8 Steps to Starting a Hot Shot Trucking Business
Have you thought about becoming your own boss as an owner-operator in the hot shot trucking business? It’s true hot shot drivers can find this to be a very profitable business venture to run their own business in the transportation industry, but you need to make sure you get yourself set up with a solid foundation from the start to give you the best opportunities for success. Hot shot trucking gives you the opportunity to get into the trucking industry with fewer hurdles in the form of licensing as well as utilizing cheaper equipment than full size semi trucks.
You may still be wondering exactly what is hotshot trucking? Here we will take a closer look at the steps that you will need to complete in order to get started in the hot shot trucking industry.
Hot Shot Trucking Start Up Costs
Getting off the ground running is a huge factor that you need to appropriately plan for, even allowing some cushion to get you through the unplanned happenings that can often occur. You will want to make sure you make a list of any and all legal requirements that will apply to your specific business and what you will be hauling. There are often fees associated with many of these aspects, and you will need to account for those, such as the cost of a medical physical required to get your DOT medical certificate and so forth through the Department of Transportation, along with your USDOT number.
Driving hot shot loads might be a great place to get your feet wet in the industry as you launch your business startup plans. The nice thing with hot shot truckers is that it does allow you to get into the industry and make money with a lower level of buy-in, or in other words, cheaper equipment would be needed for your trucking company. Full-size commercial vehicles like semi trucks can carry with them a full-size monthly payment, often between $2,000-$3,000. However, a pickup rated for what you need to haul hot shot loads can typically be a fraction of that cost, around only $1,000, possibly even less, depending on the equipment and details you choose to go with. Beyond the confines of the vehicle payments, pickup trucks being smaller than semis also typically offer substantial savings in fuel costs as well.
One of the bigger payments that you will need to account for is your insurance costs. This is an area that you will want to do your research and consider getting quotes from several reputable companies that can give you a fair price but also ensure that you are appropriately covered to meet your legal requirements as well as the specific needs of your business to make sure that if anything does unfortunately happen, you are sufficiently covered to get you back on your feet. Most brokers today will require $1 million dollars in liability and $100,000 in cargo coverage before they let you haul loads for them. Insurance is not cheap anywhere around, unfortunately, and these specifications can run somewhere around $1,000 to even $2,500 per month.
There is also a list of equipment that you will need to secure and keep on hand for your business. This can include various flatbed trailers, chains, tie-downs, etc. These will vary depending on the types of loads you are hauling, the equipment you are using, and so forth, so be sure to think this out and make a list so that you can appropriately account for these costs as well.
Write a Business Plan
Writing a business plan is crucial to starting a successful hot shot trucking company. A business plan is a written document that outlines the goals, strategies, and steps you will take to achieve success in your business. It helps you define your vision, set achievable goals, and make informed decisions about the direction of your company.
When writing a business plan, consider the market demand, competition, and pricing. Research your competitors and determine what sets your company apart. Determine your niche and target customers. Identify what types of loads you will haul and what areas you will serve. This will help you determine the equipment, insurance, and other expenses required to operate your business.
Your business plan should also include financial projections. This will help you estimate your start-up costs, operating expenses, and projected revenue. Use realistic figures and assumptions to create a detailed financial plan. You should also include a marketing plan that outlines how you will promote your business, build your brand, and attract new customers.
In addition to helping you organize and plan your business, a well-written business plan is also essential if you plan to seek financing. Lenders and investors will want to see a clear, concise plan that demonstrates the potential for profitability and growth.
Writing a business plan can be a time-consuming process, but it is worth the effort. It will help you avoid costly mistakes, identify opportunities, and achieve your business goals. Consider hiring a professional business plan writer or consultant if you need help creating a comprehensive plan that meets your specific needs. We have a great detailed article to help walk you through some of the specifics involved in putting together your business plan here.
Open an LLC
Did you know that if your business gets in legal trouble, it could come after your personal assets, including your personal bank account, house, and more? This is where legally establishing a business comes into play instead of purely operating as a sole proprietor. As a sole prop, all of your personal assets, as mentioned above, are vulnerable if you are taken to court. A business filing such as an LLC acts as a legal separation from your personal life and your business and will also play into how your taxes are handled as a business. Some states will allow you to establish an LLC on your own, while in other states you may find it necessary to seek out professional help in doing this.
Open a Business Bank Account
On the same path as establishing the LLC for your small business, as we discussed above, a business bank account is another way to separate your personal assets from your business assets. This is just a smart idea all the way around. It is smart to keep these separate for a vast number of reasons, but in the case that you do have an LLC with an employer identification number (EIN), there have been cases where by mixing one’s assets inappropriately, lawyers have been able to break through the protection of an LLC and come after the business owners personal assets due to them not properly separating there a personal side from the business side as the LLC aims to do. You will need to have your articles of incorporation handy for the bank to assist you in opening a business account.
Get a DOT Number
Getting a DOT Number is a necessary step in starting a hot shot trucking business. The DOT Number is a unique identifier assigned by the Federal Motor Carrier Safety Administration (FMCSA) to track safety scores and information for commercial carriers. It is required for any company that operates commercial vehicles that meet certain weight, size, and/or passenger capacity criteria.
To obtain a DOT Number, you will need to complete the application process through the FMCSA’s Unified Registration System. The application requires information such as your business name, address, and contact information, as well as details about your operations, including the types of cargo you will haul and the number and types of vehicles in your fleet.
In addition to a DOT Number, you may also need to obtain a Motor Carrier (MC) Number, also known as your Operating Authority. The MC Number identifies the type of cargo your company is legally allowed to haul and is required if you plan to haul interstate or across state lines.
To obtain an MC Number, you will need to file an application with the FMCSA and pay a fee. The application requires information such as your DOT Number, business name, and the types of cargo you plan to transport. You may also need to provide proof of commercial insurance policy for liability insurance as well as another other applicable insurance policies for your line of business. There may be other necessary documentation as well, depending on the type of cargo you plan to haul.
Once you have obtained your DOT and MC Numbers, you will need to display them on your vehicles and use them to track safety and driving records. Failure to obtain and display these numbers can result in fines and penalties and can also jeopardize your ability to obtain insurance and secure loads from shippers. First-time applicants can apply for both through the FMCSA’s Unified Registration System.
Get a CDL (Commercial Driver’s License)
A CDL is required for a commercial motor vehicle however may not be required in all situations for a hot shot truck driver. You will need to check and ensure that your specific circumstances do not place you in the category of needing one. This is one of those areas in which you are much better at being safe than sorry.
Purchase the Right Equipment
Purchasing the right equipment is crucial for starting a hot shot trucking company. While hot shot carriers often use smaller trucks and trailers than traditional commercial trucks, it is still important to select equipment that is reliable, durable, and suited for the loads you will be hauling.
When choosing a truck, consider factors such as towing capacity, fuel efficiency, and maintenance costs. A heavy-duty truck such as a Ram 3500 or a Ford F-350 is a popular choice for hot shot carriers. However, it is important to select a truck that is powerful enough to tow the weight of your loads and fuel-efficient enough to minimize your operating costs.
Trailer selection is also critical. Bumper pull trailers are a common choice for hot shot carriers due to their flexibility and maneuverability. Gooseneck trailers are another option, offering greater stability and load capacity. When selecting a trailer, consider the weight and dimensions of the loads you will be hauling, as well as any regulations regarding maximum weight and dimensions for loads in your state.
If you plan to haul hazardous materials, you will need to comply with additional regulations and select equipment that is designed for these types of loads. Hazardous materials require special handling, labeling, and safety equipment. Additionally, if you plan to cross state lines, you will need to ensure that your equipment meets the requirements of each state you will be operating.
When purchasing equipment, consider both the upfront cost and the long-term functionality and durability of the equipment. Cheaper equipment may seem like a cost-saving measure initially, but it may not last as long or perform as well as more expensive, high-quality equipment. In the long run, investing in reliable, durable equipment can save you money and help you avoid costly breakdowns and repairs.
Before making any purchases, create a detailed equipment list based on the types of loads you will be hauling, and research the providers and vendors in your area. Consider factors such as warranty coverage, financing options, and customer service when selecting a provider.
Find Freight
Is the ability to find loads the most important step for truck drivers? Obviously, you want to avoid driving with a truckload of air. Without freight, you are spending money on fuel and making no money in return. Finding freight is rather time-sensitive and will be one of those tasks in trucking that will never end. It is just the nature of the beast that when one load is done, you need another one to get you back. So on and so forth. If you are driving back with an empty trailer or even not driving at all, you are simply losing money. You only have a certain amount of hours you can legally drive.
Some are able to tackle this side of the industry fine themselves and have a system of looking through various load boards in their downtime to keep themselves steadily booked with good paying loads, while others are not. There is nothing wrong with you if you can’t, and this is why there are entire businesses dedicated to finding freight for you. If you are one that foresees it being difficult to keep up this task yourself or simply not sure you can get the best rates, then you may want to strongly consider getting set up with a hot shot dispatching agency that will find and negotiate loads for you to keep you on the road and making money.
Hot shot load boards are one option for finding freight. These online platforms connect carriers with shippers looking to transport goods. Load boards allow carriers to search for available loads based on location, type of cargo, and payment terms. While load boards can be a useful tool for finding freight, they do come with some drawbacks, such as expensive fees and intense competition for available loads. Another option is to work with a hot shot dispatching agency, which can offer a range of services, from load matching to billing and collections. Ultimately, the best approach for finding freight will depend on your specific business needs and goals.
There is a TON to learn here and our team of trucking experts can help! Give us a call at 913-393-6110