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Written by: Esther Strauss
Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on October 14, 2021
Investment range
$28,000 - $75,000
Revenue potential
$90,000 - $180,000 p.a.
Time to build
0 - 3 months
Profit potential
$55,000 -$110,000 p.a.
Industry trend
Growing
Commitment
Flexible
When establishing your hot shot trucking business, consider these significant factors:
While a hot shot business can be a great earner, it’s not for everyone. We’ve put a list of pros and cons together to help you decide whether it’s right for you.
Hot shot trucking is a small segment of the $732 billion US trucking and transport industry, but it’s also the fastest growing segment. It involves hauling LTL (less than truckload) shipments.
Hot shot trucking trends are:
Challenges in the hot shot trucking industry include:
The start-up costs for a hot shot business range from $28,000 to $75,000, with an average of $51,500. The bulk of this cost is of course for the pick-up truck and trailer, so if you already own these items, your costs will be reduced by up to 80%.
While the costs may seem high, the overall risk of investing in a hot shot business is low, as more than 80% of the investment is for purchasing assets with great resalable value. So if the business fails to meet your expectations, you can sell the truck and trailer to recoup most of your investment.
| Startup Costs | Ballpark Range | Average |
|---|---|---|
| LLC incorporation, licenses and permits | $500 - $1,000 | $750 |
| Insurance | $3,500 - $4,000 | $3,750 |
| Marketing and advertising | $500 - $2,000 | $1,250 |
| Website | $100 - $750 | $425 |
| Software | $200 - $250 | $225 |
| Pick-up truck | $15,000 - $45,000 | $30,000 |
| Trailer | $7,000 - $20,000 | $13,500 |
| Other tools and equipment | $200 - $1,000 | $600 |
| Miscellaneous | $1,000 - $1,000 | $1,000 |
| Total | $28,000 - $75,000 | $51,500 |
The average revenue for a hot shot service is $2 per mile,((https://www.dat.com/resources/hot-shot-trucking-startup-guide)) whereas the average cost is $0.78 per mile, resulting in a gross profit of $1.22 per mile. Each driver is allowed to work for 11 hours, followed by 10 hours of uninterrupted break.((https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations))
If you drive for a quarter of the available driving time, you can expect to do 124 miles a day. This would generate about $90,000 in annual revenue and a profit of $55,000. Once you establish a reputation, you could be making shipments for half the possible time and drive nearly 250 miles a day. This will generate more than $180,000 in annual revenue and $110,000 in profit.
Overall the industry has low barriers to entry, and there are no strict regulations and compliance requirements.
A hot shot driver is required to hold a basic Class D License if they haul less than 10,000 pounds of cargo loads. To carry a bigger load, the driver is required to hold a Class A Commercial Driving License, which may serve as a barrier to entry.
The other major barrier to entry comes from a growing number of hot shot businesses, all of which offer essentially the same service. This may make it difficult to stand out from your competitors and draw business.
Now that you know what’s involved in starting a hot shot trucking business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
As a delivery business, your work will be tied to a particular geographical area, so do your research to find out where the best opportunities are in your location.
Start by looking into who your competitors are locally, how many there are, what services they offer, and at what price. You’re looking for a market gap to fill. For instance, maybe the local market is missing a hot shot trucking firm that is eco-friendly or offers long distance transport.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as partnering with developers and construction firms to haul away loads of junk and material from building sites.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Keep in mind, a hot shot business can be a profitable side hustle for people who already own a pick-up truck and trailer. If you already run a business, consider how you might incorporate hot shot services to make it even more profitable.
Hot shot drivers deliver small cargo loads quickly and efficiently. The main advantage to the customer is cost as big trucks are expensive. With lower overheads, hot shot carriers charge less for their services. You’ll need to decide the size of your driving range and your various cargo possibilities, and you might also perform deliveries for Amazon, when hot shot work is slow.
The average price for a 9,000-lb cargo load is $2 per mile, while your overhead should cost about $0.78 per mile on average.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
The vast majority of your clients will be B2B – other businesses that require your services to keep their own business running. You can search for local shipping firms, construction contractors, farmers, medical suppliers, auto parts companies, and even retailers and developers on LinkedIn as well as on Google Maps and even Yelp.
You will mainly get hot shot jobs through load boards. A load board is an online platform where truck owners-operators meet with shippers and freight brokers that need to move freight. The major load boards are DAT, KeepTruckIn, 123LoadBoard, Convoy, and TruckStop.
Most load boards have a subscription-based business model, allowing premium users to login and post their loads or empty trucks. Load boards will also enable you to set up alerts for specific routes so that you shall be notified as a load matching with your route specification is posted.
At least initially you will work at home and in your vehicle, but if you do well and expand, at some point you may need to rent out an office space. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hot shot businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hot shot business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a hot shot business. You might also try crowdfunding if you have an innovative concept.
Starting a hot shot business requires obtaining a number of licenses and permits from local, state, and federal governments. You’ll need to obtain your Operating Authority, also known as an MC number, from the Federal Motor Carrier Safety Administration (FMCSA). Also, liability insurance is mandatory to activate your MC number.
Just like anyone else driving a commercial vehicle, you’ll need a Department of Transportation (DOT) medical card. For this you should book a physical examination with a medical examiner registered with the FMCSA-approved national registry. You’ll also need a USDOT from the FMCSA, which is a unique identifier for commercial vehicles hauling cargo interstate.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hot shot business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
For independent truckers, the DAT One platform provides a host of features including load boards, factoring services, load tracking, fleet compliance, operating authority services, and more. They also have a mobile application that takes a lot of manual work from the process.
Airtable can also help you manage your hot shot business. Instead of juggling with multiple apps for loads, expenses, and invoices, you can control everything from one program. The app will allow you to integrate third-party apps making it more productive and useful.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hot shot business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hot shot business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a trucking business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in shipping for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in hot shot trucking. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
Most of the hot shot businesses are owner-operated which means you may not need to hire employees to run your business. However, if your business grows beyond your capacity to manage it alone, you may need to hire additional staff, including:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Lensa, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
The coronavirus pandemic has led to a surge in ecommerce transactions and presented growth opportunities for the trucking industry, including hot shot trucking. You can still get in on the action in this booming industry if you launch your hot shot trucking business now.
One way to hit the ground running is to focus on a market niche and jumpstart your word of mouth marketing. For example, you could concentrate on last-mile and time-sensitive shipments such as fresh agricultural products.
You now have all the business knowledge you need, it’s time to hit the road and launch your hot shot entrepreneurial career!
Hot shot trucking is indeed a profitable business. The average revenue is estimated at $2 per mile while the direct cost is $0.78 per mile, resulting in a 61% gross margin. During peak times, you may expect to make $2,000 to $3,000 per week.
It depends upon your location, load and distance. However, the average pay rate is from $1.50 to $2.50 per mile, averaging at $2.0 per mile.
There is a shortage of truck drivers in the U.S. trucking industry. Trucks are also not feasible to transport freight swiftly in a local area. The only available solution is hot shot trucks. As a result, the demand for hot shot trucks is rampant across the U.S.
If you want to pursue a career in the transportation industry, hot shot trucking could be a great starting point. It is a lucrative business opportunity which usually pays more than a traditional trucking job. If you are based in an ideal location, you can easily scale your business to generate above $100k annually.
Generally, oversized or specialized loads that require expedited delivery and specialized equipment tend to pay more.
The best size trailer for hot shot trucking depends on the specific requirements of the loads you intend to haul. Common trailer options for hot shot trucking include flatbed trailers, gooseneck trailers, and smaller enclosed trailers. The choice of trailer should align with the types of loads you plan to transport and comply with local regulations and safety standards.
Hot shot trucking with a pickup truck is possible, especially for smaller or less demanding loads. However, it’s important to consider the limitations of a pickup truck, such as weight capacity, towing capacity, and size restrictions.
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