An effective way to supplement your income if you’re an owner-operator is to take on smaller, time-sensitive loads. When you do this, it’s referred to as hotshot trucking. Usually found on load boards, these time-sensitive loads are typically delivered to a single location. For instance, a construction company may need materials quickly delivered to a specific job site.
Some owner-operators prefer to do hotshot trucking solely as a supplement to their main business, especially if there are long periods of being on standby. Others, however, make this approach to handling loads the main focus of their business. If this is what you prefer to do, read on as we run through the steps required to create your own hotshot trucking company or business. Also take a look at our complete guide to hotshot trucking to learn how to run it successfully when you start.
Start by putting together a business plan for your hotshot trucking operation. A good starting point is to do an initial assessment of what kind of resources you have to work with and what you’ll need to include as part of your business plan. During this phase, you’re looking at things such as:
• What kind of equipment you already have and what you may need
• Your available financial resources
• What kind of systems and resources you have to track payments and expenses
A good business plan will also help you define and clarify your:
Hotshot loads, while generally small, can vary greatly in weight and the nature of what’s actually being hauled. Since most independent owner-operators in the trucking industry usually aren’t capable of handling an assortment of random loads, it’s a good idea to specialize. With hot-shot freight hauling, this is when you consider two main things:
1. What kind of hot-shot loads you’ll mainly be hauling
2. The weight class you prefer to mainly handle
With the type of loads you haul, this can range from construction or medical materials only to refrigerated freight if you have this type of truck. With weight class, most hot-shot truckers use medium-duty trucks. These are divided into three classes:
• 10,001 to 14,000 pounds – class 3
• 14,001 to 16,000 pounds – class 4
• 16,001 to 19,500 pounds – class 5
If you don’t already have a CDL, you’ll need to get one to create your own hotshot trucking company. Also, consider whether you’ll need a specialized license. This may be the case, for instance, if your hot-shot freight specialty is going to be the hauling of hazardous materials.
We’re talking about three absolute basic requirements here and one that’s generally considered optional unless certain circumstances apply. This list includes:
• An LLC
• An EIN
• A DOT number
• A TWIC – the optional one
These steps are (for the most part) necessary if you’re a new owner-operator getting started as a hot-shot freight hauler. First off, you’ll go through the steps necessary to become a limited liability corporation (LLC). The reason for doing this is to protect your business from any potentially costly legal liabilities. There are other corporation setup options, but owner-operators typically go with the LLC one.
Next, for tax purposes, you’ll need an employer identification number (EIN). Another standard requirement for anybody working in the commercial trucking industry as an owner or owner-operator is a Department of Transportation (DoT) number. With DoT numbers for hotshot haulers, there is a separate trucking-related authority. However, this a paperwork-intensive process. What you can do instead is lease this authority from another company. While there is typically a fee associated with doing this, many hot-shot haulers find the option much easier.
A transportation workers identification credential (TWIC) isn’t generally required for hot-shot haulers. It’s worth considering, however, if you’ll be doing smaller, time-sensitive loads that involve pick-ups from ports and other TWIC-secure areas. In fact, it becomes a requirement if you’ll be doing pick-ups and/or drop-offs in TWIC-secure areas like ports. The process of obtaining a TWIC includes two main steps:
1. A background check
2. A TSA-conducted security threat assessment
It’s important to keep everything financially related to your hotshot trucking business separate from your personal bank account. Doing so also makes it easier to figure things out for taxes and other obligations. For this step, your local bank should be able to help you start a business account.
A motor vehicle record (MVR) is a report that details your driving history based on what’s been documented by your state’s Department of Motor Vehicles. It’s typically fairly easy to get your MVR. In some cases, hot-shot truckers have to pick up this record in person, but there are times when it’s mailed.
The Department of Transportation requires hot-shot truckers to have a physical done and obtain a medical card. You’ll also need to do this to get your commercial driver’s license, as per Federal Motor Carrier Safety Administration (FMCSA) requirements.
If you don’t have the truck required for the type of freight you intend to primarily haul as a hot-shot owner-operator, you’ll need to take care of this step as well. In this case, leasing does have its advantages. For one thing, it’s often possible to lease a better or newer truck. However, you won’t actually own the truck. If you prefer to buy the truck you’ll need instead, you can either pay cash for it or make payments on a loan. Keep in mind it doesn’t have to be one or the other. It’s fairly common for hot-shot truckers to start off leasing the appropriate truck before buying one later. Doing so also gives you more time to earn the income you’ll need to do this.
The main piece of related equipment you’ll need once you get the right truck is a trailer. Accessories you may need for your trailer include:
• Tie-downs and similar essentials
• Any special hitches you may need for your truck
• Lights, safety triangles, and anything else that may be required by the DoT
You have to have good coverage to protect yourself and your trucking business in case of an accident or breakdown.
The level of insurance you’ll need for your hot-shot business depends on what you’ll be hauling, the value of your truck, and other factors. Get a better feel for what to consider insurance-wise by talking to an insurance agent familiar with trucking-related businesses.
This is when you run through what we’ve talked about so far to make sure you have everything required to get started. You’ll also set up your truck at this point by connecting the trailer and making sure your have your placards and lights are in place. Additionally, be sure to set up a holder for your phone or GPS device so you can safely drive hands-free.
We’re entering the homestretch here. At this point, you’ll determine a fair rate-per-mile (RPM) to charge for your hot-shot freight hauling services. If you’re not sure what to charge, take a gander at what your competitors are charging. After you do this, you’ll be ready to start finding loads. The most effective way to do this is to use hot-shot load boards.
Lastly, explore the many possibilities with freight or invoice factoring. What you’re doing here is, in a nutshell, getting paid faster. The freight factoring company gives you the payment for your smaller, time-sensitive loads. For a reasonable fee, they pay you the invoiced amount. The factoring company then collects payments from your clients. No more hassle, headaches, paperwork, stress. You get your money fast. You can learn more about how we help hotshot trucker by going to this page.