyd has no family history in transport but she is determined to succeed by not getting into debt. "We wanted to pay our way from the beginning, none of the vehicles are leased and I do the books on a daily basis. Many owner-drivers go wrong because they fail to count the pennies and have no business skills," she says. She takes advice from operators she can trust to set rates for jobs. when she is unsure what to charge. "Some rates offered are rubbish — people just won't pay for a return load," she says.
There have been teething troubles. Recently the firm turned down a run taking potatoes from Kent up to Leeds — but not until Harvey arrived at the farm to find the potatoes were still being picked and he was expected to handball 20 tonnes in 561b sacks on to 20 pallets by himself. The rate was £200. "It would have taken him hours, he would have been too tired to drive and he would have had arms like an orang-utan," she says.