New to the game

Discussion in 'Ask An Owner Operator' started by herreratrucking2022, Jan 29, 2023.

  1. herreratrucking2022

    herreratrucking2022 Bobtail Member

    Jan 29, 2023
    Hi, This might be long but me and my husband are starting a hotshot business. He will be the carrier and i will be his dispatch/broker- working on getting my brokering license. I planned on going straight to companies to try and get shipments from them and then they pay me directly then that money would go straight to us. basically, we would profit from the entire amount of money? (correct me if wrong) then my husband would ship the load. Now at the end of the year would I fill out 1099 for our business from all the money we make?? since i am the broker there is no middleman and only one money transaction.

    Would i still need a factoring company to process payments between me and the shipper??
    Or would i still need to "pay" my carrier (husband) that way he will get a 1099 from broker (me) and we file, that way it it showing how much he made and what i made?
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  3. gokiddogo

    gokiddogo Road Train Member

    Mar 5, 2012
    Ontario Canada
    Do you want to be in the business of brokering or in the business of trucking or both? You don't need to be a broker to get loads directly from customers. And if you are going to get loads from other brokerage houses, when you call up as a broker now you're double brokering the freight for no reason if you are putting it on your own truck anyway.
  4. herreratrucking2022

    herreratrucking2022 Bobtail Member

    Jan 29, 2023
    I am planning on both, but not double brokering. say if I am on a load board then I would consider myself as a dispatch, that way there is only one broker (them), but id have my brokering license so I could work deals directly for some companies that could be local. until we grow and gain more experience and our name is out there. (is that possible or does that make sense) I thought that having the brokerage will eventually make more money than just being a dispatch.

    while just starting out I was planning on just being a dispatch for my husband and then work on being a broker for our business, ( am I overthinking it or aiming to high)
  5. OscarGoldman

    OscarGoldman Light Load Member

    May 9, 2022
    1) Do you have any basic idea of how to operate a business?
    2) Do you have any start-up capital? (if you're going to depend on factoring from the start, you've already failed)
    gokiddogo Thanks this.
  6. herreratrucking2022

    herreratrucking2022 Bobtail Member

    Jan 29, 2023
    No I was not planning on relying solely on factoring, there are other ways to pay. We have not officially started the business, thats the reason why I am on here, asking questions and trying to gather more information. Yes we have start-up capital, we do have a truck and looking for good rates and making sure that we have everything we need. some of the things I have read and watched have shown different options and opportunities. I was just curious about all the aspects before we start our business. everything is a learning opportunity even when learning from others' mistakes.
  7. Dino soar

    Dino soar Road Train Member

    Dec 8, 2017
    I think the first thing is you need to understand what the different terminology is.

    If you have your Trucking Authority ( hat means you are a motor carrier) you can go directly to whoever you want and get direct freight. You do not need any brokerage license to do that.

    If you have a lot of freight you can lease other trucks on under your Authority that will only work the freight that you have from these Direct people that you're working for. You need to have enough Freight to keep them working everyday. You also have to be able to handle all of the billing and paying them and whatever other paperwork Etc that has to be done.

    Being a brokerage is different. What Brokers do is go into a company somewhere like let's just pick a place like let's say Nestle, and Nestle says they have to move 500 loads a week so they need a broker that can find all the trucks to haul for them. Then as a broker you legally Broker freight to whoever wants to haul it.

    The Brokerage business is incredibly competitive and it's very difficult to break into that. Not impossible but The Story Goes if you want to be a broker you'll probably spend 6 months to a year doing nothing but making phone calls and mostly getting rejected.

    As far as payments go, if you have your Trucking Authority you're going to be on whatever terms you can work out with them but it's going to be 30 days 60 days 90 days something like that. Generally 30 to 60 days is probably more than Norm but there are some people that will be slow pay whatever. That payment cycle also applies to brokerage.

    So if you were Brokering freight you're going to pay the carriers way before you collect from your shippers. Brokerages require a lot of cash flow and even if you don't get paid you still have to pay the carriers. The Brokerage also requires a $75,000 Bond.

    It's much simpler to just have your trucking Authority and haul your own freight, but you still have to be able to carry yourself and until you get paid from whatever loads that you haul.

    Factoring is expensive, there's a lot of legal mumbo jumbo that you may find it difficult to get out of it when you choose to, and there's a lot of very fine print that you have to read because there's more that goes along with it than just them handing you money.

    I'm not discouraging you but you sound as though you have a lot to learn, so I would advise you before you enter into this or figure what you're final plan will be, that you do as much research as you can.

    If you ask the right questions I'm sure there are plenty of people on the site that have plenty of experience that will try to help you however they can.
  8. herreratrucking2022

    herreratrucking2022 Bobtail Member

    Jan 29, 2023

    Thank you for the information, i greatly appreciate it. Yes I have a lot to learn and am researching and expanding my horizons everyday.
    Dino soar Thanks this.
  9. Kenworth6969

    Kenworth6969 Road Train Member

    Jul 3, 2020
    Freight volume is on the floor.
    Good luck getting shippers not hanging up on you in the first 5 seconds.

    Screenshot_20230129-185539_Chrome.jpg Screenshot_20230129-185607_Chrome.jpg
  10. Old Man

    Old Man Road Train Member

    Apr 3, 2009
    Oklahoma City, OK
    Good luck on finding shippers, unless you know someone.
    You are competing agains all the big boys with their slick professional sales people plus all the others. Shipper I worked with for years would not answer his office phone, only his cell that only people that needed the number got it.
    Are you buying a hot shot because of driver’s license or because of easy financing of a Dodge pickup? Starting out $100k in debt is a bad way to begin.
    gokiddogo Thanks this.
  11. Broke_and_Hungry

    Broke_and_Hungry Light Load Member

    Feb 26, 2008
    ^^ This is the part I feel most start-ups do not fully understand. Even if you are making good money, much remains on the receivables list for 30 plus day and your daily/weekly expenses continue. Many smaller carriers and start ups run to the mailbox everyday.
    Dino soar Thanks this.
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