This is a simple question that can literally save you thousands of dollars in expenses when deciding how to start your Hotshot career. In the book, "Hamlet" by Shakespeare, Shakespeare poses the question, "To be or not to be" in reference to having life or seeing death. Though this may seem to be a dark analogy, when it comes to starting a Hotshot business your success or failure greatly depends on how you begin. To lease or not lease is a question that many people starting their Hotshot career do not ask but it's one of most critical questions in route to your success. Lets dig in to this!
I don't need to lease, I own my own!
My question to you would be, what exactly do you own? Many people hear lease and immediately think about a rental/lease vehicle. While this may be a correct line of thinking, when it comes to Hotshot Trucking, the term "Lease" also refers to your choice of operation. You may have your own truck and/or trailer but then "lease on to" a trucking company that is already in operation. Vice versa, you may lease your truck and trailer from a company where you may pay a monthly cost plus mileage while owning your DOT/authority. The terms own and lease do not simply refer to purchasing or renting a truck and/or trailer but also to the way you begin operating.
Oh I see, so what is it like to lease on to another company?
This is something that many new drivers decide to do. But is it really the best way to begin? This goes back to the original question, to lease or not to lease? When leasing your leased or owned truck and trailer on to a company that is well established, you often benefit from the following perks:
No Insurance Down Payment (Normally multiple thousands of dollars)
Established Network Of Customers
Weekly pay checks
Fuel Card with discounts
No administrative responsibilities
Experience and professional assistants
Room to expand more of your own trucks
Financial backing and network of support
Minimal delay to begin operating
There are many other perks to leasing your equipment on to another company but they are largely based on which company you choose to lease on with.
That sounds great! Why wouldn't I lease?
The alternative to leasing on to another's authority is to own your own. While this may be an attractive idea, let's consider what is most attractive about it:
No percentages paid to another company for "Leasing on"
You can say you own your authority, what a great accomplishment!
You make all decisions about any and everything that happens
Having your own authority is surely something to be proud of. And while it may be attractive, there is no end to the work required to begin, start, and maintain your authority. But begin and start are the same thing! Well, this is how we briefly break the two down:
Begin (Where the greatest expenses are)
Apply for authority
Apply for state authorities
Acquire all supporting requirements
Prepare for DOT Compliance
Obtain weight/multistate registration
Obtain operating equipment (More than just truck and trailer)
Set up invoicing
Identify how you will obtain freight
Start (Once legal and compliant to begin driving)
Ensure DOT Compliance as a driver
Ensure payment for each load completed
Ensure freight movements are consistent for profit
Be financially prepared for warranty/non warranty breakdowns
Ensure proper permits for each operation/state driven
Ensure compliance in all DOT required areas including driver and vehicle
Pass entry office Audit with DOT officer
Complete both driver and administrative tasks daily
Ensure financial solvency by earning enough and collecting all payments
As you can see, there is a lot of work required for having your own authority but its success is highly rewarding. Nonetheless, the success that you can have while leased on to another authority can be equally rewarding with far less work. We at Chronicle Logistics believe that a new venture's better option is to lease on with another company and expand. Once the new venture has outgrown its shell, then would be a sensible time to transition to ones own authority. By leasing onto a company such as Chronicle Logistics, you significantly limit your financial risk all while building your company and earning money. The alternative may be sitting on the sideline and waiting weeks or sometimes months for everything to get started. To lease or not to lease, that is the question.