Are you getting into the hotshot trucking industry?

If you’re just starting, there’s a question you need to answer. That question is: Would you like to run your hotshot business under your own authority, or “lease on” to an existing company?

To help you make the best decision for your specific situation, we have laid out the pros and the cons of working for yourself or for a company. Afterward, see which would be the best fit for you.

Option A: Getting Your Own Authority

Having your own authority in the hotshot industry is the goal of most if not all hotshot truckers. But like any other business, being your own boss has its ups and downs. First, let’s look at the pros of having your own authority in the hotshot business:

PROS:

1. You Have 100% Control

As the CEO-owner-operator of your hotshotting venture, you don’t have anyone telling you what to do. So you can’t put the blame on others. Your results will depend on how much effort you put into your own business. If you work, you will get paid. If you don’t, you won’t. It’s that simple.

2. You Have 100% Profit

Whatever you make in your hotshotting for the week minus expenses is your profit for the whole week. You don’t have to share your earnings with anyone as the entire business is yours.

These are a couple of alluring reasons to get your own authority in hotshotting. But there are also some reasons why many are discouraged from pursuing this. Here are some of them:

CONS:

1. Start-Up Processing

What many would-be hotshotters don’t know is that you have to form an LLC if you want to get your own authority. LLC stands for Limited Liability Company. It protects your hotshotting business from lawsuits and from being taxed twice.

After getting an LLC, the next step is to get your EIN. Once you have your EIN, head on to the FMSCA website to file for your authority. The FMSCA will give you your MC and USDOT numbers after paying a $300 fee.

After this, you have to have insurance on file within 21 days to activate the process. If, after 21 days, you still haven’t completed your insurance filings, you may have to start all over again.

You may have to repeat the progress you’ve made with the FMSCA. You may have to pay the $300 fee again to get new USDOT and MC numbers.

2. Insurance

Getting commercial insurance can be expensive. It costs more, especially if you are starting your hotshot business outside of the Midwest. Insurance costs are high in places around the coast because there’s a greater risk of hurricanes.

While waiting for your authority to be activated, filing your insurance is the next step. You’ll pay $30 for a BOC3 form. This form would then be submitted to FMSCA to activate your authority.

3. The 90-Day Wait

Once your authority is active, you’ll have to wait 90 days. Most brokers don’t want to work with you until your authority has been active for 90 days. Other brokers want to wait for a year.

During those 90 days, you’re not able to work and make money. So it’s wise to have operating capital during these times.

4. Safety Audit, Drug Consortium, DOT Compliance, etc.

You are responsible for keeping your hotshot business away from penalties and fines.

Being compliant with the rules and requirements is a must for any owner-operator. Since you are your own authority, it is your responsibility to keep up with the paperwork.

Option B: Leasing On to a Company

For those who want to start a hotshot by working for another, here are the pros and cons:

PROS:

1. Start Hotshotting ASAP

One of the benefits of working for a company is that you can start hotshotting once qualified.

Some ways a trucker can qualify are:

  • Qualified with the company’s insurance
  • Clean NBR (no accidents and tickets)
  • Operating capital (money to start rolling for fuel and to pay a down for insurance)

Once you pass the company’s qualifications, you can start hotshotting immediately.

2. No Headaches on Paperwork

Instead of having to file all the paperwork yourself, the company would do that for you. Most companies have a back office that works with the FMSCA and other compliance agencies. Truckers can just use or ride on the DOT number that their company has.

3. Company Dispatch

Another great benefit you can have is getting a dispatcher to book loads for you.

As a company, you pay them a percentage of your earnings. So it is a wise idea to maximize this percentage and let them dispatch for you.

Even if they do the dispatching for you, you still have control over where you want to go. It’s as easy as letting the dispatcher know you have places you prefer to work. Let’s say you only want to stay around the Midwest, so they’ll give you loads to deliver around the Midwest.

Every company is different.

Others allow truckers to do self-dispatching (booking your own loads). Self-dispatching may be able to help save money. It lessens the percentage you are going to pay the company. 

Still, it would be more reasonable to leave the dispatching to them. Let the company take your mind off from booking loads so that you can concentrate on making more money.

As for the cons of working for (or leasing on to) another company, here are some of them:

CONS:

1. Minimum Control

Since you are working for another, most likely you’d have to stay under their chain of command. You have to carry out the tasks you are required to do. 

The things truckers can control are where and how you are going to deliver the load. You are also in control of your equipment and how much home time you’d like to have.

2. You Pay a Percentage

You will not get the full portion of your earnings, since a part of it goes to the company.

So, Which Option Is the Right One For You?

Having your own authority may be suitable if you are business savvy.

One must understand that starting this way may be difficult and expensive. But this understanding must not discourage you from your desire to become your own boss.

As they say, in life, the harder it is to get the goal, the more success it brings. The same goes for the hotshot trucking business. Earning one’s own authority gives business owners more benefits in the long run. If you’re considering this path, have a plan and get your finances ready.

But if you’re just getting started in hotshotting, it is best to lease on with a company to gain experience. It will give you enough to get your feet wet and get a feel for the industry. Working for a company would allow you to know the ins and outs of the business until you know enough.

From there, it would depend on how long you want to stay and work for the company. You may opt to stay and continue working for them… or decide to step up and get your own authority.

The Bottom Line

Your choice would ultimately depend on what you want to do — the desires you want to achieve in your life. It would also depend on your personal drive and determination.

So how would you choose to run your hotshotting business — under your own authority or under a company? Write your answers down in the comments. We’d love to hear from you.