Have you thought about becoming your own boss as an owner-operator in the hot shot trucking business? It’s true, hotshot drivers can find this to be a very profitable business venture, but you need to make sure you get yourself setup with a solid foundation from the start to give you the best opportunities for success. Hot shot trucking gives you the opportunity into the trucking industry with less hurdles in the form of licensing as well as utilizing cheaper equipment than full size semi trucks.
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 hotshot 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 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
A business plan is a vital part to the success of anyone with their own business. Just because you may be starting a small business and not a major corporation, that fact still holds it’s full credit for your business as well. It takes more than just clean driving records and a commercial insurance policy to be successful here. It is important to know where you are starting, where you need to be, and just how you plan to get there. This helps keep you accountable to your goals, considers your operating costs, factors in liability insurance, and will make anyone in dealings with your business see you with more professionalism and credibility rather than just winging it. 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, they 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 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 there has been cases that by mixing ones 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 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
You will need to apply for your DOT and MC Numbers through the FMCSA or the Federal Motor Carrier Safety Administration. Your DOT Number is unique to your company and used to track your safety scores and information. Your MC number (motor carrier number), also known as your Operating Authority, states what type of cargo your company is legally allowed to haul. 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 make sure 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 being safe than sorry.
Purchase the Right Equipment
A heavy-duty truck such as a Ram 3500 is much easier to run out and purchase than a semi truck but you still need to do your homework and make sure it can perform in the towing on a regular basis to keep your business going. Within your business planning stage you will want to go through and figure out what type of loads will be most available to you that will keep you on the road and making money. The types of loads that you are hauling will largely depict just what equipment you will need such as gooseneck trailers of a regular flatbed trailer, if you need a dually. You may also want to plan that you will need to replace and or upgrade this equipment in the future as you become more established in the industry.
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 down time 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.
There is a TON to learn here and our team of trucking experts can help! Give us a call at 913-393-6110