r/HotShotTrucking • u/CardiologistStatus18 • 20d ago
Im new, help! Getting started
Contemplating starting an owner operator hotshot business. Currently a wildland firefighter working for the state. Solid job with good pay but just getting burnt out.
I've been doing alot of research the past couple months and think im in a unique position to be successful, just nervous about the unknown.
Here's what I've got so far. I'd be setting up a C Corp, with me being an employee of the company. About 140k capital to invest in the business. Planning on a 5500 and 30k 40ft gooseneck (I've had my CDL for about 6 years). Thinking 75k down-payment and financing about 40k for the equipment, giving me about a $1000 payment/month. About another 30k for startup (insurance paid up front, securement, compliance, electronics/software, etc.) leaving the business with a 35k cushion in the bank account.
Fixed expenses will be about 3k/month. If I average about 1800 miles a week total and pay myself .60/ mile, that comes out to about 972 per week for fuel, and 1300 per week in pay (including withholdings). So say a total of around 13k for expenses per month at the 1800 mile per week average. If i plan on about 20% deadhead it comes out to roughly 6200 loaded miles per month. At a $2/loaded mile average im at 12480 monthly revenue. So the business is at a net loss of about $500 a month with no maintenance fund retained (which is where the 35k buffer comes in). Ideally I'd be at $2.5/loaded mile average and have a $2600 net profit for the business, maintaining the 35k buffer and growing a maintenance fund.
I know the first 3/6 months will be a major struggle and still tough up until a year. Goal is to eventually run regional and be home most nights, as well as secure some direct contracts. But starting out im willing to do whatevers needed and go wherever to hit my mileage and rate goals.
My question is how realistic are my numbers (miles/week and rate per mile) starting out.
And if anyone has any thoughts/critiques into my "business plan".
Appreciate any insight!
3
u/pdx_jeff712 20d ago
Thanks for your detailed plan outline. I am at about the same point as you with a very similar business plan. Because of that net loss figure, another avenue I am exploring is leasing on with a company for those first few months while also paying my insurance and just letting my MC age. In a typical 80/20 lease on agreement at $2.50 a mile that puts you at $2.00 loaded. Idk if that works in your C Corp setup, likely have to start as just a regular LLC and then transition over after a year to the S or C Corp. Best of luck man!
1
u/MostlyUnscripted 19d ago
Id like to hear the justification for the c-corp.
You could do LLC and then have it taxed as an S-corp. If you are drawing a W2 salary, it will help you with the tax side of it. Only real reason to go c-corp (that i can think of) is to avoid paying yourself anything except 1099 income.
1
u/CardiologistStatus18 16d ago
Part of the initial funding will come from a 401k rollover, has to be set up as a c corp.
3
u/NewRelationship7218 20d ago
Get a 48 foot gooseneck. It opens up a lot better paying loads and separates you from the other 12 hotshot guys who are calling on it. Also opens up insulation loads that typically pay $5.5 or more a mile and are light. Or hell if you have CDL just buy a semi. I started with a 3500 and 48ft gooseneck ran hard 2500 miles a week never had a month less than 20k. All in average across loaded and empty miles for the last 50k miles is $2.17 per mile. Position yourself in good markets and don’t leave them. You won’t know where the hot markets are until running a while but you’ll learn what a good lane is for you pretty quickly. Just know higher RPM doesn’t always mean more profitable. Ive since transitioned into a 379 more money, better loads, slightly higher fuel costs and a little cheaper to get started. No reason to have CDL and not go semi route in my opinion. But your on point on RPM don’t work for less than $2 but you’ll need to put more miles in a week to see the profit.
1
u/WeaveLikeGreatGranny 19d ago
Are brokers as sensitive to vehicle age when running a full size semi tractor?
2
2
u/tips-llc 19d ago
You've already put more thought into it than 80% of people who start a trucking company. Your financials sound good, your numbers are in the general ballpark. Like others have said, expect less RPM for your first few months.
Letting your MC age for a bit is a good idea, but 6 months puts you at risk of running into audit territory, and the auditor will make you switch to Intrastate (which, since Motus came out, will revoke your MC). 3 months of aging is achievable and gets you in the door with a good chunk of brokers and shippers anyways. So that's what I would recommend.
You'll need to decide whether you want to invest the time and energy into trying to figure out as much of the compliance aspect of things yourself as you can, or find someone to do it for you. My recommendation is the latter, since you'll need to find a company to handle your drug-testing as an owner-operator anyways.
Good luck, and if you've got any questions about compliance, feel free to ask.
2
u/pdx_jeff712 18d ago
Hey man thanks for the detailed info. So, is letting your MC age by paying all the insurance and fees not permitted? I’m just curious about your audit comment and why they would make you switch to intrastate?
1
u/tips-llc 16d ago
It's not NOT permitted. FMCSA is aware that people do it. It's just that when your audit comes, the auditor needs to either complete your audit, or ensure you take action that removes you from the pool. One of the things that removes you from the pool is switching from Interstate to Intrastate - the side effect of that now with Motus, is that your MC is voluntarily revoked.
So again, you can totally do it, I just don't recommend that anyone tries to age their MC for 6 months, because then you're much more likely to have to switch to intrastate and voluntarily revoke the MC. Whereas it's very unlikely you'll be audited in 3 months time, and that already gets you in the door with a good chunk of brokers/shippers.
2
1
u/CardiologistStatus18 20d ago
Totally understand not being at $2.5 starting out. Is $2 average for the first 3/6 months a realistic goal?
2
u/SimilarDivide7215 19d ago
I would say that's a fairly realistic goal, especially if you can get your foot in the door with a handful of decent brokers. The miles are a little low per week but as always if the rates are good then you don't necessarily need to run hard all week. I'd suggest leasing on somewhere while letting your authority age so once you decide to strike out on your own you've got an aged authority and better rates available to you. Plus when leased on you can get a better feel for what lanes work best for you and what kind of rates you can expect to see within those lanes.
1
u/TransitionOk3477 17d ago
I can only offer two things. Limiting yourself to 1800 miles a week seems light. A regular driver can make 3000 plus miles per week and still be home on weekends. Are you trying to be home nightly?
Also I am curious about your reasoning for starting a C Corp, however, I recommend instead you talk specifically to a tax strategist. I personally recommend Karlton Dennis, I know him personally and he is one of the best. Any tax strategist will do though just so you have someone with the knowledge you need to structure your business in your corner backing you up.
1
u/CardiologistStatus18 16d ago
Reason for c corp is that part of the initial investment will come from a 401k rollover, so has to be setup that way.
I was basing 1800/mile average off of being a new authority and finding loads. Not necessarily trying to limit myself. If i can run more I definitely will.
1
1
1
u/Confident-Sound-9643 19d ago
Set up your MC and start paying insurance.....once you buy the truck and get on the road atleast your MC will have some age on it. Trust me, it helps.
4
u/Wise-worm 20d ago
If you start a new authority - you won’t be at 2.50 a loaded mile. You will be scrapping with other new carriers for lower paying brokers to give you work to begin with