Do you want to know how to start your own towing business? You’ve come to the right place!
If you’re ready to learn how to start a business that is focused on cruising the roads, helping drivers in their time of need, and handling automobiles, then you are ready to start your own towing business. This article will help you with everything you need to know about from starting your own tow truck company to the key factors for growing it fast.
Why Start a Towing Business?
This is the most common question people will ask whenever you decide to start your own towing business. So the answer is maybe it will be the way to go if you want to start a business that provides stability and little stress with excitement at the same time. Not only this there are many other multiple benefits of starting this business such as:
- High-profit margins
- You are your boss
- You have a good eye for mechanics
- You thrive in high-stress scenarios
- It is highly scalable
Steps To Start Towing Business
- First Choose The Towing Service You Want To Provide
The initial step is you decide what type of towing business you want to open, in starting a towing business. Because tow truck companies are classified into two types, mentioned below:
Consensual towing: when a company offers roadside assistance to a customer whose vehicle has broken down or been damaged in an accident.
Non-consensual towing: when companies work with private property owners and law enforcement to tow vehicles illegally parked or otherwise in violation of the law.
Non-consensual towing companies have their own challenges, which not only include belligerent, even uncooperative vehicle owners and strict local regulations governing where and how long vehicles can be impounded. That’s the reason why these company owners spend a lot of time in court, but they rarely lose cases. First, understanding the dynamics of each type of towing and then taking into account your actual location is essential before starting your business venture.
- Make A Business Plan
Around the world, every successful company and business begins with a solid plan to back it up and a good idea. So, to determine the structure of your towing business it’s better to make every decision. You should figure out your business budget and choice of location, also how much you will spend on a truck, and other startup expenses for your company.
The key point is, for your tow truck business, it’s a good idea to develop specific processes at this point, you should write down the steps you’ll take every time you go out on a call, from when your phone rings to when you deliver the vehicle to its final destination.
- Register Your Business
Before you can open your doors for business, you must first complete some important paperwork. You must choose the business legal entity that will influence how you file your business taxes and risk, in order to register your company with state and local agencies.
Limited liability company
Limited Liability Company (LLC) business structure especially appeals to tow truck companies, the reason is it provides some personal liability protection because it can be formed as a single entity or with several business partners. Like, during a legal dispute, you, the individual, are protected.
Corporation
If you want to grow your business into a national brand, forming a corporation may be the way to go. This independent business entity required more paperwork, such as creating bylaws and forming a board of directors but still enjoys many of the same tax advantages and liability protections as LLCs and others.
- Register for EIN and Open A Bank Account
You should apply for an employer identification number (EIN), after registering your towing business. EIN is essentially a tax identification number, on the IRS website, that will allow you to open a business bank account on behalf of your new towing company. Open a bank account with a debit card and charge all business expenses like towing vehicles, tow truck insurance, truck financing, equipment, gasoline, and anything else required to perform the duties.
Business accounts will help to avoid tax headaches and build business credit, also keep your tow truck business finances separate from your personal ones.
- Obtain Licenses and Permits
To start a towing business it’s necessary licenses and permits for this you can check your state’s Department of Transportation to ensure you meet all requirements for the business license. To check for specific permits business owners need to check with their state and local city county clerk’s office. Every tow truck vehicle owner will have to obtain the following company licenses and permits:
- Indictment management permit
- Private property permit
- Consent to tow permit
- Overweight vehicle permit
- Oversized vehicle permit
- Class B driver’s licenses
- Purchase A Tow Truck
To be able to serve each customer with any type of towing service, you must have to own a wide range of towing trucks. The price of these trucks may vary on the model, the tow truck cost will more likely range between $40,000 and $100,000. A wide range of towing trucks and special equipment will also determine the services your company can provide. Like, those trucks that are designed for normal vehicles, will not be able to transport an oversized load, such as an ambulance, bus, sports car, and many others. Some of the important ones are:
- Flatbed trucks
- Tow truck for oversized loads
- Tow trucks with wheel lifts
- Tow trucks with hooks and chains
- Look For A Route Planner
Fast response time is the most important factor to compete with other towing services. People always want their vehicles towed as soon as possible when they break down, and property owners want improperly parked cars removed as soon as possible. So try to keep these customers satisfied, by providing prompt service. If a company wants to reduce all unnecessary overhead costs, route planning strategies are essential, don’t let them hurt both performance and fleet management.
Therefore, to find efficient routes, it is preferable to use intelligent route planning software.
- Identify Your Target Market
After settling all the legal issues, it’s time to move on to the fun part: determining your company’s target audience. Regarding towing, it’s mandatory to decide whether you want to go the B2B or B2C route. B2B is an abbreviation for “business to business,” which means that you’ll serve other businesses. On the other side, B2C implies that you’ll serve customers directly. From the start, if you make this difference, then it will help you with everything you do for your tow truck business in the future.
Another thing you have to decide is which business you will serve, whether they will be roadside assistance companies or will they be local garages and auto repair shops.
Your company could specialize in moving manufactured homes and equipment if you choose heavy-load towing, so your target audience would be builders or construction companies. Whereas, on the consumer side, you could tow vehicles for people who have a breakdown and prefer to take their car home rather than to the shop.
- Build Your Brand
Once you’ve identified your target audience, establishing your brand will be a piece of cake for you. The website’s logo, fonts, color palette, business cards, pamphlets, and other marketing materials are your brand’s visual elements. Not only but these are ultimate goals as well to create a brand that connects with members of your community and fosters brand loyalty. You must aim, when someone needs a tow truck your brand to be the first thing that comes to mind.
- Prove Your Reliability
Reliability is huge, especially in the towing industry. No matter whether you serve businesses or consumers, you’ll want to be on your game all the time, when you’ll likely be called in for time-sensitive jobs. When you partner with a business to serve their clients, then you have to show up and get the job done to the best of your ability, it’ll prove that you’re reliable. They will see the consistency if you’ll likely be working with these clients regularly.
In case you’re working directly with consumers, then to prove that you’re reliable, collecting reviews on Yelp, Google, and Facebook will be beneficial. The reviews will pop up when they search for you and will be enough to speak for themselves.
Tips for Growing Your Towing Business
With the steps mentioned above now, you have a decent understanding of how to start your towing business but you can start laying the framework for long-term growth from the get-go. Here are a few tips for you to grow your towing business:
- Maintain trustworthy relationships with your customers
- Be easy to arrive during working hours
- Prioritize timeliness
- To take care of administrative work hire an assistant
- Give your business card to every customer
- Ask happy customers to leave you a review on your Google page
- You can also use towing programs to get more calls like Towbook, Agero, AAA Roadside Assistance, towtrucknearme.co, towing.com, geturgently.com, and many others.