Hotshotting and The Lies We Love to Believe…

Oh mercy, I had another call just this morning from a guy ready to quit a perfectly good and steady paying day job just for the privilege of plunking down around $70K for a brand spankin’ new 1-Ton and 40′ trailer to drive off into the Hotshotting Sunset & Make His Fortune Land, wherever he thinks that mythical place may be.

I’m afraid (or rather, I hope) my blunt-ness burst his dreamer’s bubble, but I couldn’t let him just jump in without giving him a heartfelt warning. Which I’m sure he will ignore, it happens all the time…

(BB told me later I blew my chance to sell him the Beast, maybe he was right but this guy also wanted me to put him to work, and no thanks, I’m still in the process of squirming my way out of that stuff.)

If this blog has done nothing besides keeping one would-be hotshot from making unwise start-up decisions, then I would count it a success…

But… Apparently, as blunt and straight-talking as I am, I’m not blunt enough to get through the starry-eyed (and closed eared) hotshot hypnosis that overtakes even the most normally sensible folks.

And I just don’t get it. I lay it out there and tell it straight, and still people want to argue with me and tell me how wrong I am.

But in the interest of saving someone from the difficult to reverse side effects of this insidious ailment I’ll try again, so here are the top things not to do when starting out as a hotshot…

1. Do not mortgage the farm to outfit yourself with a brand spankin’ new 1-ton truck. Ditto on the trailer. If you must indulge this truck buying/hotshotting compulsion, at least have the sense to go with a used 2-ton and trailer combo, or good used single axle truck, and keep it cheap. You’ll thank me later…

2. Do not buy into the myth that a 1-ton truck is big enough for this work. Fact is, if you fail to heed this rule, you will spend a lot more replacing transmissions and rear ends and whatever else breaks from the excess stress on a too-small for the work truck than you would have spent just buying a 2-ton or bigger truck to start with. Guys argue this with me all the time, usually when their truck is in the shop getting fixed and they have time to stand around arguing, if you get my point…

3. Do not assume that anything anyone “tells” you about hotshotting is true, particularly if they have a vested interest in getting you to pay the bill to haul their loads. Remember, anyone you haul for is expecting you to pay the up front costs. What they are willing to fib about to get you aboard is probably (and usually) proportionate to how badly they need your cash to move their loads.

4. Do not, I repeat do not ever fall for the old line…”You can make enough money the first year to pay off that brand new 1-ton and trailer.” Trust me when I tell you that unless you have enough money banked to run on and live on that entire first year, this is a big, big lie. Sadly, it’s also the lie that usually sets the hook and gets you reeled in.

5. Do not assume that you can even find a hotshot gig if you have no CDL, no verifiable driving experience hauling a 40′ trailer, and no contacts in the business. And sorry guys, but 30 years of driving experience and a CDL in good standing that’s been molding in your back pocket for more than three years is just as useless as no CDL at-all. That’s not the trucking industry’s fault either, blame your government representative for letting the federal government set up that little snafu in the trucking laws.

6. Do not assume hotshotting is great income. The truth is it’s great if you get enough great paying loads. It’s not so great if (and this is the case, honestly) there are too many trucks competing for all of those great loads. And that’s the case right now. Everyone and their dog who has a pickup or bigger truck is apparently signed on with one or the other of the big hotshot companies and everyone is hungry for the loads that are out there, so the obvious result is that everyone is left hungry most of the time, and nobody is fat and sassy, if you get my drift.

7. And last, but not least, don’t quit a decent paying job to go off a’hotshotting. Especially if you want your spouse to continue talking to you, and if you rely on steady paychecks to pay the bills. I’ve said it before and I’m pretty sure I’ll say it again, hotshotting these days is a part-time, off and on, roller-coaster ride and there’s no such thing as a steady hotshot paycheck. Some weeks you get paid, some weeks you don’t. And that’s the truth.

That concludes tonight’s post, I’m sure something else will hit me around noon tomorrow that I just won’t be able to contain myself from yapping about.

Until then…
That’s all I’ve got.

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Think Before You Leap

Getting into any form of business requires a ton of thought, research, study, preparation, and before anyone takes that leap, they really need to make sure they have all of the available information to make that decision wisely.  They also have to have a bankroll sufficient for start-up costs, equipment, and operating cash for a specific start-up period which can be from six months to one year.

Hotshotting is no different in that regard than any other business.

It’s a case of really needing to understand the business and the available potential customers in a particular area.  What type of equipment will be needed to fit the potential customer is important too, and knowing what that equipment should cost is also necessary.  Without that critical information, the odds of running a profitable business are pretty low.

The whole reason I started this blog was because when I first started researching hotshot trucking, there was very little information available.  It’s a closed-mouth type of industry, where competition is stiff and the old timers keep their cards close to their vests.  I think I’ve done a reasonably good job of chronicling my start-up mistakes and snafu’s, as well as explaining the different parts of the start-up process.  Which is not to say that I’ve covered it all A to Z, but if I keep going with it I may eventually get there too.

So before you go leaping anywhichway into hotshotting, please, please take the time to do your research and get the facts.  It’s a tough business to get into (have I said that before?) and it’s a sporadic business to be in (I think I’ve said that too…) and without a full understanding of the whys and hows, a newbie hotshot is just a little snack for the big dogs out there who can and will gobble them up.

If you’re just starting your research, I highly recommend that you pick through the past posts on my blog and get familiar with the various phases of the process.  It doesn’t hurt to do a lot of googling around for any other information you can find, but with the caveat that there are a couple of sites out there that are self-serving and are run by folks who “hire or lease” hotshots… and I’ve not heard good things about them from others who know them.

So be cautious, be skeptical, and be thorough before you take any leaps, if you get my drift.

If you want to be successful in any business you have to know that business inside and out.  Hotshotting is exactly the same, and without that essential understanding, the odds of success are nil.

 

A New and Improved Tutorial… Getting Your Authority for Hotshot Trucking

I went back and re-read the old tutorial I posted, and thought it was lacking.  This will hopefully be more useful as I’m trying to make it clearer, and adding links to the various sites you’ll need to visit when setting up your operating authority.

This is the federal portion of the process.

  1. Before you do anything else, decide on your company name. Be sure you like it, because once you get your authority filed, it’s a real pain to change it.
  2. Once you have that, get an EIN, a federal tax number (unless you are using just your own name and want to use your Social Security number.)  If you’re not up to snuff on tax laws, it won’t hurt to consult an accountant to see how you should best set up your business in your particular state.  Get your EIN here.  The EIN is free, and the application is pretty straightforward.  One note, this is an Employer Identification Number.  You will need it whether or not you have employees if you use anything other than your own name for your business.  You’ll use this on W-4 tax forms (the 1099 version of a W-2.)
  3. Once you have your EIN, you need to check with your state and see if you need to file any paperwork to operate legally.  If you want to be set up as an LLC, corporation, etc., you’ll need to take care of that as well.  If you google “business registration” and “your state” you should bring up the proper agency.
  4. The next place to visit is the FMCSA (Federal Motor Carrier Safety Administration) website.  It is here that you can apply online for your operating authority by filling out the MCS-150 (non-hazmat trucking) or the MCS-150B (Haz-mat trucking.)  You’ll need a credit or debit card to process your filing online.  I believe the filing fee is $300 unless that’s changed recently. You can also read through the kajillion or so pages of regulations while you’re there.  Once you are in the system, you will be given a DOT number and a Docket Number (Your MC number.)  Keep good records of all of this, as you’ll need both of those numbers as long as you stay in the business.
  5. Once you submit your FMCSA application, you will be barraged by phone and email offers to file your BOC3.  Here’s a definition of the BOC3.  You can save money by shopping around online for the best rate.  I’ve seen it range from $20 to $80, and what you’ll get back is usually a fax or email showing your agent’s name.  They will also file that info with the FMCSA.
  6. You need to get insurance coverage in order to obtain your operating authority.  You will have to search for commercial coverage, with liability of $1,000,000, and most of us carry cargo for up to $100,000.  You may need more or less cargo coverage depending on what you’ll be hauling.  You will also have to tell your insurance company to make the proper filings with the FMCSA once you get set up, if they don’t, you won’t get your authority granted.  One note here… if you have zero trucking experience, you may have to use Progressive as they’re one of the few companies out there that will insure new trucking outfits.  And be prepared for sticker shock, commercial insurance ranges from around $5,000 and up per year, depending on your age, driving and credit history.   The only silver lining to this particular cloud is that you’ll be expected to pony up 2 months worth, then you’ll pay off the balance in 10 monthly payments, so you don’t have to fork over the entire amount at once.
  7. If you decide to haul haz-mat, you will also need to register with the PHMSA and the fee for the haz-mat certification is $275.
  8. You will also need to file for your UCR (United Carrier Registration) online once you have your federal DOT and MC numbers.  The cost is about $80.

That completes the federal portion of the process.

There will be a specific agency in your state that handles commercial truck licensing.  In Oklahoma, it’s the Corporation Commission.  You can find your state agency by googling “commercial truck licensing” and “your state.”

You should also file for operating authority in your state.  This mirrors the federal filing and is simple to do, the fee in my state was $100.

It will benefit you greatly to go over your state’s website in detail.  It should list the documentation you will need to register your truck for commercial use, and where you will have to go to get your paperwork filed.  In my state, everyone has to go to Oklahoma City to get this done.

You may need commercial vehicle plates on your truck.  These are known as “Apportioned Tags.”  The way this works is, you purchase your apportioned tag (you get one that goes on the front of your truck) and along with the tag, you will be filing for IRP (International Registration Plan) and IFTA (International Fuel Tax Agreement.)  These two plans are intended for vehicles over 26,000 lbs. used in commerce crossing state lines, but in my state, any vehicle used in commerce is required to be plated as Apportioned.  Your state may have a different take on it.

States also have different methods of licensing trailers.  In my state, we get non-expiring plates.

Once you’re registered, you should have the following items from your state…

  1. IFTA tax license and 1 set of stickers for each truck.
  2. IRP Cab Card, (Prorate Truck Registration) shows the states in which you are licensed to operate.
  3. Truck and trailer registrations.
  4. State Operating Authority Paperwork.
  5. One apportioned tag for your truck.
  6. One trailer tag.
  7. Intrastate For Hire Motor Carrier License and Stamp

And the following from the Federal agencies…

  1. FMCSA DOT Operating Authority Motor Carrier License (From Federal)
  2. UCR Registration – (From online, Federal)
  3. Haz-Mat Certification (Optional, only if hauling haz-mat)

The other paperwork you need to have on hand (and in your truck)…

  1. Proof of Insurance (Bobtail)
  2. Certificate of Insurance and Form E  – (Commercial + Cargo)
  3. Certificate of LLC, Articles of Incorporation (Filed w/secretary of State)
  4. Equipment lease agreement (between you and your company)
  5. Copies of truck and trailer titles
  6. Driver’s long form Physical

Just to keep things organized, I keep copies all of the above in a 3-ring binder in my truck and the originals safely filed in the office.  You’ll need the binder if you are stopped by law enforcement or during an inspection.

That pretty much covers the process from the Federal to State level.

One thing to keep in mind when doing your IRP/IFTA is that if you plan only to run in a limited grouping of states, you will spend less registering your truck than if you decide to register for all of the lower 48, for example.  However, if you run outside of the states you are registered in, you’ll have to stop at the Port of Entry and buy permits to operate legally in each of the states you are not registered to run in.

I hope this is clearer and more helpful than the original tutorial!

 

 

If Hotshot Trucking Was That Easy, Everyone Would Be Doing It… And Succeeding At It!

OK kiddos, I’m sorry, but today I’m going to burst some bubbles and spell out the cold, hard truth about hotshot trucking… It’s not all peaches and sunshine.

Don’t get me wrong, it can be a great way to make money if you have the right temperament for this kind of work, enough financial backing, and patience to deal with government paperwork and red tape out the wazoo,…but there are distinct down sides to hotshotting that most of us ignore/deny/reject while we’re in the honeymoon phase of true love with the concept of being our own boss and raking in the cashola with our little truck.

The reality is … this business is tough, competitive, and extremely unpredictable. There is no such thing as a steady paycheck, and you are footing all of the expenses up front.  You will also be in direct competition with a thousand other hotshots for every load you try to book.  And some days, and weeks, you won’t win the work.

Honestly, if my better half BB was not supportive (both personally and financially) and gainfully self employed, we would not have made it though the first year ourselves.  It took both of us working our tails off and making huge sacrifices in time and money just to decide if it was worth starting into year 2.  There were days when we didn’t think we wanted to keep it going, and some days we were encouraged just enough to try.  It’s that tough.

If you’re not a “self-starter”, thick skinned, good with money management, and able to handle stress well, do yourself a huge favor and keep your day job.

I’m talking about entire weeks that slip by without a single load, when the bills still have to be paid, groceries still have to be bought, and the cash flow is in the negative range.

On top of that, there is the absolute necessity to keep back a little nest egg to finance the next load that might come your way so you don’t have to turn down work for lack of operating cash, the worry that goes along with each and every one of these slow periods, and the uncertainty that goes along with this line of work.

And honestly, this sort of stress is hard on everyone, and can be a real deal-killer for stay at home spouses, especially when there are babies still at home who need to eat on a regular schedule and Papa is sitting at home burning up the cell phone, scrambling for loads that just don’t seem to materialize.

Oh, it happens.  It happens a lot.  And it’s stressful.

Anyone thinking about starting a hotshot business needs to get a good dose of reality before taking the plunge.

I get questions every day from starry-eyed dreamers (no dis intended, they are just like I was 2 years ago) who want to start their own hotshot business and become independent over night.

Sadly, most ignore (or at least appear oblivious to) the advice I try to give, and I can’t help but shake my head and feel for them.  I’m talking from personal experience here, and would like to save them from some of the rude awakenings I had to suffer on the road to hotshot-dom…

So this post is a wake-up call to all of you dreamers out there…

This is a tough business to get into, and tougher still to keep the truck moving consistently.  If you (and your spouse!) aren’t fully committed to making it work, don’t burn up the family savings account or go into debt buying equipment that may end up sitting idle in the driveway instead of generating revenue. 

Let me put it this way… the truth about driving hotshot is that you will be on-call 24-7, 365.  You will never be separated from your cell phone, even during the most inconvenient moments.  Whether you run your own show or lease out to a carrier, you need to be prepared to ask “How high?” with a smile when the customer/carrier says, “Jump!”

And they may not call for days, but will still expect you to show up within the hour when they do call.  They will require you to be professional and treat people decently when you do get there.  No griping or rudeness is ever allowed while either at the shipper or the receiver.  It only takes you acting badly one time (criticizing the fork lift operator, pitching a fit over something, being just plain cranky or disagreeable) to get you blackballed from ever setting foot on their property again.

I can attest to this actually happening twice to a driver I know who apparently is grumpy and has some trouble controlling his mouth.  If you give anyone a hard time at pick up or delivery, they won’t call you again at all, ever.  Worse yet, they will call your company or broker and specifically tell them to never send you out to their location again.  And that kills your business.  Which makes you even broker than when you started.  Get my drift?

You will be called out on weekends, holidays, in the middle of the night, on your anniversary, the day of your baby’s birthday party, the night you have tickets to see George Strait, and just about any other inconvenient time you can think of.  Sure, you can turn down loads, but if you turn down too many loads, you get shuffled to the bottom of the heap and will sit idle for days on end.  Turn down enough, and you might as well sell your rig and get a day job because you will be starved out of the business.

You need to know ahead of time that the loads you get won’t always be $3 per mile runs.  Especially starting out, you have to take what you can get as long as there is some slim profit margin.  You will also need to know what it costs you to run and know your bottom line rate.  You will have to suck it up and take the bad with the good to keep the truck moving.  Some days you’ll make a little profit, some days you’ll make a real good profit, and some days you’ll hit a snag with truck troubles or some other unforeseen problem and not even break even.

Some days you’ll show up for your scheduled load only to be told it’s been cancelled.  Nobody is going to pay for the fuel you burn getting there and back home.  Your truck can and will have break-downs, and you have to keep it in top shape to stay compliant with DOT rules.  That costs money and time.  Nobody else is going to pay those costs, or for your down time.

Other days everything that can go wrong will go wrong.  Murphy’s Law kicks in and no matter how well you planned, the whole load will turn into a major pain in the neck.  It can be as simple getting pulled in for a Level I inspection that puts you half an hour behind schedule, hitting heavy traffic or serious construction zones, or just a combination of a bunch of little things that make a particular load feel like misery on wheels.

Now, I’m not trying to be discouraging to anyone wanting to get into this business, but I am telling it straight and not sugar-coating it a bit.  The truth is, you have to be mentally tough, financially prepared, and willing to suffer some for the payoff.

You also need to understand ahead of time that even when there is not a job in sight, the truck still has to be maintained, groceries still need to show up on your table, the lights have to be kept on, and you still have to keep a positive attitude going, or you will make yourself both crazy and miserable.

Now for some free, friendly advice that nobody will heed…

1.  Don’t go into this business thinking you can make the big bucks with a little passenger pickup truck, it’s too limiting to what you can load and carry.  At minimum a 1-ton flatbed is required, (bigger is better) and there is a reason for this.  Loads will be fork lifted onto the bed of the truck and you can’t fork pallets or whatever over the sides of a standard pickup bed.  A lot of what we carry won’t fit in a standard bed anyway. And while some loads may be 35 lbs, others will be 3500 lbs.  You need the bigger truck to maximize your load capacity and flexibility.

2.  Don’t go into this business thinking you can survive the first year without having at least $10K earmarked for operating expenses in the bank in addition to all  equipment expenses.  Some do, and they’re lucky, but the majority of new independent hotshots go out of business due to lack of operating cash within the first 6-12 months.

3.  Don’t go into this business until you do extensive, exacting research on what is required, and if at all possible, actually find someone already established to ride with for at least a couple of loads to see how it all works.  This work is not for everyone, and it’s better to find that out up front than after you plunked down 50K+ in start-up costs.

4.  Don’t go into this business if your spouse is dead set against you being gone for days at a time, they don’t dig the idea of being in the hotshot business, or they are attached to the idea of having a steady weekly income coming in.  At least, don’t do it if you value your marriage…

and

5. Don’t go into this business thinking it will be easy money.  Trust me when I tell you there is no such thing.  Anyone who tells you different is blowing smoke up… well, you get it.   It truly will take you a long time to recoup your investment.  Don’t buy into the line, “Hey, you can make enough in one year to pay off all of your equipment.”  Technically, in theory this may be true.  But in practice, that money you generate hotshotting still has to cover everything else you already pay from your current job, plus all of your start-up and operation costs.

If you’re still with me and not too discouraged, (a little discouraged is good, it means you’re getting the reality of it and paying attention) then you may just have a chance to succeed at becoming an independent hotshot.

Just know that it’s not an easy, overnight process.  The rewards can be very good, but there is also real pain and a lot of time involved in getting there.

More About Hot Shot Trucking Start-Ups… Leasing

I still get tons of questions about starting a hot shot trucking business, so I thought I’d go over the subject again, this time focusing on what happens when you decide to lease to another company.

Obviously, I’m more inclined to advise people away from leasing, but from what I hear from others in the business, leasing seems to work for them.  Whether or not you lease successfully is completely dependent on two major points:  Your ability and willingness to follow rules and take care of small details, and the quality and honesty of the company you lease to.

In my case, leasing was a bad idea because the company owners were crooked as a split rail fence.  Even so, I took away a lot of knowledge from the experience and was jettisoned into learning the business at hyper-speed.

At any rate, some people prefer leasing, and if that’s the route you want to take, there are some things you need to think about, and some footwork you need to take care of ahead of time.

Aside from operational details, you need to be prepared for taxes as the leasing company will be sending you a 1099 tax form at the end of the year. This means that you will be responsible for any taxes owed come tax time, as they won’t be withholding anything from your checks during the year.

I strongly recommend you find a good CPA who is familiar with trucking leases.  It’s a great idea to find your CPA before you sign the lease, and have them look it over.  If there are glaring accounting problems caused by the way the lease is written, they should be able to advise you.

It’s also a great idea to have your attorney take a look at your lease before you commit yourself.  I know it’s a pain in the neck, but it probably won’t cost you more than $100 to have a lawyer go over it, and it might save you thousands down the road.

Leasing companies will require three years of driving history plus 10 years work history on whoever you plan to put behind the wheel of your truck, and they expect you to provide a copy of that info to them before they’ll agree to lease to you.

This isn’t because they’re hard-nosed, it’s because the DOT requires them to have this information on file.

In my state, I can get the driving history for about $25 from the local tag office.  In other places you may have to visit the County Clerk.

Just a note, make a copy of the driving history for the leasing company and keep your original so you don’t have to buy it again if things don’t work out a month down the road.

Leasing companies can and do dictate who can drive your equipment, so be sure that you, if you plan to drive, or the friend you plan to hire as your driver have the proper licensing, a squeaky clean driving history, and can pass mandatory random drug and alcohol testing every time your name gets pulled out of the hat.

When running under lease authority, you are required to also run under their insurance.  They’ll deduct this from your settlement checks and it should be detailed on your settlement sheet.

Note that their insurance will normally cover only the freight on your truck and commercial liability.  You still need bobtail insurance to cover your equipment.

Now, some companies will offer bobtail insurance through their insurer and deduct it from your settlement pay.  I’d avoid that for two reasons.  It’s going to cost you more than if you buy your own, and in the event that things go bad, you don’t want to be stranded somewhere with no insurance to get you home.

The same goes for truck and trailer tags.  I recommend buying your own.  Some companies will buy these for you, but if you decide to leave you have to turn them in, leaving you tag-less and stranded.  It’s a big chunk of change putting tags on a CMV, (somewhere around $1,500) but it’s well worth doing this out of pocket rather than risk being stranded.

When you go to get your tags in some states, you need to register with the Feds and obtain a DOT number.  Check your state regulations to see if this applies to you.  If so, you file with the DOT as a “Registrant Only” and they’ll send you paperwork to take to your state licensing agency.

Make sure you do a book for your truck.  Make copies of everything and stick the copies in a binder of some type so that you have them ready at hand in the event you get pulled in for an inspection.

This includes your DOT paperwork, your insurance, truck & trailer registrations and copies of titles, and when you do lease, you’ll need to copy the lease as well and add that to the book.  Copy any paperwork the leasing company gives you and put the originals away in a safe place, add the copies to the book.

You’ll also want to put copies of the IFTA cab card the leasing company gives you, any permits and other pertinent paperwork in the book.  I work on the theory that it’s better to have it and not need it.  Especially during an inspection!

Now, to operational details when leasing…

You’ll want to run a log book (most hotshot operations are required, check the regulations for specifics) and keep it up to date.  An accurate, up to date,  neatly kept log book can be your very best friend during an inspection or at the scales.

Not having one will cost you a small fortune in fines, and probably result in you being put out of service.  It will also potentially get you un-leased in a hurry, as the company can be subject to separate fines for their drivers failing to follow rules.

Your leasing company will most likely require logs anyway.  You’ll need to turn in log sheets along with any other paperwork (BOLs, proof of delivery, receipts, etc.,) on a regular basis.

Most companies will either hold back your settlement pay or punish you in some other fashion if you fail to turn in the proper paperwork, so get in the habit of keeping your papers together and organized.

You’ll also need to keep copies of every fuel purchase for the company IFTA reports.  Do not turn in your originals, but make copies and turn those in.  Keep your originals in a safe place and organized so you can find them again if you need them.  You may need to re-submit them if your paperwork is lost or misplaced by the leasing office personnel.  It happens…

I use envelopes to track my receipts and IFTA info, and most companies do.  You can stick all of the paperwork for a given load in the envelope and keep track of your mileage per state you travel through on the front.  You’ll be expected to list each highway you travel on while in any given state, and keep mileages upon entering and leaving states.

This may seem finicky, but it’s critical information that the company needs for those pesky IFTA quarterly reports.  If your paperwork isn’t up to snuff, they can and will withhold your pay until you get it caught up.  There’s a reason for this.  If IFTA reports are not filed on time, the company gets hit with penalties and fines.

Aside from the paperwork required, leasing is fairly straightforward as far as pickups and deliveries go.  Just make sure you are on time for everything!  Running late can get you in a lot of trouble and can cause you to lose a percentage of your expected pay on loads.

If you have any delays or problems, the first call you need to make is to your dispatcher, not your best buddy or your significant other.  It’s super important to keep the lines of communication open with your dispatcher. It’s also super important to be nice and professional with the dispatcher.

Never, never be a jerk or let any impatience or irritation show in your voice when dealing with dispatchers, even if they’re gigantic butt-heads to you.

If you don’t nurture this relationship you can bet you’ll get the worst loads, if you get loads at all.  A dispatcher is going to have their favorite drivers.  It’s just human.  If you go the extra mile to make the dispatcher happy, they’ll reward you.

If you complain, refuse loads, show up late, fail to call in, or misbehave in other ways they’ll label you a problem child, which means they’ll ignore you and starve you right out of business.

You will still need to outfit your own truck & trailer with the proper securement and safety equipment, and you definitely need to know how to use all of that equipment properly.

If you don’t know anything about securement, give yourself a crash course and study the materials available online.  If you have a friend working flatbed or hotshot, arrange to meet them when they pick up some loads and help them tie things down.

It’s a lot better to learn something about proper securement before you show up at your first load than it is to screw up and get either pulled over or, Heaven forbid, lose a piece of the load because you don’t know what you’re doing.

The same is true with your emergency equipment.  Take it out, look at it, play with it, and figure out how it works.  If you don’t know anything about first aid, learn.  You may be the first person on the scene of any number of emergency situations out on the road, and having some basic know-how might just save someone’s life.

Obviously, for some people the advantages of leasing outweigh the paperwork and other hassles of operating under their own authority.  Hopefully this will give those of you considering leasing a little better idea of what you can expect.

 

 

 

 

The Numbers Don’t Lie

Well I sat down the other day and ran all of my numbers from last year.  My conclusion was that I ran too much for too little, which I already knew, but now I have the numbers to back it up.  I only used the numbers from the time I started running under my own authority and ignored the miles I ran under lease since they were skewed so far to the bad side of the ledger.

When leased, I was running for about .27 per mile.  By the time I added in all of the expenses involved I was clearly in the red.  Thankfully that didn’t last long and better things came out of the experience.

As it turns out, once I was in charge of things, overall, I ran for an average of .93 for every mile I drove.  When I looked at all expenses, and I do mean all, truck payment, insurance, fuel, lodging, maintenance, fees & permits, licensing, etc., my per mile cost was .72 leaving a profit margin of .21 per mile driven.

This isn’t bad for the first year, especially considering I went into this as ignorant of the trucking industry as a person can possibly be.  As I noted before, all of the bills got paid on time and there’s money left for the tax man.  It’s not great though, and this year I’m working hard to up the profit margin as much as humanly possible.

Now, projecting for this year, I’ll have lots less in expenses since most of the permits and such are cheaper after the initial application process.  I won’t have the equipment expenses either.  I’ll also have higher paying customers this year as I’ve weeded out those who don’t pay a rate I like.

On top of that, my customers now mostly run truck only or power only loads which will exponentially increase my fuel mileage and decrease my fuel costs from what they were when I was dragging that 40′ trailer around and averaging between 5 and 8 mpg.

With all of that in mind, I have been beating the shrubbery around here for a new customer or two and it appears I did find a couple to add to my list.

I knew when I started this whole business that it would take time to learn the ins and outs of the trucking industry, to get the company on it’s feet, and that it would take a lot of energy and effort.  And it has.  But it’s starting to feel more and more like all of the work involved is worth it.

My Little Project Today…

I thought I’d start this year by doing another mailing campaign and try to get some new direct customers lined up since the load I thought I had set up for today hasn’t materialized.  And I’m feeling a little sorry for myself, which usually results in me throwing myself into some form of constructive activity to fight off the urge to throw a pity party.

Of course, before I could get started I had to beat my computer into submission after it shut down and didn’t want to start up again.  I suppose I can chalk that up to being too cheap to replace this poor old thing, but it’s served me well and I don’t want to let it go.  It’s a laptop that actually has a full-sized keyboard unlike most of those little ones (and my tiny cheapo version that travels with me) so typing on it is so much easier.

Anyway, I am already rambling….

Once the computer was up and running I managed to get a dozen new flyers printed up, stuffed into envelopes along with several business cards, and now have a neat little stack ready to go in the mail. I did more research and targeted a handful of companies near me who I know use hot shots, unlike my last few attempts at just sending out flyers to anyone and everyone I could think of.

Whether this will be a better approach remains to be seen.  Hopefully it will be!

I also got a call this morning from the guy I haul trailers for when the better paying stuff is slow, but I’m not really too eager to get back into that gig just yet.  I’m hoping, and working toward getting more and better loads, not just settling for stuff that doesn’t pay as well. Which means less stock trailers and more oilfield.  Which is where the real money is in this part of the trucking business.

Call me an ingrate, and in a way I feel like one, but it’s disheartening when you have time and money invested in a hot shot business and people who just want things hauled at mediocre rates are the ones you have to fall back on when it’s slow.

Even though I like the guy and he’s good to work for, it’s just not the type of freight I need, or want to haul to make the most of this little venture.  At the same time, it is a paycheck, and if I can’t get anything better going here fairly soon, I may have to keep hauling that stuff to keep ahead of the bills.

And despite my feelings in general about brokers, I still have to resort to taking their loads too.  I’d like less of that and more direct dealing with shippers.  Of course there’s the money side of it, but I like having shippers who know my name and call me directly when something has to be somewhere pronto.

I just need more of them so I can avoid sitting and worrying as much as I do now…

So in the past month I finally got myself all set to haul haz-mat, (I know, I’m starting to repeat myself) but it’s an important step for me and could just be the break I need to get into consistently good paying loads.

All I’m waiting on now is a flip-placard for the front of the truck and a little haz-mat spill kit that I ordered to get here, then I’ll go make a visit to the shipper down the road and see if I can get some work with them.

As I’ve said before, it’s always something, and a lot of waiting for this or that before I can make it to the next step up the ladder.  And as I’ve also said before, I’m not the most patient of souls.

But I’m trying.  In a lot of ways.

One of the things I’ve been thinking about today is other hot shotters who lease out to big companies doing a lot of the oil field work.  I found some to talk to and it sounds like they’re doing a whole lot more right now than I am.

Some days I wonder if I should consider it again, but I got so burned right out of the gate by leasing I’m not really desperate enough to take that route again.  So I suppose I’ll just have to keep plugging away and keep working at making new contacts in the business.

I guess that’s about where I’m at today.  I’m not as discouraged as I sound, but I’m still at a place with my business that I know I have a long way to go to get where I want to be.   I’m just not ready to settle for hauling cheap freight like I had to do way too often last year, particularly now that I know there’s better work out there to be had if I can just figure out how to get it.

That said, I better quit my whining and get busy.

Just Scratchin’ the Surface…

While it’s true I’ve managed to flatten the learning curve just a tad bit since starting this hot shot business, it’s also true that I know good and well that I still have years of learning left ahead of me.  Some days this seems kind of daunting.  Then again, my last job took me years to learn and to feel comfortable in, and in the near decade I did that job I still didn’t know everything about it.  So this isn’t a new concept to me.

At any rate, in the year since we started up, I can’t tell you how many new things I’ve had to wrap my brain around.

Every day brought another challenge, question, and with luck, at least the direction to go for an answer.  Sometimes I got lucky and stumbled across information that helped me later while searching for a solution to a problem I already had.  And once in a great while, I managed to find someone with some knowledge about trucking in general who would let me pick their brains a bit.

One of the things I learned early on is not to discount any particular source for gaining information.  I’ve used the internet, talked to other trucking company owners, hob-knobbed with the handful of hot shots I’ve met across the fuel island at truck stops or while unloading my trailer, talked to shippers, read and studied trucking magazines, and sometimes, as a last resort, just figured things out by trial and error.  And I’ll continue to do all of these things for as long as it takes to get a good grasp on every facet of this business I possibly can.  But I never expect to know it all.

Another thing I learned early on is that some things you just really do have to learn the old fashioned way, by thinking the problem through and figuring out a livable solution.  Particularly when there’s no internet connection handy, no experienced driver nearby, and you’re out on the road somewhere between say, Odessa and Wichita Falls.  Or any two other locations on the map.  Sometimes you just have to take a few minutes and a deep breath and make a decision, then do something, even if it’s wrong.

And I’ve definitely done the wrong thing once or twice, but doing so was just as valuable to me as having the right answer the first time.  It pointed me in the proper direction when I figured out it wasn’t the right answer.  Then the next time I had a similar problem I knew, at least, which way not to go.

I suppose the point is that it’s going to take time and experience to get this all figured out, and that’s ok.  What isn’t alright is not taking the time to figure it out, or failing to learn from mistakes made.  I hope I have the sense to learn from my errors.  I have a firm belief that mistakes are not bad in and of themselves, it’s making the same mistake more than once that’s not so hot.

But all of the above is part of what makes this business appealing; no two days are the same, and most of the “problems” I encounter are challenging, which keeps  just about every day I’m out there hauling freight around pretty interesting.

Gearing up for 2012… And Looking Back At My First Year in Business…

It’s that time of year already!

Time to think about all the business details that have to be attended to with the changing of the year.

Time to give this blog a new look for the coming year.

And time to reflect on what has been a wildly fluctuating first year in the trucking industry.

I’m trying to stay a little bit ahead of the curve this year instead of playing catch-up.  2012 UCR, check.  2012 IFTA, check.  2011 taxes, mostly check. 2012 insurance, check.  Pesky 2012 New Mexico permit, check.

I know danged well something else will rear it’s ugly head that I’ve overlooked and will bite me for a good chunk of cash, but at least this year I’ll be as ready for whatever-it-may-be when it does get me as I can be.  Just knowing there are such greedy (mostly governmental) things lurking out there to lure away my hard-earned dollars puts me in a lot better position than I was in this time last year, when I was just getting started in this venture and didn’t understand how many hands there were trying to pick my pockets.

I had no idea what I was getting into.  None whatsoever…

In retrospect, it’s been a wild ride.  Sometimes literally so.

There was the two-month long marathon start-up, picking and forking over mucho bucks for equipment.  The flurry of flying paperwork, jumping through government hoops and digging deep for the cash to pay fees, licensing, insurance, and such.

Then there was that first trip that could have been my first and last if I had given in to fear.  I could easily have thrown in the towel after that little jack-knife incident and given up.  But then again, I guess I couldn’t have, since I obviously didn’t.  I’m still internally a bit skittish about driving in ‘black ice’ weather, but I finally decided I just have to suck it up and get my job done.  And you know what?  I’ve been ok about it now for a while.  It’s all just part of the business.

I learned a lot real fast by leasing to a crooked trucking company right out of the chute.  I got dinged for a little cash but bailed out in time to avoid taking a big financial hit.  I chock that whole experience up to OJT – and training, it was.  I can spot a crooked company now a mile away and it was that experience that pushed me to either sink or swim on my own.

I suppose I learned to swim.  Maybe I’m not up to competition swimming standards, but I managed to dog-paddle my way out of a bad situation and made it across the first big, soggy obstacle.  I’m still here, still keeping my eyes and ears open and still learning, and thanks to that one crooked trucking company, I’m probably light years ahead of where I’d have been if they had been a good company to lease for.

The single biggest lesson I got was that it’s a whole lot better to succeed or fail as an independent company owner than it is to be nickeled and dimed out of business by paying someone else while leasing out to them.

Sure, insurance costs a lot.  But even with the upgrade I just got that allows me a whole lot more range and options for what I can haul, including haz-mat, I’m still not going to be paying quite as much as that first company took out of my checks.

And yes, I buy my own fuel, permits, and all of the other kajillion costs of doing business.  But now I know where that money is going, and although it’s still expensive, I don’t have to worry about anyone skimming from the money I generate by running independently.  And that’s a huge point for any business start-up.  Every cent that went to the leasing company came out of my slim profit margin and it hurt!

So even though it was rough going while waiting for my checks to start catching up with me for a couple of months after I split from the leasing company, it was sooooooo worth it!  Now every cent I earn over and above operating costs and taxes is mine.  Nobody has the opportunity to stick their sticky fingers into my cookie jar.  And that’s how I’m going to keep it.

When I say it was rough for a couple of months, I mean it was really difficult.  I had to juggle every cent that I had managed to scrape together, I even had to borrow from BB to keep fuel in the truck once or twice.  I had sleepless nights and worried days where I didn’t think the business would survive the waiting period between hauling freight at my own expense and eventually getting paid for the stuff I’d dragged across the country a month or two earlier.  But I hung in there with a whole lot of moral support and some financial help from BB, and once we got over that hump, things just got very, very good.

It was so strange.  One day we were sweating it out, not knowing if we could buy that next tank of fuel, then one miraculous day the checks finally started flowing in.  Let me just say that was a very, very, happy day for both of us.  And we’ve never looked back since.

That’s not to say there haven’t been slow freight weeks, because there have.  And I’ve stressed and sweated it out while scrambling to find something to put on the truck that would keep the income coming in.  I resorted to hauling again for a couple of brokers (even though I hate paying broker fees, sometimes you just have to bite that particular bullet) just to keep the cash flowing.

But there hasn’t been another moment since the checks started coming in that I wasn’t certain that I could keep the fuel tank full, make the truck payment, or keep the insurance in place.  And that makes all the difference in the world.

I suppose the moral of this story is that starting an independent trucking venture is difficult, trying, and often enough to make a person want to bang their own head on a big rock.  But if you really want to make it work, it can be done.

Now I’m looking forward more than backward and anticipating, and yes, expecting year 2 in this business to be an entirely different experience.  With the knowledge I have gained, the contacts I now have in the business, the handful of good customers I earned in the past year, I can see the potential for some really good things happening over the next 12 months. I think our next year in business will be great and profitable.

At any rate, that’s my story, and I am sticking to it.

I guess the big question at this point is, if I had known then what I know now, would I do it all again?

And my answer would have to be….. Yep, in a heartbeat.

A Trucking Company Evolution…

I’m home for a day taking care of odds & ends and it occurred to me that this little company is evolving.

What brought this on?  Well, I’m getting set up to carry haz-mat and am jumping through hoops to be able to do so.

As it turns out there is a chemical plant not far from my little casa where I might be able to pick up some more lucrative freight.  As it also turns out, their chemicals (no surprise here) are haz-mat rated, which requires me to upgrade my insurance to cover carrying that type of stuff.

I’ve already got the haz-mat endorsement on my CDL, and also have my Motor Carrier Haz-Mat Certificate, so it’s just a matter of biting the bullet and forking over the cash to get the insurance set up.  And one would think that would be a simple matter, but it’s already taken several days & several phone calls / conferences with my (NEW) insurance agent, as my (OLD) agent, well, sucked.

Luckily, the new agent appears to have his stuff together and is working hard to get me covered ASAP.  Which apparently is difficult at best this time of year when insurance folks seem to disappear for days on end while using up their left-over vacation days…

The good news is that getting the insurance upgrade shouldn’t break the bank since we have a squeaky clean record to date.  (Knock on wood…)

Once it’s up and running I can see a whole new world of possibilities opening up for us, which should mean less travel time to get loads (from 100 miles to about 4) and more actual compensation for loaded miles (haz-mat paying more than stock trailers, of course.)

So, in the big scheme of things, I guess you could say we’re going through trucking company evolution.  I’ll let you know how it turns out.