Wondering How To Start A Hot Shot Business?
How do you start a hauling business, step by step?
What’s essential to know?
Keep reading as we have gathered exactly the information that you need!
Let me explain to you how to start a hot shot trucking business!
Are you ready?
Let’s get started!
What Is Hot Shot Trucking
Hot shot trucking is essentially a business model where drivers or company owners deliver small loads for shippers and brokers due to time-sensitivity aspects or project-critical loads.
In other words, hot shot drivers are those that provide support to shipping companies in need of someone to quickly deliver a small load.
Typically, hot shot drivers use super-duty pickup trucks to make their deliveries such as agricultural equipment, materials, heavy machinery, or other important loads.
There are many that get into the hot shot trucking business.
If you start your business properly and operate your business right, you can make good money.
In this article, I will tell you exactly how to start a hotshot trucking business the right way so you can start generating some cash!
Be sure to read all the way to the end of this article so you don’t miss out on any of the steps!
How To Start A Hot Shot Business
You’ve been thinking about starting a business for a while!
Now, you’re considering the hot shot trucking business and wondering where do you start?
It may sound daunting at first, especially for those who have never started their own business.
However, with proper research and diligence, you can get become a successful hot shot driver.
Let me break down all the steps for you, one by one.
1- Consider Your Finances
The first step in your journey to starting a hotshot business is to consider your finances.
If you leave your current job, how much money will you need to support your family until you make enough cash from your hotshot business?
How much money do you need to purchase or lease your truck, get your equipment, apply for the permits and licenses, form a corporation or limited liability company, and so on?
Do you have anyone who can provide you with some cash or financing to get you started?
Everyone’s risk tolerance varies.
One person may not have a lot of money saved up or have access to a lot of cash but is highly motivated to get started.
Another person may want to save up enough capital to fund his or her personal expenses for a few months before taking the dive.
No matter your situation, consider how much money you need to save up and how much you need to actually get your business started.
2- Prepare A Business Plan
As you are considering your finances, it’s a great time to prepare yourself a business plan.
A business plan is essentially a “plan” that you put on paper where you identify where you are today and you forecast where you will be in the future.
Preparing a business plan is a great way to mentally dive into the hotshot trucking business so you can better understand what it entails, the pros, the cons, and the main aspects to think about.
You don’t need to make this step too complicated.
Preparing a business plan is not intended to be a scientific study but rather a rough guide as to where you are, what you need, and where you are headed.
3- Choose Your Specialty
Next, think about what type of freight you are interested in hauling based on the equipment you have.
If you’re just starting out, you may not be able to haul all the different types of loads as you may not have the right truck or equipment to do so.
The good news is that there are different types of trucks and trailers that can handle different types of loads.
Here are the different types of truck classes:
- Class 3 medium-duty trucks have a weight limit of 10,001-14,000 pounds
- Class 4 medium-duty trucks have a weight limit of 14,001-16,000 pounds
- Class 5 medium-duty trucks have a weight limit of 16,001-19,500 pounds
The Class 3 medium-duty trucks are generally used by contractors and last-mile delivery drivers.
The Class 4 medium-duty trucks are heavier than the Class 3 trucks and can carry similar loads (they are classified as non-commercial).
The Class 5 medium-duty trucks are yet heavier than Class 3 and Class 4 and are considered light commercial trucks.
When you’re starting a hotshot business, you have the freedom to choose what type of load you will carry.
For example, you can decide that you will only carry light cargo or specific types of loads.
4- Register A Company
In your hotshot trucking business journey, you’ll need to consider registering a company for yourself.
Many drivers will either form a corporation or a limited liability company.
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The main reason why you want to register a company is that you want to have personal liability protection.
This means that when you do business through your company, your company creditors will not be able to hold you personally liable for the company debt or obligations (unless you signed a personal guarantee or gave personal assets as collateral for instance).
Here are the different options you have in forming a new corporation or LLC:
- Do it yourself (cheapest alternative)
- Hire a business attorney (the most expensive alternative)
- Use online incorporation services (moderately expensive alternative)
If you’re comfortable with reading and understanding incorporation papers, legal documents, and federal and state laws relating to companies, you may give it a try.
If your situation is complex, you may want to consider higher a qualified attorney to help you.
You can also hire an online service provider to provide you with the company formation services although they will not provide you with legal advice.
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5- Get Your Tax ID Number
Every company doing business in the United States is required to have a Tax ID Number.
The Tax ID Number or TIN is a unique number given to your company allowing the government and tax authorities to identify your business entity.
Consider the Tax ID Number to be the equivalent of your Social Security Number.
With a Tax ID Number, you will be able to accept checks and other forms of payment from your clients.
Also, you’ll need your Tax ID Number to accomplish other steps like opening a bank account, filing your taxes, and so on.
6- Open A Business Bank Account
To be able to do your business banking, you’ll need to get yourself a business bank account.
It’s important that you open your company’s bank account and make all your business deposits and withdrawals from your company’s account.
This way, you’ll have a clear separation between your “personal” transactions and your “business” transactions.
To get started, you’ll need to make a deposit in your account (it could be of any amount that you can afford or need to start paying for different expenses).
7- Apply For A DOT Number
The next step is to apply for a Department of Transportation (DOT) and Motor Carrier Number (MC) for your corporation or LLC.
This step requires that you complete a series of paperwork with the Department of Transportation so you can get your DOT and MC numbers.
When you have your own DOT number, you have your own trucking authority.
As an alternative, you can pay certain companies a fee to be able to use their DOT number on your vehicle.
If you don’t want to go through the process of applying and getting your own number, renting your number can be a viable option.
No matter what option you choose, you’ll need a DOT number to operate your truck.
8- Get A DOT Physical
Another requirement that you’ll need to satisfy to become a hotshot driver is to do a DOT physical.
This means that the authorities will confirm that you can act as a commercial motor vehicle driver and carry out the requirements of this type of function.
Once you do your DOT physical, you’ll get be issued your medical card.
9- Get A CDL
Driving a hot shot truck requires that you have a commercial driver’s license (CDL) in some cases.
Typically, a CDL will be required in the following situations:
- To operate a vehicle with a Gross Vehicle Weight Rating (GVWR) of 26,001 pounds or more or using this type of vehicle to tow another not exceeding 10,000 pounds
- To operate a vehicle with a (Gross Combined Weight Rating) GCWR of 26,001 or more when the GVWR of the vehicle towed is over 10,000 pounds
10- Get Your MVR
To make sure that you have all the paperwork in your possession, it’s a good idea to get your Motor Vehicle Report (or MVR).
The MVR will provide a detailed history of your driving record.
Most likely, you’ll need this report when you’re looking to get insurance for your truck or business.
Also, it’s good to have this report on hand in case you get audited by the authorities.
11- Get A TWIC
Depending on the type of loads you want to carry and the type of places you want to access, you may want to get a Transportation Workers Identification Credential (or TWIC).
Although it’s not mandatory for you to get a TWIC, getting one can help you get access to more loads by accessing secure areas or letting you broaden the type of loads you can haul.
For example, with a TWIC, you can access secure areas like ports.
Anyone looking to move containers in ports, do transportation between ports and warehouses, or go to military bases, will need to get a TWIC.
When you apply for a TWIC, you’ll need to undergo a background check so you can get cleared for this credential.
12- Get Your Business License
Depending on where you will operate your trucking business, you may need to get yourself a business license.
A business license is essentially a document issued by a government agency granting you permission to operate your business in the geographic region controlled by the agency.
In other words, a business license will generally refer to a document allowing you to conduct your business within your city or town allowing you to sell particular products or services.
It may be difficult at times to know what business license you need as the term “business license” means different things in different states.
Be sure to verify with your local authorities and state to see if you need any business licenses to operate your company.
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13- Purchase or Lease A Truck
Now that you’ve done most of the paperwork for setting up your company, getting your US DOT number, and all the other preliminary work, you now need to think about your truck!
Depending on the type of load you want to carry, you’ll need to make sure that you buy the right truck having the proper specifications.
One option is to purchase your truck.
This means that you’ll become the owner of the truck and will be responsible for whatever happens to the truck.
Another option is to lease a truck.
This means that you’ll sign a contract for a certain number of years, pay the monthly rent, and use the truck for that period of time.
In the end, you will not own the truck.
Many new hotshot drivers tend to start out with a lease and eventually purchase their own truck.
The advantage of owning your truck and paying it off is that you will no longer have to worry about monthly payments, all you will need to pay for is the repair, maintenance, and usage costs.
On the other hand, the lease gives you the ability to get a newer and better truck allowing you to handle the loads you want to carry at the expense of chipping away your working capital.
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14- Get Your Trucking Equipment
Now that you have your truck, consider getting the proper equipment to carry for your loads.
Consider getting things like:
- Tie-downs
- Come-a-longs
- Hitch
- Lights
- Flags
- Safety triangles
- Fire extinguishers
15- Get Insured
You’ve invested a lot of time and capital to start your hotshot business, make sure you don’t underestimate your insurance.
For the most part, you’ll need business insurance to protect your corporation or LLC from liability and you will need to insure your truck.
You can get more protection hotshot business insurance protection by speaking to a qualified insurance broker or agent to give you the right options.
Think about getting insurance policies that protect your company from liability, yourself from liability or injuries, and your family if something happens to you.
Grow Your Hot Shot Business
You’re all set.
You are now ready to start hauling your first load and earning some cash!
The success of your hot shot business will depend on how well you can find loads to haul.
You can work with accredited suppliers to locate loads and get some gigs.
Here are some of the things you can do to generate leads and grow your business:
- Work with load boards
- Create a business website where you promote your services
- Create a blog to attract traffic to your website and convert leads to customers
- Work with content marketing agencies to help promote your business
- Speak to your friends and family
- Set up your social media platforms and talk about your business
- Consider email marketing, social media marketing, pay-per-click advertising
Takeaways
So there you have it folks!
In this article, I went over the exact process of how to start a hotshot business from scratch.
Being an entrepreneur and having operated my own business for many years, I know exactly how exciting it is to start a new business but at the same time very daunting.
With all the experience I’ve gained over the years (and having learned important lessons from a lot of mistakes and failures), I was ultimately able to achieve my ultimate dream of operating my own business and having the financial stability to take care of my family.
I’m excited to see you are on the same journey in wanting to start your own business and I have taken the time to write this detailed post to help you along the way.
I sincerely wish that you succeed in your business venture and I’d love to hear from you.
