- Startup costs: $71,350- $187,900
- Industry trend: Growing
- Difficulty: Easy-to-Moderate
- Profitability: 5-20%
- Time to build: 0 – 3 months
- Commitment: Flexible
Are you a trucker wanting a new experience? Or curious about the trucking industry but not keen on driving a big rig? Hotshot trucking could be your solution.
It only takes a pickup truck and flatbed trailer to transport lighter, time-sensitive loads like farm goods and building materials. It can be a highly attractive business with solid profit margins when done efficiently. Plus, you get to meet new people and discover new locations.
But, starting a hot shot trucking business needs careful planning and a good grasp of the industry. This guide gives entrepreneurs like you a clear roadmap to launch a successful hotshot business. If you’re up for the challenge, stick around, and we’ll walk you through the steps!
Pros and Cons of Starting a Hotshot Trucking Business
- Fast turnaround times for small loads.
- Lower initial costs with basic equipment.
- Wide range of industries served.
- Smaller trucks mean smaller hauls.
- Requires effort to secure and maintain clients.
- Fuel, maintenance, and insurance costs are greater.
A Comprehensive Guide to Starting a Hot Shot Trucking Company
1. Determine Startup Costs and Figure out Financing Needs
Starting a hot shot trucking business involves some investment, typically from $71,350 to $187,900. The central part of this expense is for your pick-up truck and trailer. If you already have these, you can significantly cut your startup costs by up to 80%.
A successful hotshot trucking business sees a profit margin ranging from 5% to 20%. You can expect even higher profit margins as you expand and fine-tune your operations.
Though the initial costs to start a business might appear steep, the risk is relatively low. This is because over 80% of your investment goes towards assets like the truck and trailer, which hold strong resale value. If the business doesn’t work out as planned, selling these assets can help you recover most of your initial outlay.
Check out our hot shot trucking startup costs guide to learn more about how much you can expect to spend while getting started.
2. Select a Business Specialty
Starting your own hotshot trucking business is exciting, especially when you’re new to hotshot freight hauling. If you don’t have a lot of equipment yet, that’s OK! You can focus on hauling specific types of freight that match your equipment.
In the world of hotshot trucks, there are various sizes and types, each suited for different cargo. Most of these trucks are bigger than your average pick-up but still considered medium-sized. Here’s a quick guide:
- Class 3 medium-duty trucks: They can carry 10,001-14,000 pounds, often used by contractors and for last-mile deliveries. These are great for lighter hotshot loads.
- Class 4 medium-duty trucks: It can handle 14,001-16,000 pounds. They’re heavier but still not classified as commercial vehicles.
- Class 5 medium-duty trucks: It come with a limit of 16,001-19,500 pounds, are among the lighter commercial trucks.
When it comes to trailers, you have options too:
- Bumper pull trailers are short and budget-friendly, ideal for smaller loads under 10,000 pounds.
- Gooseneck trailers offer better maneuverability and carry heavier loads, which is useful in tight construction sites or remote areas.
- Tilt deck trailers make loading heavy cargo easier thanks to their angled design.
- Lowboy trailers are perfect for hefty loads due to their low center of gravity.
- Dovetail trailers are a good choice for transporting cars or wheeled equipment.
3. Prepare a Business Plan
Diving into the world of the hotshot business requires not just enthusiasm but also a solid hotshot trucking business plan. Think of it as your roadmap, guiding you from the initial idea to a successful operation. Plus, it’s a valuable tool for investors to get to know your business inside out.
Here’s what to include in your hot shot trucking business plan:
- Executive Summary
- Business Overview
- Products and Services
- Market Analysis
- Competitive Analysis
- Sales and Marketing
- Management Team
- Operations Plan
- Financial Plan
Creating each part of your trucking business plan needs your time and careful attention. It’s essential to focus on every detail. If you feel stuck or need guidance, we’re here to help. Explore a hotshot trucking business plan with us and start your journey to success.
4. Purchase or Lease a Truck
When starting a hot-shot trucking business, deciding whether to buy or lease trucks is crucial. Buying trucks is expensive upfront but turns them into assets for your company.
Once they’re paid off, you’ll only have to cover maintenance and fuel costs. You can also customize them as you like. However, trucks lose value over time, and you’ll have to budget for repairs.
Leasing trucks, in contrast, need less money upfront, which helps with cash flow. You’ll have fixed lease payments, often including maintenance costs.
Leasing lets you regularly update your trucks, giving you access to the latest features. But you won’t own these trucks, and there might be extra fees if you go over the lease terms.
For those starting in hot-shot trucking, leasing trailers, and essential freight-hauling supplies like tie-downs, safety flags, and repair kits is advisable. It’s cost-effective, letting you determine what works best for your business as it grows.
5. Register your Hot Shot Trucking Business
You’ve done the smart thinking and got the perfect business plan and a pickup truck. Now, let’s get your hotshot trucking business officially registered in the following simple steps:
Select a Business Entity
Starting a hotshot trucking company begins with choosing the correct business entity. Your options include:
- Sole Proprietorship
- General Partnership
- Limited Liability Company (LLC)
- Limited Partnership
Many experts, including those from reputable sources like Forbes, recommend an LLC for its ability to safeguard personal finances and offer tax benefits.
Finding a Registered Agent
Next, if you opt for an LLC or Corporation, you must appoint a Registered Agent. This person or company will handle essential mail and legal documents for your business, acting as your liaison with the legal system. They must be based in the same state as your business.
State Registration and Getting an EIN
Now, it’s time to register your hotshot trucking company officially. Each state has its own set of rules, so be sure to understand your state’s specific requirements. This process typically involves the state’s Secretary’s office.
Additionally, you’ll need an Employer Identification Number (EIN) from the IRS. Think of it as your business’s social security number, necessary for taxes and setting up a business bank account.
Signing Up for Taxes
Lastly, set up your tax obligations. Register with the appropriate state and federal tax authorities. This includes managing sales, income, and employment taxes, particularly important if you plan to employ other hotshot drivers.
While these steps may seem overwhelming, a Registered Agent can guide you through the legalities and ensure you meet all local requirements.
6. Get CDL and other Licenses & Permits
Starting a hot-shot trucking business involves several key licensing and permit steps to ensure you’re legally ready to hit the road.
Commercial Driver’s License (CDL)
To start, get a Commercial Driver’s License (CDL) based on your vehicle and load type. For special loads like medical items, you might need a hazmat certification. CDL requirements vary by state, and you can choose from various driving schools and testing options.
Motor Vehicle Record (MVR)
Getting this record is easy in most states, and some even offer online access. However, expect possible delays and fees. In certain states, you may need to pick up a physical copy or wait for it to be mailed.
Transportation Workers Identification Credential (TWIC)
Not essential for all hot-shot trucking, but a TWIC broadens your load options, especially for secure areas like ports. Get one by undergoing a TSA security threat assessment and background check.
Department of Transportation (DOT) Number
Getting a Department of Transportation (DOT) number is important for legal trucking operations. You can create your DOT and MC number linked to your LLC, but it involves paperwork. Alternatively, leasing a company’s authority, though simpler, usually comes with a fee.
DOT Physical and Medical Card
A DOT physical and medical card are necessary to confirm your fitness for the role, mandated by the FMCSA. It ensures you’re physically, mentally, and emotionally ready for hotshot driving. This is especially important for interstate commerce, specific vehicle weights, or transporting hazardous materials.
7. Get Business Insurance
Starting a trucking business comes with its share of risks. Smart owner-operators know that even well-planned operations can face unexpected challenges. That’s why business insurance is crucial. It’s not just about meeting legal requirements; it’s about providing peace of mind and ensuring your business runs smoothly.
Here’s a look at some key types of insurance you might need:
- General Liability Insurance: This covers legal costs if you’re faced with accidents, injuries, or negligence claims.
- Business Property Insurance: It protects the items and locations vital to your business.
- Equipment Breakdown Insurance: This takes care of repairing or replacing your tools and machinery.
- Worker’s Compensation: This is important for covering medical expenses and lost wages if your employees get injured.
- Commercial Property Insurance: It helps protect your business spaces from damage or disasters.
- Commercial Auto Insurance: Essential for covering incidents involving vehicles used for business.
- Professional Liability Insurance: It deals with legal issues arising from unsatisfactory services.
- Business Owner’s Policy (BOP): This is a convenient package combining multiple insurance coverages.
8. Apply for a Bank Account & Business Credit Cards
When you start a company, keeping your own and your company’s money separate is essential. This helps keep your things, like your house and car, safe from company troubles.
Here are two simple steps to make sure you keep your company’s money matters in order:
Open a Business Bank Account.
Having a business bank account is smart because it helps you keep your shopping separate from your company’s expenses. It also makes it easier to manage your company’s money and taxes.
Get a Business Credit Card
A business credit card is more than just a way to pay for company things without mixing it up with your stuff. It also helps your company to show it can handle money well. This is excellent when you need to borrow money or get financial support for your company.
9. Purchase Necessary Equipment
To begin, hot shot truck drivers need a pick-up truck and a flatbed trailer to carry stuff. Some people prefer a dual pick-up truck. It has dual wheels for more stability, but it’s up to you.
As for trailers, hotshot drivers have a few choices:
- Bumper pull
- Tilt deck
Each one is good for different kinds of loads.
You’ll also need some essential tools: straps, chains, and tarps. The chains you use don’t have to be thick because you won’t carry hefty loads.
Learning to cover your cargo with a tarp can be tricky at first—it’s like wrapping a huge gift, but keeping things dry is important.
For a good set of tools, we suggest having:
- 20 straps with ratchets
- Four chains that are 20 feet long and 3/8 inch thick
- Four binders and a winch bar to secure them
- A couple of tarps that can cover a 6-foot drop should cover most of your needs for protecting your cargo.
10. Set Your Rate-per-mile
The amount you can earn for carrying a hot shot load can change a lot. It depends on who’s driving, what you’re carrying, who’s sending it, and how fast it needs to get there. Sometimes, you charge a bit less if you’re carrying only part of a full load.
You earn about $1.50 for hotshot hauling for every mile you drive. If the hot shot load needs to get somewhere fast, you could get up to $2 per mile, but that’s not very common. Most of the time, the pay is around $1 to $1.25 per mile.
Regarding how much to charge, $1.50 per mile is an excellent place to start. You can ask for more if the load is special or the shipper wants to pay more. Know the least you’ll take for a job. Mixing high and low-paying jobs can keep your earnings steady.
11. Start Finding Hot Shot Loads
Now that you’re set up, it’s time to get your truck rolling. Hotshot load boards are the go-to for finding nearby loads from trustworthy sources.
What can a hotshot load board do for you? There’s a lot you can look into, such as:
- Checking the current going rates with something called Rate Insights.
- Seeing how many loads there are versus trucks in your place.
- Finding out past payment trends for hotshot jobs.
- Learning about brokers – how quickly they pay, their credit ratings, and more.
- Feel confident in discussing and agreeing on the best prices with the information you have.
While not every hotshot load board is free, they often justify their cost if you use them well. These boards also prevent wasteful runs without a load, saving you time and fuel.
How do I Book Hot Shot Loads for Non-CDL Hotshots?
Businesses looking for non-CDL hotshot loads can benefit greatly from online boards and services that match freight. Creating good connections with shippers and brokers can lead to regular and rewarding work.
Freight Brokers: These go-betweens link shippers with carriers like you. By partnering with local brokers, you might find loads that match what you’re looking for.
Load Boards: Online hubs like load boards bring shippers, brokers, and carriers together. They’re handy for finding non-CDL hotshot loads.
Online load boards can be valuable in your search for non-CDL hotshot loads, as they are meeting points for shippers and carriers. You can set up a profile and look through loads that need moving.
Freight Agents: These agents can assist in finding you non-CDL hotshot loads and handle rate negotiations, usually for a share of the load’s revenue.
Direct Approach: Contact shippers who need quick shipping of smaller loads. Reaching out directly can be very effective.
In hot shot trucking, there’s no magic formula; it’s all about investing time and gaining experience. However, with a solid business plan and the right tools, you can make wise business decisions. It will ensure your company is well-supported and positioned for success.