Hotshot Or Class A?

Topic 21274 | Page 1

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Triplet Dad's Comment
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I know you have probably heard this question a thousand time, but I sure could use some advice. I am 50 years old and live in Atlanta. I worked in a completely different field and have worked for companies for 25 years (with crappy pay). I love being on the open road and want to start my own business. I need some guidance. I am able to pay cash to get the equipment and training I would need, but don't know whether to go Hotshot or Class A. Ideally, I would like to haul 3 days a week (between Tues-Fri) and be able to net $1500 or over a week. I am pretty frugal and would sleep in my vehicle. Which way would make this more possible? Are there many dedicated routes that stay full most of the time (like Atlanta to Savannah, or Atlanta to Anywhere Florida)? Thanks very much for your advice?

Dedicated Route:

A driver or carrier who transports cargo between regular, prescribed routes. Normally it means a driver will be dedicated to working for one particular customer like Walmart or Home Depot and they will only haul freight for that customer. You'll often hear drivers say something like, "I'm on the Walmart dedicated account."

Susan D. 's Comment
member avatar

Many hotshot rigs will need a class A.. I know my nephew's does. So yeah, get your class A and as far as equipment, etc., Your best bet would be to do your research with OOIDA. Running your own business on top of learning how the business works is a risky proposition.

OOIDA:

Owner-Operator Independent Drivers Association

Who They Are

OOIDA is an international trade association representing the interests of independent owner-operators and professional drivers on all issues that affect truckers. The over 150,000 members of OOIDA are men and women in all 50 states and Canada who collectively own and/or operate more than 240,000 individual heavy-duty trucks and small truck fleets.

Their Mission

The mission of OOIDA is to serve owner-operators, small fleets and professional truckers; to work for a business climate where truckers are treated equally and fairly; to promote highway safety and responsibility among all highway users; and to promote a better business climate and efficiency for all truck operators.

Ithel's Comment
member avatar

I hesitate to jump in here, as I have mostly lurked this past year and am not a driver, but as a small-business owner who advises other small-business owners at tax time, my advice is that going into business in this new path for you is a very bad idea. Owning a business is far more complicated than most people imagine it to be. Even from the outside I can see trucking has a tremendously steep learning curve that will require your concentration and diligence. Learn how it works and gain some experience before adding the complication of also learning how to run a business. It would be painful enough to find six months in that trucking is not as workable for you as you thought.....how much more painful if you also now had investments you cannot easily recover!

There are better ways to approach this, and this site has many resources to help you decide how to make the most of your opportunities.

My 2 cents.

Old School's Comment
member avatar

Welcome aboard Triplet Dad, and congratulations on the event that helped you get that moniker! Boys, girls, or some of each?

I love being on the open road and want to start my own business.

First off, do you have any business experience? I love your enthusiasm, but I've got to tell you this...

I was involved in a custom manufacturing business for thirty years - that is just to let you know that I know all about being self employed. There are no harder working people than those who are in business for themselves. It's funny how folks who have only signed their names on the backside of a paycheck seem to think those people who are accustomed to putting their signature on the front side of a paycheck don't really have to work that hard. Well, for thirty years there was nobody in my organization who put in any where close to the hours that I did. In fact I oftentimes slept in my shop for a few brief hours on a hard work surface just so that I could put the finishing touches on a project before it went out the door the next morning. My employees would leave at the end of the day, and then return in the morning to still find me there working on whatever it was that I was doing when they left the night before.

That is why this statement puzzled me...

I would like to haul 3 days a week (between Tues-Fri) and be able to net $1500 or over a week.

Are you aware of the profit margins in the trucking industry? I know guys working 70 plus hours a week who can't seem to make 1,500 dollars a week. I think before you get this cart before the horse you need to do some serious research and come up with a real business plan. All you are going on now is hopes and dreams with a few unicorn farts mixed in there to make it all seem like a dream come true. I don't see anyway you can expect to work at this like it is a part time job and expect to make 80,000 dollars in a year. It aint happening! You are going to need to be all in, and expect to be putting in some long hours on the road.

How many people do you know who have successfully started a business doing something that they have absolutely no experience at? Think about that for just a minute. You say you love the open road - well, who doesn't? I have watched a lot of people fail at this business, and most of them had years of experience behind them when they finally decided they wanted to be the boss of their own operation. It is a commodities business, and the cheapest bidder gets the work. Do you really want to get yourself involved in a bidding war with huge national companies who have all kinds of leverage that you cannot even dream of in a one truck operation?

The scariest thing you mentioned was that you had the money to buy the equipment, and it seemed you were wiling to deplete your own personal capital on a new business adventure. There are a long list of failures in business who thought that just because they had inherited a little money or saved a little money that they could improve their lives by spending it on a business venture. That is not the way successful business people think. They hang on to their capital, because they know it is highly likely they will be needing it just to survive. A successful entrepreneur never buys himself a job, and that is exactly what it sounds like you are wanting to do. If you can create yourself a job, because there are people who want, and or need your service, then you are on the right track. Just being able to lay out some cash for a job is generally not a good way to get started.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Big Scott's Comment
member avatar

In addition to what everyone else said, look at some simple math. The biggest cost to trucking companies is fuel. According to The EIA, the US average price per gallon of diesel fuel as of 11-20-17 is $2.912. This morning I filled my truck, about half a tank. It took 116.527 gallons at a price of $3.099 per gallon for a total of $361.12. Now it will take you approximately 1200 or more miles per week to gross $1500.00 and to take home $1500.00 you can't do that driving 3 days per week. The areas you want to run have more traffic which means fewer miles.

The best thing for you to do is get your CDL , work for an OTR company for at least one year. This way you will be able to earn while you learn.

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Triplet Dad's Comment
member avatar

Thanks very much for the information. My reasoning for the days and money are as follows: If I were to do Hotshot, I thought of buying a RAM 3500 Dually and a 4 car hauler. If I could do 3 or 4 cars from Atlanta to Texas or Atlanta to South Florida making $350 or so a car. Then making a return run with the same type load. Then maybe one day, do a day trip (like Atlanta to Nashville maybe $200 a car there and back). Seems like gas mileage around 10 mpg. Diesel fuel about $2.75 gallon now. Three days on the road going around 2100 miles. Around $600 for gas. Around $6000 per year insurance (about $125 week). Probably around $150 week maintenance. I know there are other costs, but these are the big ones. Expenses about $875 per week. On the low side 3 cars to Texas $1050 and 3 cars back to Atlanta $1050 ($2100). Atlanta to Nashville 3 cars $600 and back $600 (1200). That's about $3300 in revenue with $875 in expenses. With that formula it is $2425 profit. I think I would be able to do at least $1500 a week. What do you think? By the way my triplets are 2 boys and a girl. They are 12 now.

Brett Aquila's Comment
member avatar
With that formula it is $2425 profit. I think I would be able to do at least $1500 a week. What do you think?

I think if there was such a thing as a business where you could buy a pickup truck, drive around for a few days hauling a few vehicles, and make a profit of $125,000 a year we'd all be doing it, wouldn't we?

I'm afraid that's a pipe dream, mostly fueled by super optimistic math.

One of the most important things you have to ask yourself when it comes to the potential profitability of any business is this: "How much of a demand is there for this product or service, and how many people are capable of providing it?"

The higher the ratio of demand to supply, the higher the profitability.

Now look at this business. How difficult would it be for any average American adult to get into this business? Pretty much anyone can get started. How hard would it be to provide the service? Well, if you can drive a pickup truck you can pretty much do it.

So in the end, pretty much anyone can get into this business.

Now how many people have a demand for this service? I don't know the exact number, but I know the demand isn't high enough that one guy can buy one truck and drive around for a few days each week and turn a profit of $125,000/year. Not even close.

Supply of a service versus the demand for the service. That's always been the key indicator of profit in any business. In this case the numbers look very, very bad for the business owner.

Susan D. 's Comment
member avatar

First off, you probably won't be able to turn 2100 miles in 3 days.. you'll have to follow HOS rules like everyone else. What about the cost of elogs? Your own authority? Fuel, maintenance, road taxes, plates/registration.. going to have a sleeper in that rig? Prepaid quarterly taxes?

My nephew, who I mentioned as having a hotshot rig got his cdl-a through Stevens Transport's company sponsored training. He drove OTR for 2 years with them. He lives in Florida and only left because my brother in-law (his uncle) started a portable building business 3-4 years prior. He requested our nephew to haul his prefab and site built buildings for him. His business had grown to the point that he needed help hauling the buildings and lumber around. He simply couldn't do it all. He hand held my nephew and helped him incorporate, gave him a guaranteed 3 year contract to haul his buildings and helped him obtain his own authority and a 3 year lease for the necessary truck and trailers. Because of the size, weight he must have a class A. He's now home pretty much every night and is a dedicated carrier for my brother in-law. He hauls buildings and building materials around northern and central Florida and very southern Georgia.

At the end of 3 years, he can end his equipment lease, go back OTR if he so chooses. My brother in-law, who has had many successful businesses over the last 30 years, set him up with a turn key business with guaranteed profit. A very fortunate position for my nephew, one that other business owners would give their eye teeth for. When he's not hauling buildings, he can choose to haul other freight/cars. He's doing very well, but he certainly works more than 3 days a week.. more like 6 or 7.

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

Elog:

Electronic Onboard Recorder

Electronic Logbook

A device which records the amount of time a vehicle has been driven. If the vehicle is not being driven, the operator will manually input whether or not he/she is on duty or not.

Elogs:

Electronic Onboard Recorder

Electronic Logbook

A device which records the amount of time a vehicle has been driven. If the vehicle is not being driven, the operator will manually input whether or not he/she is on duty or not.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Company Sponsored Training:

A Company-Sponsored Training Program is a school that is owned and operated by a trucking company.

The schooling often requires little or no money up front. Instead of paying up-front tuition you will sign an agreement to work for the company for a specified amount of time after graduation, usually around a year, at a slightly lower rate of pay in order to pay for the training.

If you choose to quit working for the company before your year is up, they will normally require you to pay back a prorated amount of money for the schooling. The amount you pay back will be comparable to what you would have paid if you went to an independently owned school.

Company-sponsored training can be an excellent way to get your career underway if you can't afford the tuition up front for private schooling.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Triplet Dad's Comment
member avatar

I definitely am optimistic. I am not talking about netting $125,000, more like $65,000. Does anyone know if the Hotshot market is increasing, or is it on the decline? Isn't it the point that anyone can get a pickup and a trailer and go into business for themselves? That is the definition of Hotshot Transport.

Brett Aquila's Comment
member avatar
Isn't it the point that anyone can get a pickup and a trailer and go into business for themselves?

Yeah, that's my point. Anyone can do it. That's why there's very little profit in it. If anyone can do it then how can anyone command a sizeable profit? Someone else is always going to step in and do it a little cheaper and before you know it everyone is barely breaking even.

I've spoken with quite a few people who have hauled new campers from the factories to the dealerships and it's the same thing. There's no money in it. They barely break even or maybe just make enough to scrape by, at least until they need a new truck, which isn't very long when you're turning those kind of miles.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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