Starting a Hot Shot Trucking Business? Read This
Hot shot trucking can be an invigorating career choice for anyone who loves being on the road and saving the day. Although there will be a lot to learn along the way, starting your very own hot shot trucking business is a great way to enjoy entrepreneurship and build a future for your family.
What Do Hot Shot Truckers Do?
Hot shot truckers typically fall into Class 3, 4, and 5 trucks. They work in a pinch to deliver items to businesses, government facilities, and even individuals.
These drivers are not only experienced in trucking single loads, but they are capable of handling a variety of cargo sizes.
Common items that hot shot truckers transport include equipment, machinery, RVs, boats, and so forth. The main difference between hot shot truckers and average truckers is that hot shot truckers get paid a higher rate to deliver the cargo in a shorter time period.
Most hot shot jobs need to be completed ASAP. Companies and even individuals are willing to pay higher rates to get essential items delivered to prevent downtime.
Most hot shot truckers are simply freelance entrepreneurs who are considered owner-operators.
The Benefits and Drawbacks of Hot Shot Trucking
Once you learn about what hot shot trucking is, it's not uncommon to wonder how to start a hot shot trucking business. In fact, many drivers look to this particular business type to create a lucrative paycheck. However, before deciding to start any business, it's vital that you look at both the pros and cons that come along with it.
3 Benefits of Hot Shot Trucking
Hot shot trucking offers a plethora of benefits to the professional truck driver. From low initial startup costs to premium rates and constantly changing cargo, there's a lot to look forward to.
1. Low Startup Costs
One very significant benefit of starting a hot shot trucking business is that it doesn't require a huge upfront investment. Many Class 3 trucks are fairly affordable to purchase or lease. They're also a lot cheaper to insure than heavier Class 8 long-haul trucks.
2. Premium Rates
Due to the immediate nature of hot shot loads, they tend to produce higher premiums than your typical run-of-the-mill haul. Being a new entrepreneur, you can choose which jobs you want to take and set your very own rates.
Additionally, with higher rates, you can be more financially at ease during downtimes.
3. Constantly Changing Cargo
Doing the same old thing every single day can be quite boring for some people. With a hot shot trucking business, you'll always be transporting different cargo. Every day can be its own challenge and allow you to take pride in delivering time-sensitive cargo on a tight deadline.
2 Drawbacks of Hot Shot Trucking
While there are many great benefits to starting your own hot shot trucking agency, there are also some drawbacks that you'll need to be aware of. From unstable work opportunities to out-of-pocket regulation fees, you'll need to prepare your business strategy accordingly.
1. Unstable Work Pattern
One of the biggest drawbacks of hot shot trucking is that your workload can be quite unstable. You won't typically have regular jobs lined up for weeks to come. Rather, you'll have to take jobs at a moment's notice due to the time-sensitive nature of hot shot cargo.
2. Maintenance and Regulation Fees
Another drawback of starting a hot shot trucking business of your own is that you'll be financially responsible for truck and equipment maintenance as well as legal registration fees. Your truck must comply with all state and federal regulations, such as HOS logging and drug and alcohol testing.
For a quick overview of the pros and cons, check out this infographic from OverDrive.
How Much Do Hot Shot Truckers Make?
Since all hot shot trucking cargo needs immediate attention, you can enjoy charging premium rates.
The recorded median salary for an owner-operator in the hot shot trucking industry ranges between a low of__ $49,000 to a high of $75,000__.
However, the amount of money that you make in a year will be highly dependent on the jobs that you take. Some hot shot truckers report making over $100,000 per year.
There are many different factors that go into determining how much you'll make in an annual salary as a hot shot trucking entrepreneur. These include:
Your set rates
Equipment you have
Region you operate in
Number of loads you carry
Years of experience
Amount of time you devote to trucking
Logistics and Other Requirements for Hot Shot Trucking
Register your commercial truck: Regardless of the size of the truck that you're going to be driving for your hot shot trucking business, it will need to be registered as commercial. Since you're going to be your own boss, you're in charge of the various logistical and government regulations regarding your new trucking business.
Keep driving logs: One key component that you'll need to be aware of is your driving logs. You'll need to keep accurate records of the distance you drive, the time you spend behind the wheel, and the weight of your cargo. These are all outlined in the Hour of Service (HOS) regulations.
Comply with local regulations: Additionally, if you plan on doing interstate travel, you'll need to apprise yourself of each state's regulations for documenting hours and hauls.
Three additional key elements you'll need to start your hot shot trucking business include:
CDL License: Since you're going to be hauling cargo, you'll likely need to obtain a commercial driver's license (CDL). The legal requirements are that you need a CDL license if your trailer has a GVWR of 10,001 pounds or more or the GCWR of your truck and trailer is 26,001 pounds or more.
Insurance coverage and DOT & MC numbers: Both DOT and MC numbers help officials to identify your vehicles and trailers. These are federal requirements that every hot shot trucking business must-have to be in operation.
16 Steps to Start Your Own Hot Shot Trucking Business
Now that you have the gist of what's all involved in starting your own hot shot trucking business, it's time to decide if it's the right career for you. For those who are interested in becoming a hot shot trucking entrepreneur, we're going to go into much more detail below about how to specifically start your own hot shot trucking business.
1. Prep Your Finances
Before you dive into getting contracts for any load, you need to get yourself prepped financially. This involves having tools in place for all tracking and recording of your expenses, payments, and other key financial data.
You should have a decent idea of what you need to be taking home to survive and what you need to be keeping in your business to cover expenses like fuel, equipment payments, and so forth. Now is the time to create a business plan so that you're prepared whenever you need to head out to a bank or other financial institution for funding.
2. Choose a Specialty
Hot shot trucking jobs are done on a variety of cargo sizes. It isn't likely that any one hot shot trucking business will be able to handle all types of cargo. The jobs that you can take are restrained by the type of equipment that you have available to you and the licensing that you have.
While there are all different types of trucks out there, most hot shot truckers have medium-sized trucks. These are considered Classes 3 to 5.
Class 3: 10,001 to 14,000 pounds
Class 4: 14,001 to 16,000 pounds
Class 5: 16,001 to 19,500 pounds
Check out out Complete Guide to Commercial Drivers License: CDLs and Weight Class for more details on each weight class.
You can also opt for having a trailer as part of your fleet to allow you to take different hot shot cargo contractors. Some of the most popular trailers that hot shot truckers utilize include:
• Bumper Pull Trailers: These are the most inexpensive of the bunch and are fairly easy to drive. However, they only haul less than 10,000 pounds.
• Gooseneck Trailers: This type can carry heavier and larger loads than bumper pull trailers. They have the added advantage of tighter turn radiuses, so they can be utilized in tight construction sites and other remote areas.
• Tilt Deck Trailers: These trailers help to make the loading and unloading process much easier because the bed of the trailer will tilt downward. This is great for jobs where there isn't additional loading equipment available.
• Lowboy Trailers: This type is typically utilized to haul some of the heaviest loads out there due to their low center of gravity.
• Dovetail Trailers: The dovetail trailer is very simple to use and is ideal for hauling cars and other equipment that has wheels.
The above are just some of the most popular trailers that hot shot truckers choose to invest in. Depending on the area that you plan on specializing in, you may want to branch out to more specialized trailers.
For example, refrigeration trucks and trailers can allow you to transfer medical and perishable cargo.
3. Obtain Your CDL License
Unless you plan on doing loads below 10,000 pounds, then you're going to need a commercial driver's license. Having this license allows you to do more versatile hauling.
Realize that CDL licenses don't give you permission to haul any load. Rather, there are some particular types of hauling that require you to have special endorsements. These include:
Truck with a tank
Truck with double or triple trailers
Each state's requirements are going to vary slightly. It's best to check with your local Department of Motor Vehicles for specific state licensing details.
Depending on the hot shot trucking specialty that you choose, you may need to invest in adding one or more of these endorsements to your CDL license.
4. Establish an LLC
Once you get your CDL license and any necessary endorsements, you'll want to set up an LLC. This stands for limited liability company and is the easiest type of organization to establish.
This will set up your hot shot trucking business with a pass-through income for you.
To establish an LLC, you'll need to register with your Secretary of State with a unique business name. The specific registration details and fees will vary depending on the requirements in your home state.
Don't know how to start an LLC? Follow these 6 steps to get started.
How To Start A Trucking LLC In 5 Steps
5. Get an EIN
You'll also need to get an EIN from the IRS.gov website. This is formally known as an employer identification number, and it's used much like a Social Security number for a business.
You'll need it to pay yourself and other employees' wages from your business. An EIN is also important for benefits packages and even contributing to a 401(k).
6. Set Up a Business Checking Account
After your business is officially registered with your state and you have your EIN number, it's time to set up your business checking account. This is necessary to split your personal and business finances.
It's also vital for tracking your business expenses and income so that you can keep accurate financial statements for your taxes.
7. Obtain an MVR
MVR stands for motor vehicle records. You'll need to obtain a copy of your MVR to submit with your DOT and TWIC submissions. In most states, you can obtain your MVR online for a small fee.
However, some states may require you to wait for a physical copy in the mail or pick up one in person.
8. Get a TWIC Card
TWIC, Transportation Workers Identification Credential, is necessary if you plan on doing any transport of freight or containers from an ocean port to another destination or a secure warehouse. To obtain this credential, you'll have to undergo a security threat assessment from the TSA.
It's important to note that TWIC is not an absolute necessity for all hot shot truckers. However, it can broaden your ability to move more loads that require this higher access credential.
What is a TWIC Card?
9. Obtain a DOT and MC Number
To haul freight in the United States, you need to have a DOT number on your truck. This number gives you specific authority to truck and provides others with a direct link to your business.
Most hot shot entrepreneurs may opt for setting up their own DOT number through the Department of Transportation. However, if you don't want to go through the stringent requirements of obtaining your own DOT number, you may operate under another company's authority. They will essentially lease their authority for a set fee.
Another typical requirement of many hot shot trucking loads is an MC number. You can obtain yours from the FMCSA website.
10. Get a DOT Medical Card
The Federal Motor Carrier Safety Authority (FMCSA) requires all individuals with a commercial driver's license that participate in interstate commerce, drive certain vehicle weight classes, or haul any hazardous materials to undergo a DOT examination.
This ensures that the driver is physically, emotionally, and mentally fit to be hauling heavy loads. When you pass your DOT examination, you'll receive a medical card that will serve as proof that you passed.
11. Buy or Lease a Truck
If you don't have your truck yet, it's time to get one. Most hot shot truckers will either buy a truck or opt for leasing one. Each comes with its own set of pros and cons.
When you opt for leasing a truck, you can enjoy running newer equipment that is less prone to breaking down. However, unless you opt to buy out your truck at the end of your leasing period, all of your payments aren't buying you any equity.
If you opt to purchase a truck, all of your payments are going towards paying it off. However, realize that trucks are exceedingly expensive, and you may not be able to afford a new model.
12. Purchase Your Equipment
Once you get your truck figured out, it's time to get your equipment straight. This equipment will include everything from the trailers that you buy to the tie-down straps you use to hold your cargo in place.
Apart from the equipment that you need to physically do the job, you'll also have to purchase safety equipment required by DOT regulations, like safety triangles, flags, fire extinguishers, and so forth.
13. Get Insurance Coverage
Insurance is an absolute must for any hot shot trucking business. Not only will vehicle leasers and truck loan lenders require it, but the FMCSA will also require minimum business liability insurance to operate legally.
Primary business insurance needs to have a minimum of $750,000 in liability insurance, according to the FMCSA. Additionally, many cargo holders will require proof of adequate insurance coverage before they will allow you to accept any of their jobs.
14. Prep Your Truck
Before you can hit the road, you'll need to get your truck and trailer prepped.
You'll need to physically add your DOT number according to DOT regulation standards and MC number.
You'll want to have your hitches installed and other necessary equipment strategically loaded onto your truck and trailer so that you're ready to haul a load.
15. Establish Your RPM
The last step that you'll need to take before getting hot shot contracts is establishing your rate-per-mile (RPM) fee.
It's best to check with local competitors to see what they're charging so that you can stay within the same relative range.
Additionally, you'll need to take a look at your finances to determine what RPM will be necessary to turn a profit.
16. Get Contracts
Now that your truck is prepped and you're legally ready to head down the road, it's time to schedule some contracts.
You can find many hot shot trucking jobs listed on hot shot load boards.
Some load boards may charge a small fee for you to obtain access to job listings.