If you are looking for how to start a hotshot business, here is the practical guide you need. It will take you by the hand and lead you step-by-step into starting your hotshot trucking business.
The freight industry is presently a really lucrative one, contributing more than 500 billion USD every quarter to America’s economy. But getting into traditional trucking requires a whole lot of requirements. But an easy way to still enjoy the handsome pay lucking around in the trucking industry is through hotshot trucking.
Hotshot trucking business is a sure-fire way to be part of the trucking industry, and you can start with a very limited requirement. However, you will need to be ready to put in some hard work and preparations. If you are looking to start a hotshot trucking business, here are the steps to follow. But first, let’s see what hotshot trucking is.
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What Is Hotshot Trucking?
In case you are not even sure what hotshot trucking is. Let’s first clear the air on that. When shippers and brokers have relatively small loads that need to be delivered quickly, they often call on hotshot truckers to do the job for them. Hotshot truck drivers specialize in delivering time-sensitive, project-critical loads like construction equipment, medical supplies, heavy machinery, and more.
Hotshot truckers are usually freelancers working privately, carrying freight from one point to another without any employer restrictions. That means you are simply your own boss, and you can choose to work any time you like. However, the more you can work, the more money you will be able to make. All you need is a medium or heavy-duty truck with at least 7,000 pounds of hauling force and a trailer.
How to Start a Hotshot Trucking Business
Let’s learn about “How To Start A Hot Shot Business” in detail:
#1: Understand the business
This is the first thing you will need to do. You cannot just jump into the business just because you heard there is money there. That may cause your business to collapse even before it starts. So first, get familiar with the business and understand important things about it. Have answers to essential questions because that will help you set out right – and on the right foot.
How much does it cost to start a hotshot business?
To start a hotshot trucking business, you will need between $28,000 and $75,000. The bulk of this initial cost will be going into purchasing your pick-up truck and trailer. That means if you already have your own truck or trailer, the initial startup costs will likely reduce by 50%.
How much can you earn from a hotshot business?
The hotshot business is a profitable one. The average revenue is estimated at $2 per mile, while the direct cost is $0.78 per mile. That means you can enjoy a profit margin of about 61%. During peak times when business is moving well, you can make $2,000 to $3,000 per week.
#2: Choose a specialized niche
The hotshot trucking industry deals in carrying a wide range of loads. To get loads fast and have customers refer you for similar work, you will need to choose and deal in a specified niche. That means you will be choosing to only haul certain loads. You can choose only to carry agricultural equipment and materials or just concentrate on handling medical or perishable goods.
However, it may not be easy to decide which niche to focus on. Sometimes, it involves several trials and errors before you can find one that best works for you. But when you do, it will really pay off.
#3: Raise funds for the business
Hotshot trucking business requires comparatively huge capital to start. You will need to make investments in purchasing some equipment and materials. So, before you set out in the business plan, make sure you have enough money to get you through the startup period until you begin to make good money from the business.
There are different ways you can raise capital for your business. You can depend on your personal saving or donations from family and friends. At the same time, you can take things a step further by asking for a loan from a bank or any financial institution to finance your hotshot business.
You can organize crowdfunding, and you can invite investors to invest in the business for a share. However, if you are seeking loans from the bank or want to partner with an investor, you will need to convince them. That is where having a well-thought-out and well-written business plan comes into play.
#4: Form a business entity
You are running a real business that will require lots of registrations and requirements. So get yourself prepared by taking the first step; forming a business entity. In this case, the most appropriate entity is a limited liability corporation (LLC). With pass-through income, an LLC will provide the right protection you need for your business against liability claims.
Getting a structure for your business is not difficult. You just need to file LLC paperwork with your state’s secretariat or check their website online for the necessary requirements.
#5: Obtain your EIN
The next thing on the list of how to start a hotshot trucking business is obtaining an employer identification number (EIN). This is usually issued by the IRS. This is a very important step to take when thinking of how to run a successful hotshot business, especially if you are thinking of employing workers to help in the business.
Your EIN will also be required to do some important registration in the business. Some of them include opening a business bank account and paying taxes. Without your EIN, you may not be able to take these important steps.
#6: Get a commercial driver’s license and motor vehicle record
These two are important. A commercial driver’s license (CDL) is important to run a hotshot business. However, the license comes in various levels depending on the type of your vehicle and load you will be hauling. You will also need to obtain a motor vehicle record (MVR). This will require you to pay certain fees, but it is very convenient to get. Most times, you only apply online and have it mailed to you.
#7: Purchase the necessary equipment
Of course, you will need a truck to start a hotshot trucking business. That means if you don’t already have one, you need to get it. Also, you will need to invest in some more standard equipment like tie-downs, come-a-longs, etc.
Depending on what you carry, you may also need straps, chains, bungees, safety triangles, flags, and fire extinguishers.
#8: Set a pricing structure for the business
Hotshot businesses charge per mile of travel. And the amount you charge will grossly depend on the type of load you are carrying and what type of truck you have. To get your pricing well, you may need to check out similar businesses in your area to know what they charge. When you know what your competitors are charging, it will help you know how to plan your pricing structure too.
#9: Obtain the necessary insurance
Anything can happen at any time. So you will need to protect yourself and your family from liability and other claims by getting the right insurance for your hotshot business. There are a couple of options available to a hotshot trucking business. So, to know which is best for you, you may need to speak with an experienced insurance agent or broker.
#10: Get your first loads and start your business
Now that everything is set. You already have your truck and some other equipment you will need. You also have all the legal aspects settled out. So, you are good to go with your business. The next thing is to start thinking of how to get loads or contracts for your hotshot. In the following section, we will talk about how you can get loads for your hotshot business.
How to Get Contracts (Loads) For a Hotshot Trucking Business
There are a variety of options available to truckers when looking for loads for their hotshot business. But the easiest and most reliable among them is through load boards. You can sign up for load boards online where you can have access to different loads available for delivery. With a load board, you are likely not going to run out of loads to carry. However, some load boards will require a fee to sign up.
Some general load boards include Truckstop.com, DAT, and Trucker Path. You can also check out Uship and hotshotcarrier; they specialize in hotshot deliveries.
Apart from using load boards, you can also take the bull by the horn and start making contact with local companies that may need hotshot deliveries from time to time. Jobs from this may not be as consistent as those from load boards, but it will make a good alternative for raising your income. So speak to construction companies, businesses in the medical industry, and manufacturing businesses that can make a good potential customer.
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