Just like with any other type of endeavor, starting a hotshot business involves careful planning and investment of your time, money and effort. You don’t want to waste them now, do you? Follow our step-by-step guide to start a hotshot business and you should be on the right track.
1. Understand the business
Many people are confused about the term hotshot or hot shot. It really means any flatbed trailer towed by a medium or heavy duty truck that delivers loads to local, regional or national locations. The tow vehicles are typically midsized-class 3, 4 or 5 trucks with four axles from RAM 3500.
As an owner-operator, the responsibility of running the business lies on your shoulders. While you can work at your own pace, being your own boss means more responsibilities including balancing your finances, maintaining your rig, and finding potential loads.
Before you get started, you need to understand that you may experience financial pressure especially at the onset of the business as you try to get funding to buy your rig and have extra funds for operational costs. If you do operate your business right, the end result will be rewarding.
Is Hotshot Trucking For You?
You can take time off when you want. You can travel places. These are the privileges that you’ll get if you have your hotshot business. However, it could also mean spending more time on the road or missing important family occasions in exchange for more income opportunities. While on the road, most hotshot drivers sleep, shower and eat at truck stops. If you can handle this kind of lifestyle, then you are ready to be a hotshot business owner-operator.
The US trucking industry has a positive outlook with an expected growth rate of 2.3% per year from 2019 to 2024, according the ATA Chief Economist Bob Costello. However, before starting your own hotshot trucking business, check first the load ratio or density for your area of operation as well as the rates. You would want to be in an area where the demand is at least 18 loads per truck to give you the best negotiating power in terms of rates.
Is Hotshot Trucking Profitable?
Rates per mile (rpm) vary with freight season. Peak season? You’re gonna love it! Save your vacation time during low season. On the average, rpm could be between $1.5 and $2.5. If you log 2,000 for a particular week, you could earn at least $3,000.
Before you can finally enjoy the fruits of your labor, you have to first take into account your operating costs and repayments. The most basic includes cost of fuel, insurance, food and accommodation during trips.
2. Prepare yourself financially.
Starting a hotshot business involves an enormous amount of initial investment as well as operating costs. These are the ballpark figures:
- Pickup truck: $15,000 – $45,000
- Flatbed trailer: $7,000 – $20,000, depending on the overall features
- Other equipment (chains, binders, tie-downs, bungees, straps, etc): Est. $1,000
- Registration (FMCSA, BOC-3, Unified Carrier Registration, Home State DOT, ELD, Others): Est. $1,000
- Insurance: $3,500 – $4,000 downpayment with monthly payment of about $1,000
- LLC (Optional): $400
Secure the requirements
If you have a 3/4-ton pickup truck and a flatbed trailer, they are all that you need to get started. Of course, you need to invest in straps, tie-downs, chains and bungees which are essential to secure your loads. As you grow your business, you may find it necessary to purchase different types of hotshot trailers for more versatility on what you can load.
- At least 1 ton
- At least 9,000 lbs rear axle
- Diesel engine
- Either gooseneck or 5th wheel hitch
Hotshot Trailer (Depends on what you will haul)
- Open with 3- and 4-car wedge-style vehicles
- Enclosed trailer for motorcycles and general cargo
- Flatbed for general cargo and other equipment
- Goosenecks or 5th wheel
When you purchase a truck and a trailer, consider your targeted niche as it will dictate the kind of loads you will haul. Below are common niches you can choose from:
- Medical industry
- Commercial industry
- Agricultural industry
- Manufacturing industry
- Spare parts
- Perishable cargo
- Lightweight cargo
- Heavy duty cargo
You don’t need a CDL if your loads are under 10,00 lbs. However, it’s best to secure a CDL so you can also haul heavier loads. All hotshot drivers are also required to file an MC number or operating authority granted by the Federal Motor Carrier Safety Administration (FMCSA).
Other required legal documents include:
- Business License
- Vehicle Permits
- Vehicle for Service Permit
- Proof of Insurance
If you do everything on time, it would take about four weeks to secure an active authority. After registration with the FMCSA, you can expect about 3 days to be put on the register. There’s a 10-day protest period after that. If you filed your BOC3 and insurance sooner, it takes about 6 business days to be active.
4. Be ready to get your first load.
Having contacts with potential load providers will help keep your business going. You can also build your client base by signing up with hotshot load boards. Check online for load boards that fit the equipment you have, loads you want to haul, and locations you want to travel to.
If you plan to get most of your loads from load boards, it’s important to keep in mind that they pay differently. Some may pay you within days while others may have a waiting time of 30-60 days.
Additionally, it wouldn’t hurt if you ask for referrals from companies you already work with. You could also send emails to your targeted companies, advertise by creating a website, and improve your visibility through social media channels.
5. Keep your business running.
Don’t expect to profit immediately after you start your operations. It may take a while for you to recover your initial investment, but as long as you stay passionate with what you are doing, your business will keep on running.
The steps we listed above should give you a general overview on how to start a hotshot business. You may encounter many ups and downs but as long as you are serious about it and have done your own research before getting started, there’s a big chance that you’ll succeed in this industry.