17 Steps to Start a Hotshot Trucking Business
What is hotshot trucking? At its simplest, hotshot trucking means hauling smaller (less-than-truckload or LTL) loads. They are often time-sensitive and usually delivered to a single destination. For example, suppose a construction company needs a specific piece of equipment delivered from one job site to another. In that case, they will often “hotshot” it, hiring a driver to take the load from one location to another quickly.
Rather than being on standby, hotshot drivers often find freight on load boards. This is a great way to make extra cash as an independent owner-operator. So how do you start a hotshot trucking business, and what are the hotshot trucking requirements?
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How to Start a Hot Shot Business
Here are 17 steps to guide you through the process from start to finish.
Step #1: Get your finances in order to start a hotshot trucking business.
When starting a hotshot trucking business, first take stock of what equipment you already have and what you need to buy, and make sure you have the money to cover it. You’ll also need operating cash to help you get through the startup period until your hotshot business is profitable.
It’s essential to figure out how and what you will pay yourself and what minimum profit you will need to succeed. You’ll also want to have systems and tools in place to track and record expenses, payments, and other important information. If you need financing to pay for your hot shot trucking startup cost, there are a few options. You could ask for loans from your friends and family, or you can try to get investors. You will need a business plan to convince others to help you with funding. All the things we mentioned in this section will be a part of that.
Step #2: Choose a specialty.
If you’re just starting in hotshot freight hauling, you likely don’t have enough equipment to handle multiple kinds of loads. The good news is that you can specialize in the types of freight you haul based on the equipment you have.
There are different kinds of trucks and trailers to handle different types of loads. Most hotshot trucks are medium-sized but typically larger than pickup trucks. Trucks come in classes:
- Class 3 medium-duty trucks have a weight limit of 10,001-14,000 pounds. Mainly contractors and last-mile delivery drivers use this class, but you can also use them for lighter hotshot loads.
- Class 4 medium-duty trucks have a weight limit of 14,001-16,000 pounds. These are heavier trucks, but they’re still classified as non-commercial.
- Class 5 medium-duty trucks have a weight limit of 16,001-19,500 pounds. Many of the lightest commercial trucks are categorized as Class 5.
You can also use trailers for some jobs:
- Bumper pull trailers are generally shorter and less expensive. They’re easy to use, which is why they’re popular with civilian drivers. But they can’t haul as much, usually less than 10,000 pounds.
- Gooseneck trailers have a tighter turn radius than bumper pull trailers. They can also usually carry larger, heavier loads. This can be an advantage when delivering to construction sites or other remote areas with little space to turn around.
- Tilt deck trailers tilt at an angle, so it’s easier to load heavy cargo.
- Lowboy trailers have a low center of gravity, ideal for the heaviest loads.
- Dovetail trailers work well if you’re hauling cars or other equipment with wheels.
The beauty of starting a hotshot business is that you can choose to haul only lightweight cargo. Or, you could have small refrigeration trucks or trailers to handle medical or perishable cargo.
The more you specialize, the easier it will be for customers to refer you to similar work. Deciding on your specialization may involve some trial and error at first until you decide what works best for you in the lanes you want. You can always pivot, but choose an industry that you’re passionate about from the start.
Step #3: Get a commercial driver’s license (CDL).
You will need to get a commercial driver’s license if you don’t already have one. These licenses come in various levels, depending on the type of vehicle you will be driving and the load you will carry. For instance, you might need a hazmat certification to carry medical loads. The rules vary by state, and there are various driving schools and testing options.
Step #4: Create an LLC.
You need to have a limited liability corporation (LLC) or other company structure to protect yourself from liability claims. An LLC is the simplest way to organize a business and is best for most hotshot businesses with pass-through income. This helps you avoid the double taxation you will encounter in some states with a C-corp or another structure. You can file LLC paperwork with the Secretary of State in most states, and most have online options in place.
Step #5: Obtain an EIN.
An employer identification number, or EIN, is a number issued to your company by the IRS. An alternative to using your social security number lets you pay yourself wages and other employees if needed. You can also offer yourself benefit packages and even contribute more to your 401k through your company than you can as an individual. If you have questions, check with a financial planner. You can apply for your EIN here.
Step #6: Open a business bank account.
Once you have an LLC set up and have your EIN, your next step in starting a hotshot trucking business is to open a business bank account. You should do this to keep your business and personal finances separate. This will be essential at tax time, but it’s also important so you can track expenses and income and determine if your hotshot trucking business is profitable. Most local banks offer good business checking plans, and some offer online banking.
Step #7: Get a motor vehicle record (MVR).
Getting a motor vehicle record is pretty easy in most states, but it pays to plan in case of delays. There is usually a fee involved, and some states now have online options and digital downloads. In other states, hot shot truck drivers may have to pick up a physical copy or wait for it to be mailed. You can learn more about getting your motor vehicle record here.
Step #8: Obtain a Transportation Workers Identification Credential (TWIC).
While hotshot trucking requirements do not mean that truck drivers must obtain a Transportation Workers Identification Credential (TWIC), the credential can help you to broaden the types of loads you can haul. A TWIC lets you access secure areas, such as ports. TWIC is regulated under the Maritime Transportations Act (MTSA).
If you plan to do any drayage trucking or move containers between ports or secured warehouses, you’ll need a TWIC. Hotshot truck drivers need to undergo a security threat assessment by the TSA, including a background check to get the credential.
Step #9: Apply for a Department of Transportation (DOT) number.
This step in meeting hotshot trucking requirements is a little more challenging than the others, but you have options.
- Hotshot trucks can get their own trucking authority, establishing their Department of Transportation (DOT) and MC number connected to their LLC. But if you’re only doing hotshot trucking, it may not be worth getting your own authority because it involves a lot of paperwork.
- You could also lease on another company’s authority, so they put their numbers on your truck. Essentially they “lease” your vehicle from you. Most companies charge for this service, but it is an easier way to go.
Either way, you will need a DOT number to operate your business.
Step #10: Get a DOT physical and medical card.
Hotshot truck drivers may also be required to undergo a DOT physical and get a medical card. This is a health examination to ensure commercial truck drivers are physically, mentally, and emotionally fit to be hauling loads.
The Federal Motor Carrier Safety Administration (FMCSA) requires drivers to complete and pass a DOT physical to maintain a commercial driver’s license if they operate a motor vehicle for interstate commerce in certain vehicle weight classes or haul any hazardous materials.
Step #11: Purchase or lease the right truck.
If you don’t have the right kind of vehicle already, you will need to lease or buy a truck. Leases have some advantages and typically allow you to get newer or better equipment than you couldn’t otherwise afford. But, with a lease, you don’t own the vehicle. You can buy out your lease at the end, but it can be more expensive in the long run.
If you finance a truck or flatbed trailer, you’ll own it outright once you have paid off the loan. Paying cash is an even better option. Owning your truck outright means you won’t have monthly payments as you do with leasing. Many hotshot truckers lease trucks initially and then switch to ownership when they have more working capital, and their business is more stable.
Step #12: Purchase the necessary equipment.
Once you have your truck, it’s time to get a trailer. You’ll also need tie-downs, come-a-longs, and other standard equipment. You might also need a special hitch for your truck, or even more than one. Depending on the lanes you drive, you might also need lights, flags, safety triangles, or fire extinguishers to comply with DOT regulations.
Step #13: Get the right level of insurance.
You will need a few kinds of insurance. Business insurance protects your LLC from liability and other claims, and you will need vehicle insurance as well. Sit down with an experienced insurance agent who knows the transportation industry to review your options. An agent can help you with a business evaluation and make sure you have everything you need to protect your company, yourself, and your family should something go wrong.
Step #14: Prepare your truck.
Getting your truck prepared means installing any hitches or other equipment, adding the DOT and MC numbers, and ensuring you have all lights, appropriate placards, and other items in place to comply with DOT regulations. Install phone or GPS holders to keep your hands free for driving for comfort and safety.
Step #15: Set your rate-per-mile (RPM).
When you put together your business plan, you probably outlined what you need to make your business profitable. Now is the time to figure out your rate-per-mile (RPM) rate. Be sure to look at what your competitors are charging so you’re relatively in range.
Step #16: Find hot shot loads.
Now that you have everything in place, you need to get your truck moving. Hotshot load boards are the best way to find loads nearby from reliable and qualified sources. The easiest way is to use the Truckstop Load Board. The faster you can find loads, the more money you can make. Load boards also help you avoid deadhead runs where you and your truck are driving without a load.
Step #17: Use invoice factoring to get paid faster.
Cash flow can be critical when you first start your hotshot trucking business. Use a factoring service to get paid faster. Through Truckstop Factoring, submit your completed invoice paperwork to get paid right away. Truckstop Factoring will collect that payment from the broker when they pay your invoice.
How do you start a hotshot business? Start with your finances. Set up your company with the proper paperwork for the IRS and your state. Get DOT ready, get your truck and trailer, and get insured and protected. Then use hotshot load boards to find your first and every load. You’ll be on the road and making money in no time.
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