The trucking and transportation industry has different players, including hotshot truckers who cater to a specific demographic. How do you start a hotshot trucking business?
This guide shows you all there is to know in setting up your hotshot operations.
How to Start a Hotshot Business
Are you looking for how to get into hotshot trucking?
If you’re wondering what hotshot trucking is about, it’s simply the business of hauling or moving less-than-truckload goods promptly.
Here, truckers don’t wait to have a whole truckload due to the time-sensitive nature of this niche. Does that sound interesting? You might want to find out more.
Hotshot Trucking Requirements
Are you a trucker who prefers to be on the go with a limited stand-by period in-between loads?
If you answer yes, this might be the perfect opportunity for you. Hotshot drivers are often hired to move emergency supplies or delivery.
You’ll always find ready freight as a hotshot driver on load boards. This means fewer wait times as you won’t have to wait for full loads.
If this sounds exciting, then it’s time to consider starting your own hotshot business and using the tips discussed below.
Pick a Niche
One of the decisions you’ll need to make to start a hotshot business is to pick a niche.
This business can be pretty fascinating for all niche types. Some niche examples include RV hauling, pipeline service, shed delivery, livestock hauler, & home improvement centers & contractors.
Car hauling and several other niche types are available to try.
Generally, hotshot trucking operations deal with all kinds of loads. In other words, certain truck types are more suited to specific truck types.
There are class-3 through 5 medium trucks with varying carrying capacities.
Choose a Business Structure
What business structure will best serve your interest?
When it comes to such legal forms, they offer varying benefits. The most common are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
For the most part, hotshot trucking business owners mostly go with the LLCs. Is this the best alternative? There’s no definitive answer to that, as it involves various factors, including your choice as the business owner.
If you have doubts about choosing a suitable structure for your hotshot business, consider seeking advice from a legal expert. You can also research these structures online for a clear idea of their advantages.
Write a Business Plan
A clear roadmap is needed for your hot shot business, and this is a plan.
A comprehensive business plan is necessary to capture the business’s essence adequately. This plan is also crucial for a variety of reasons. Important sections to add include the executive summary and company description.
Other sections include competitive analysis, market analysis, a description of management & organization, and a breakdown of products & services.
More sections include the marketing plan, sales strategy, request for funding, and financial projections.
Get Required Funding
Getting the needed funding to launch your operations is vital, but before that, you’ll need to work out the required startup costs.
The exact amount required may vary by individual based on several factors, including location, the operation scale, and many others.
However, a ballpark range for hotshot startups is around $28,000 to $75,000, with an average cost of around $51,500.
This startup costs to cover expenses like insurance, licenses & permits, LLC incorporation, marketing & advertising, a pickup truck, website, software, trailer, other tools & equipment, and miscellaneous.
Having obtained an estimated startup amount, you’ll need to figure out where to such for such funds. Sources to explore include personal funds (savings), traditional sources like bank loans, SBA loans, business lines of credit, small business grants, and crowdfunding.
Have a Bank Account
A dedicated bank account should be opened to establish robust hotshot trucking operations. Your personal and business arrangements must be distinct.
This helps with easy tracking of expenses as well as business income. Opening a business account helps with tax preparations too.
Register your Hotshot Trucking Business
You must have your business fully registered as this is necessary for ease of business.
Now, registration requirements will vary from one state to the next. So, you’ll need to find out what the requirements are for your condition.
The most common types include transportation workers’ identification credentials (TWIC) and motor vehicle records.
Other registration requirements include a DOT physical & medical card, a DOT transportation number, and obtaining the employer identification number (EIN) for tax purposes.
Hotshot Truck: Lease or Purchase?
One of the crucial decisions you’ll have to make when starting your hotshot business is choosing between truck leasing or outright purchase.
Such a decision might be influenced by several factors, including whether you have sufficient startup costs.
Leasing helps new business owners access a truck that is mostly in perfect condition. Plus, payments are made periodically in small installments.
This enables you to meet your business needs, thus cutting down on significant financial commitments.
In the case of buying a truck outright for your hotshot business, such cost can be prohibitive. This increases your startup costs significantly. With these comparisons, choosing what works best for you becomes necessary.
Get your Business Insured
Never start a hotshot trucking business without having it thoroughly ensured.
While this is important, you must understand that the right insurance is needed to provide comprehensive coverage. This way, you protect your business and the workers and clients.
It’s essential to research the types of insurance policies available.
Also, you’ll do well to discuss with a professional to find what best fits your kind of operation. You may be required to provide information on your insurance needs to choose the right insurance.
Set your pricing
To hit the ground running as a hotshot trucking business owner, you must set all aspects of your operation in the order, including the pricing.
Before setting your rate-per-mile, you’ll need to research current going rates within your niche. This allows for competitive pricing.
Now you know how to start your hotshot trucking business. All that’s needed is to follow the basics as discussed above. You also need to carry out a lot of personal research before launch.