January 12, 2022 by Adam Hoeksema
In this article I am going to show you how you can generate $100,000 in annual profit with a hot shot trucking business. I will outline the industry trends, startup costs, typical expenses for a hot shot trucking business and potential profitability. To help organize all of these financial assumptions and project profitability based on your specific plan I will use our trucking financial projection spreadsheet.
Hot Shot Trucking Industry
The hot shot trucking business has been growing in popularity over the last several years. A quick search on Google Trends shows increasing search interest for “hot shot trucking” over the last five years.
Hotshot trucking is typically short turnaround deliveries made with smaller trucks and trailers as described in great detail in this article from Truckstop.com.
Startup Costs for a Hot Shot Business
One of the reasons that starting a hot shot trucking business is gaining in popularity is because the startup costs can be substantially lower with a class 3 truck when compared to a class 8 long haul semi-truck. Your startup costs for a hot shot trucking business will consist of:
- Fees for licenses, permits, and insurance
- Working capital (fuel, insurance, salaries, repairs, etc)
- Fees, licenses, permits and insurance deposit = $6,000
- Truck = $40,000 to $70,000 for a Ram 3500 which is commonly used for hotshot trucking
- Trailer = $15,000
- Working Capital = $15,000 to cover fuel, insurance, repairs for the first few months
Total Startup Costs for a Hot Shot Trucking Business = $76,000 to $106,000
If you decide to lease a truck and trailer you would be able to reduce your startup costs significantly, but your ongoing monthly expenses would be greater.
In the video below I show you exactly how to enter your startup costs into our trucking spreadsheet template.
How Much Revenue Can You Make with a Hot Shot Business?
With a hot shot trucking business your revenue potential is going to vary depending on how much you drive and the rate per mile you can generate.
According to DAT, $2 per mile is a good goal to shoot for. I would encourage you to sign up for a load board or two and see exactly what rate customers are paying in your area.
Next, it really depends on how busy you can be. You won’t always have a load, sometimes you will have to drive back home without a load, sometimes you will just need a break etc. But based on $2 per mile, and running at 50% capacity Step by Step Business estimates you can drive approximately 250 miles per day for an annual revenue of $181,000.
In the video below I will show you how to enter in your revenue projections in our template - Hot Shot Trucking Revenue Projections
Common Expenses for a Hot Shot Business
Again according to the previously mentioned Step by Step Business article the average cost to operate a hotshot truck is .78 cents per mile. The specific cost per mile is going to depend on current fuel prices, but as a general rule of thumb if gas prices go up the rate per mile that you can charge an end customer will go up as well.
So a good assumption is for your cost of goods sold to be approximately 40% of your revenue. So if you charge $2 per mile you could assume 80 cents per mile in costs to operate the truck including costs like:
- Broker fees if you use a broker or load board
Other than these variable costs you really won’t have much in terms of fixed costs if you are driving the truck yourself. You can expect about $1,000 per month in insurance on the high end according to Commercial Truck Insurance HQ. If you keep your truck at home and just operate off of load boards and through brokers then you won’t have advertising costs.
How Profitable is a Hot Shot Trucking Company
Based on our research above your profitability should be as follows:
- Annual Revenue = $181,000
- Cost of Goods Sold (40%) = $72,000
- Annual Insurance Costs = $12,000
- Annual Profit = $97,000
Just a few more jobs and you can hit $100,000 in annual profit.
Now before you get too excited about a 6 figure take home pay, if you borrowed money to buy the truck and trailer, your loan payment will come out of your profit. If you borrowed $70,000 for 7 years at 8% your monthly payment would be just under $1,100 or $13,200 per year.
This leaves you with $97,000 - $13,200 = $83,800 per year as your potential take home pay.
In the video below I show you exactly how to enter all of this information into our Trucking Financial Projection Spreadsheet so that you can provide it to your potential lender.
If you have any questions, let us know!