Get Your Tow Truck Rolling: Starting Your Own Business

A driver loading a damaged vehicle on a flatbed tow truck.

Main Sections In This Post
Steps To Starting A Towing Business
Points to Consider
Resources
Knowledge Is Power
Featured Video

In this post, you’ll get the steps to start a towing business. We will then look at key points to consider before you start. Finally, you’ll find tips and resources that mostly lead to search results so that you always have the latest information whenever you use this post.

Steps to Starting a Towing Business

1. Business Research

Research is one of the most important steps before you start a towing business. What if you could get inside information from industry professionals? Would you take the time to do so? If your answer is yes, see the article below for information about starting your towing business.

For the details, see An Inside Look Into the Business You Want To Start.

2. Choosing a Location

The location you choose for your towing business is a significant factor in whether you’ll succeed. If you have an excellent location, your chances of success increase dramatically, while starting your business in the wrong one will result in an ongoing struggle.

For more, see Choosing The Best Location for Your Business.

3. Choose a Business Name

The name you choose for your towing business is an important step. You want something memorable, catchy, and available for registration. Because the name will likely be with you as long as you own your towing business, take the time to choose it carefully.

A Sample List of Catchy Business Names for a Towing Business

It is important to remember that the names may already be registered and used by other businesses.
This list is intended to inspire your imagination.

    1. TowMaster
    2. Road Rescuers
    3. Speedy Tows
    4. Quick Hitch
    5. Roadside Heroes
    6. TowTech
    7. Towing Titans
    8. Drift Away Towing
    9. Swift Saviors
    10. Tow Squad
    11. Rescue Wreckers
    12. Highway Helpers
    13. Towing Express
    14. Turbo Tow
    15. Tug ‘n’ Go
    16. Fast Track Towing
    17. Hitch Haulers
    18. Ace Towing Solutions
    19. Rapid Response Tows
    20. Tow Prodigy

Remember to choose a name that resonates with your target audience and aligns with your business values and services. Conduct a thorough search to ensure the chosen name is not already trademarked or in use by another company in your industry.

See How to Choose a Business Name to learn more.

4. Becoming a Legal Business

The section focuses on the legalities of setting up your business. For example, you’ll need to set up a company and other permits required to operate a tow truck on public roads.

You’ll need to contact your local state/province and municipality to see what laws and regulations are in place for your area.

You can find more information by typing “tow truck business license” + your city or state in your favorite search engine.

Have a look at the search results below for insights on licensing.

Search Results – Towing Business Licenses.

5. Your Corporate ID

Your company’s corporate identity includes various design elements, including business cards, signage, logo, website, etc. To start, begin with the components you need now, and then add the rest as needed.

See A Complete Introduction to Corporate Identity Packages.

6. Towing Equipment Research

Here are a few items you’ll need to have for your operation.

    • Equipment & Tools
    • Clevises & J Hooks
    • Chains
    • Hooks & Fittings
    • Jump Starters
    • Lights
    • Lockout Kits
    • Ratchets
    • Slings
    • Specialty Tools
    • Hand tools
    • Air Tank
    • Shackles
    • Snatch Blocks
    • Tie-Down Kits
    • Vehicle Movers
    • Winch Line
    • Towing Accessories
    • Truck Accessories
    • Impact wrenches
    • Fuel Containers
    • Jacks
    • More in the search results Below

When it comes to equipment, the most important piece of equipment you’ll be purchasing is your tow truck.

When you’re starting, getting the right size truck that will be able to do the work is important. You want to research the marketplace for a truck suitable for your needs. The last thing you want is a truck with a reputation for breaking down or being expensive to operate.

Another issue you want to consider is whether you plan to purchase a brand-new truck or a used one.

Naturally, used vehicles have wear and tear. So you want to ensure you get something in good shape.

Look at the link below to search results that can provide you with the insights you’ll need to make good decisions.

Search Results – Towing Business Equipment.

7. Evaluating Your Start-up and Monthly Costs

Your startup cost will depend on how you set up your business. For example, if you run out of a commercial building, buy brand-new trucks, and hire many employees, your monthly costs will be high.

On the other hand, if you start from home and do most of the work yourself, your startup and operating costs will be much lower. This is because most of your monthly operating costs will be fuel, maintenance, insurance, and wages.

Startup Costs:

    1. Tow Trucks: $50,000 – $150,000 per truck. This cost can vary depending on whether you choose new or used trucks and the type of tow truck you purchase (flatbed, hook and chain, wheel lift, etc.).
    2. Business Licenses and Permits: $100 – $600. This includes a general business license, specific towing permits, and potentially commercial driver’s licenses for your employees.
    3. Initial Marketing and Advertising: $1,000 – $5,000. This could include the cost of building a website, designing a logo, printing business cards, and launching your initial marketing campaigns.
    4. Uniforms and Safety Equipment: $200 – $1,000 per employee. This includes uniforms, safety boots, high-visibility jackets, gloves, and helmets.
    5. Legal and Accounting Setup: $1,000 – $3,000. This could involve costs for setting up your business legally, drafting contracts, and setting up initial accounting systems.
    6. Office Setup: $2,000 – $10,000. This includes the cost of leasing an office space, purchasing office furniture and equipment, setting up a computer system, and buying initial supplies.
    7. Tow Truck Equipment: $3,000 – $10,000. This includes the cost of equipment like towing hitches, chains, winches, dollies, and lights.
    8. Training and Certifications: $500 – $2,000. You and your employees may need to complete certain training or certification programs, such as WreckMaster or Towing and Recovery Association of America (TRAA) certification.

If you’re starting with one truck and one employee, the grand total for startup costs ranges from $57,800 to $181,600.

Monthly Expenses:

    1. Office Space Rent: $1,000 – $5,000 per month.
    2. Insurance: Approximately $416 – $1,250 per month. This includes liability, property, auto, and workers’ compensation insurance.
    3. Marketing and Advertising: $500 – $2,000 per month. This includes ongoing costs for website maintenance, online and offline advertising, and other marketing activities.
    4. Employee Salaries: $2,000 – $4,000 per employee per month. This includes their wages, as well as taxes, and potential benefits.
    5. Fuel: $500 – $1,000 per truck per month. The fuel cost will depend on how often your trucks are used and the current fuel price.
    6. Maintenance and Repairs: Approximately $83 – $250 per truck monthly. This includes regular maintenance and any necessary repairs.
    7. Miscellaneous Supplies: $200 – $500 per month. This includes office supplies, cleaning supplies, and any other miscellaneous items needed.
    8. Legal and Accounting Fees: Approximately $83 – $416 per month. This includes ongoing legal and accounting support and tax preparation services.
    9. Communications: $100 – $300 per month. This includes phone service, internet service, and potentially a GPS tracking service for your trucks.
    10. Utilities: $100 – $500 per month. This includes electricity, water, and waste disposal for your office.

The grand total for monthly costs, with one truck and one employee, ranges from $4,982 to $14,216 per month.

Remember, these are rough estimates, and the actual costs can vary significantly depending on various factors, including your location, the size of your business, and current market conditions. You can research more by checking out the following Search Results – Towing Business Startup Costs.

 

Basic Revune Model from Towing Services

A basic revenue outlook for a towing business. This will be a rough estimate as the actual revenue can vary significantly based on factors like location, competition, pricing, and the types of services offered.

Consider a scenario where your business operates one tow truck and offers basic towing services.

Towing Service Fee: Let’s assume you charge an average of $100 for a basic tow. This can go up or down depending on the complexity of the tow, the distance, and the type of vehicle.
Number of Tows Per Day: Tow truck drivers can typically handle about 3-5 calls per day, depending on the distance and complexity of each tow. Let’s average this to 4 tows per day.
Days of Operation: For this example, let’s assume you operate 6 days a week.

So, your weekly revenue from towing services would be:
$100 (service fee) x 4 (tows per day) x 6 (days per week) = $2,400

And your monthly revenue would be:
$2,400 x 4 = $9,600

Additional Services

In addition to basic towing, many towing businesses offer additional services like roadside assistance, vehicle storage, and vehicle recovery. The revenue from these services can vary significantly based on the demand in your area and the fees you charge.

For the sake of this example, let’s say you earn an additional $1,000 per month from these services.

So, your total estimated monthly revenue would be:

$9,600 (from towing) + $1,000 (from additional services) = $10,600

Again, this is a very rough estimate. The actual revenue can be higher or lower depending on various factors. Also, remember to deduct your monthly costs to get your net profit. Based on the monthly cost range provided in the previous response, your estimated monthly net profit would range from a loss of $3,616 to a gain of $5,618.

To get a more accurate revenue outlook, you should research the demand for towing services in your area, check the rates charged by competitors, and consider the types of services you plan to offer. It may also be helpful to consult with a financial advisor or business consultant. You can research more by checking out the following Search Results – Towing Business Revenue Samples.

8. Write Your Business Plan

A business plan is essential when applying for a business loan or attracting investors. You can write one yourself, utilize specialized business plan creation software, or hire a professional to assist you.

Creating a business plan is crucial as it provides a clear vision of your company’s future and aids in efficient planning.

It serves as a roadmap, guiding you during your business launch and throughout its operations.

It is particularly useful when navigating challenging periods, helping you realign your strategies. Reviewing and updating this plan every few months is recommended to ensure it accurately reflects your current situation and future aspirations.

A straightforward and simplified sample business plan is presented here to provide you with an understanding of the essential elements required for a basic plan for a Towing Company.

Executive Summary

“QuickHook Towing” is a new venture that aims to offer a prompt, reliable, and courteous towing service in the Metro City area.

Our business mission is to become the region’s leading provider of towing services, recognized for our professionalism, rapid response time, and customer-centric approach. We plan to distinguish ourselves from competitors by embracing innovative technologies, superior customer service, and diverse services.

Business Description

QuickHook Towing will provide a comprehensive suite of services, including emergency road service towing, accident recovery, long-distance towing, unauthorized vehicle removal, and post-accident clean-up.

The company will initially operate within the Metro City area, with plans to expand its coverage area over time. Our target customers will include individual car owners, insurance companies, law enforcement agencies, car dealerships, and motor clubs.

Market Analysis

According to industry data, the demand for towing services is rising due to increased vehicle ownership and unfortunate incidents like breakdowns and accidents. Our primary market research confirms that there is a significant gap in the market for a reliable, high-quality towing service.

While several competitors are in the market, many customers complain of poor customer service, long waiting times, and high prices. QuickHook Towing aims to fill this market gap by focusing on customer satisfaction, quick response, and competitive pricing.

Marketing and Sales Strategy

QuickHook Towing will leverage online and offline marketing strategies to reach our target audience. This will include a robust online presence, including a company website and active profiles on relevant social media platforms. Offline, we will engage in networking activities, community events, partnerships with local businesses, and direct mail campaigns.

Our sales strategy will be centered on providing excellent service, fostering strong customer relationships, and offering competitive pricing.

Operations and Management

QuickHook Towing will start with a fleet of three modern, well-equipped tow trucks operating 24/7.

We will use a dispatch system to manage calls and optimize routes. Our team will initially consist of a general manager, a dispatch operator, and three certified towing drivers. As the business expands, we will increase our fleet and staff accordingly.

Financial Projections

Our financial projections show that QuickHook Towing will be profitable by the end of the second year. Initial startup costs will include buying tow trucks, necessary equipment, office setup, marketing, and operational costs.

Revenue will primarily come from service fees, with additional income from partnerships with insurance companies and local businesses. We anticipate steady growth in revenue as we increase our market share and expand our services.

Funding Request

We seek an investment of $150,000 to cover startup costs, including purchasing our initial fleet, equipment, and marketing efforts. In return for investment, we offer a percentage of equity in the company or a structured repayment plan with interest.

Exit Strategy

Our exit strategy includes the company’s potential sale to a larger service provider or a strategic partner after building a significant market share and consistent cash flow.

Alternatively, we might consider franchising the business model once we have proven its success and profitability.

Conclusion

With a growing demand for reliable towing services and a solid business plan to fill this need, QuickHook Towing presents a compelling business opportunity.

We believe that our commitment to customer satisfaction, use of innovative technology, and experienced team will ensure our success in the towing industry.

For more information about business plans, see, How to Write a Business Plan.

9. Banking Setup

Business owners should keep their personal and business finances separate, and the easiest way to do so is to open a separate business account.

You can do this at your current bank or elsewhere, more appropriate for your needs. You can find help by clicking on the links below.

See, Choosing a Business Bank and How to Open a Business Bank Account.

10. Getting a Business Loan

The startup cost for this type of business is high, especially if you’re looking to purchase an established business or purchase a fleet of trucks and operate a storage facility. Even if you’re a small operation, you may need a wrecker, a flatbed, and a pickup just for lockouts. Regardless you are looking at a high startup cost.

Below are some key considerations for meeting with a loan officer for a new towing business and a list of necessary documents:

    1. Identify Your Needs: Know the capital you require and how you intend to use the loan for your business.
    2. Understand Your Credit History: Your personal credit score will play a significant role as your business doesn’t have a credit history yet. Be ready to explain any financial issues in your past.
    3. Develop a Comprehensive Business Plan: This should outline your market analysis, pricing strategy, marketing plan, and financial forecasts.
    4. Explore Loan Options: Familiarize yourself with the different types of loans available and their terms.
    5. Decide on Collateral: Consider what assets you can provide as collateral. This might include personal assets since the business is new.
    6. Anticipate Questions: Loan officers will want to know about your business. Be prepared to discuss your operations, the towing industry, target customers, and potential competition.
    7. Understand Your Personal Financial Situation: Be ready to discuss your personal finances, as they would be interested in your personal income, expenses, and cash flow, given that the business is new.
    8. Don’t Hesitate to Ask Questions: Ask your loan officer any queries you have. Their role is to assist you through this process.

 

Below is a list of documents you’ll likely need to apply for a business loan for a new towing business:

    1. Business Plan: A thorough plan detailing your business strategy, market analysis, promotional plans, and financial projections.
    2. Personal Credit Report: Your business is new and does not have a credit history, so your credit report will be essential.
    3. Personal Tax Returns: Typically for the last two to three years.
    4. Projected Financial Statements: Since your business is new, you must provide estimated balance sheets, income statements, and cash flow statements.
    5. Legal Documents: This includes your business registration documents, any third-party contracts you have, proposed leases, and the licenses and permits required to operate a towing business.
    6. Collateral Documentation: If you’re offering collateral, you’ll need to provide documents that verify ownership and value.
    7. Business Licenses and Registrations: Any licenses and registrations required to run your towing business.
    8. Insurance Documents: Proof of liability insurance and any other insurance relevant to your new towing business.
    9. Business Overview: A detailed overview of your business, including its proposed structure, owners, the number of employees you plan to hire, and a clear description of your operations.
    10. Resumés: For all proposed business owners and key management.

Remember, the specific documents required may vary depending on the lender and the loan type. Always verify with your loan officer based on your specific situation.

See the resources below for tips and insights for financing your startup.

Remember that if you’re purchasing your equipment from a dealer, they may have financing options available.

Search Results – Towing Business Loans.

See Getting a Small Business Loan.

11. Software Setup

The right software can help you manage your business efficiently for dispatch, bookkeeping, or storage management.

Search Results – Software Packages Related to a Towing Business.

12. Get Your Business Insured

Ensure you have more than enough insurance coverage for your tow trucks, employees, customers, and the vehicles you tow.

Take your time and speak with a broker specializing in tow truck operators’ insurance policies.

This type of business has a high risk of mishaps; you could damage a car by pulling it from a ditch. In addition, you’re always on the road with drivers around accident scenes that may be distracted.

Important considerations when looking for insurance for a new towing business:

    1. Coverage Types: Your towing business will need multiple types of coverage. This includes liability insurance for accidents and injuries, property damage insurance for any damages that may occur to the vehicles you tow, workers’ compensation for your employees, and comprehensive coverage for your own vehicles.
    2. Policy Limit: The policy limit is the maximum amount the insurance company will pay in the event of a claim. Ensure your limits are sufficient to cover potential costs related to accidents, lawsuits, or other incidents.
    3. Deductible: This is the amount you’ll pay out-of-pocket before your insurance kicks in. It’s important to select a deductible that’s affordable for your business.
    4. Specialized Coverage: Towing businesses may require specialized coverage options such as on-hook towing insurance (covers damages to vehicles you’re towing), garagekeepers legal liability insurance (covers vehicles stored at your business location), and tow truck physical damage insurance.
    5. Insurance Provider’s Reputation: Check the insurer’s reputation, including their customer service, claims handling process, and financial stability.
    6. Premium Costs: Compare the cost of premiums from different insurers. Make sure you’re not just going for the cheapest option but also considering the coverage provided.
    7. Exclusions: Make sure you fully understand what’s not covered by your policy. Some policies might not cover certain types of vehicles or specific situations.
    8. Legal Requirements: Check the minimum insurance requirements for towing businesses in your state. Make sure your policy meets these standards.
    9. Insurance Provider’s Experience in Towing Industry: Choosing an insurance provider with experience covering towing businesses is beneficial. They will better understand the unique risks and needs associated with your industry.
    10. Policy Flexibility: As your business grows and changes, you may need to adjust your coverage. Look for an insurance provider that offers flexibility.
    11. Risk Management and Loss Control Services: Some insurance companies offer services to help you reduce risk and prevent losses, which can help lower your insurance costs over time.
    12. Independent Agent or Broker: Consider working with an independent agent or broker who can help you compare policies from multiple insurance companies and find the best fit for your business.

Remember, it’s crucial to thoroughly review and understand your policy before purchasing. Consult with an insurance professional or legal expert to ensure you’re adequately covered.

Take some time to review the search results below for a thorough understanding of insurance for the towing industry.

Search Results – Towing Business Insurance.

13. Office Setup and Layout

Whether you have a garage or storage area or operate from a commercial location, you will need to set up your area to make it easy for customers to access.

Set up your office so it’s organized, and you can be productive when managing your business.

Here are the Considerations for The Setup of Your Office.

14. Create an External Support Team

Your external support team can help you when you’re in a bind, need to expand, or need professional assistance. A team can include a lawyer, accountant, marketing specialist, web designer, etc.

See, Building a Team of Professional Advisors for Your Business

15. Hiring Employees

Once your company is established, and you start getting busy, you will want to hire staff to help you handle the workload.

One of Your most challenging tasks is to find good reliable drivers.

Unfortunately, being a tow truck operator is not a job many like doing due to the work conditions and hours.

If you’re dealing with issues like vehicles stuck in a ditch, or a muddy field, you may even need to recover vehicles from rivers, lakes, and ponds. Your employee will need to get in there to hook a chain to the vehicle.

Employees could be working in the dark where it’s difficult to see, and they will be attending many accident scenes. Therefore, you’ll need to make the position attractive to hire and retain employees you can build a team around.

See How and When to Hire a New Employee. 

Points to Consider

Considerations Before You Start

In this section, you’ll find tips and resources to help you identify whether running a business is right for you.

Some people like dealing with the products and services but prefer to avoid attending to the business tasks involved.

Look at the article below to help you identify if running a business is a good fit.

What You Must Consider Before Starting Your Business

As a tow truck driver, you’ll be helping motorists that need their vehicles towed. You’ll often get calls to change a flat tire, unlock doors because keys were left in the vehicle, or if someone ran out of gas.

Keeping up with the calls can be stressful, especially when you’re behind. You could be on one call, and another call comes in, and another, and so on.

If you’re on your own without help, you could be on call 24/7, and that’s a tough way to go because you never have any time off. You can’t set your hours. Most towing operations run 24/7, so there is no time off.

Sometimes you’re slow and have no work; other times, you won’t keep up with the calls.

When starting, you might want to try and do everything yourself until you get established. Once your business is fully operational, you will need help to keep up with demand and have 24/7 coverage.

Questions About Your Company

Answering the following questions will help you plan your startup. You don’t need to have all the answers now, but you will need answers before you start.

    • Will you do all the work yourself during the startup phase, or will you hire staff?
    • Will you be operating as a home business or need a commercial location?
    • What type of towing will you provide? Regular towing for vehicles, or will you focus on heavy rescue?
    • How will you finance your business?
    • Will you be bringing in partners or investors?
    • How will you market your new company?
    • What type of customers will you be targeting?
    • Will you purchase new or used vehicles?
    • Will you purchase one truck or a fleet of trucks?
    • Will you provide vehicle storage?

Are You Passionate About the Towing Business?

The passion you have for your business will affect how successful you’ll be. If you have a passion for towing, you have the drive to succeed. When problems arise, you’ll look for solutions rather than a way out.

If you want to know how passionate you are, consider this. Would you still start this business if you had five million dollars in the bank and all your debts paid in full?

If you answered yes, you’re on the right track and passionate. If you answered no, consider what you would do, and should you focus on doing that instead?

Is There a Demand For Towing In your area

When you’re considering starting this type of business, it’s very important to ensure that there is a demand for your services in the area you’re planning to operate.

If you plan to open in a small town, the demand for your service may not be enough to make you a healthy profit.

On the other hand, if there are many tow truck operators in the area, you may be trying to get into a saturated market. If the market is saturated, it will be difficult for you to get any business in that area.

The competition may be fierce, with truck operators competing for each call.

Your ideal situation is to find an area with a demand for towing services, and the market isn’t saturated.

Inside Information

Here’s a tip you can use to get inside information that is useful and comes from someone qualified.

Search for tow truck businesses that are for sale. Find the ones that you can visit and speak with the owners.

Before your visit, make a list of questions you have about the business.

When you meet with the owner, you’ll see what it’s like to operate the company, how profitable it is, what are the biggest challenges of running the business, and why they want to sell it. Etc.

You’ll probably get a tour of the business and can meet with any staff they have.

The benefit of this approach is that you have inside information from someone qualified and experienced in the towing industry.

The second benefit is that you may find it is better to buy an established business instead of starting from scratch. Once you’ve met with the first owner, it’s time to set up another appointment with the second, and so on, until you have exhausted your list.

Now you have inside information into this industry and whether it’s better to start your own business or buy one already in operation.

You’re not finished yet. Your next step is to look into getting into a franchise for towing. Like looking at businesses for sale, these meetings will also allow you to ask questions and get an overview of what it’s like running a franchise. You may find that getting into a franchise is a better route to take. Everything is set up for you, including your business plan and steps for execution.

After the above meetings, you’ll have enough knowledge to make a better decision than you can now.

Profitability and Revenue

There is profit to be made in towing. Your profit will depend on how many trucks you operate, how busy you are, and how many daily calls you can handle.

Your profit will depend on your monthly expenses. For example, your expenses will naturally be high if you have a large crew size, many trucks, and operate out of a commercial building.

If you do all or most of the work yourself, operate one or two trucks, and run the business from your home, your expenses will be much lower, and your gross profits could be higher.

Your profit will depend on how you set up and operate your business.

Search Results – Towing Business Profitability.

Resources

In the resource section, you’ll find towing businesses for sale and franchise opportunities, trends, videos, and more.

Trends and Statistics

You will find tips and insights from the search results below to better understand the towing industry.

In addition, you’ll be able to identify trends showing if this industry is on the rise or declining.

Take a look below for statistics and trends related to the towing industry.

Search Results – Towing Industry Trends and Statistics.

Businesses for Sale

From the link below, you can get an idea of which towing businesses are for sale, and speaking with the owners is a great idea to see if there is a good match.

Search Results – Towing Businesses for Sale.

Franchise Opportunities

You can also start your towing business with a proven system through a franchise. Before starting your business from Scratch, it doesn’t hurt to see what’s available.

Search Results – Towing Franchise Opportunities. 

Established Towing Businesses

Seeing what the top towing businesses offer can help you understand the market, ensure you haven’t missed anything, and determine if you can find something missing in the industry you can provide.

Search Results – Top Towing Businesses.

Marketing Tips

Business marketing is a continuous process. In some cases, you may want to outsource some campaigns and ads. In either case, you need to understand various marketing techniques.

Search Results – Towing Business Marketing Tips.

Knowledge Is Power When You Use It!

Publications

Reading publications can help you stay on top of your industry. Reading magazines and blogs can also provide useful information about your business. The link below can help.

Search Results – Towing Business Publications. 

Books

Books are another source of information you can use to start and operate your towing business. For example, see the one available from Amazon below.

Books from Amazon Related to Starting A Towing Business.

News

If you want to stay up to date with the latest media coverage related to towing, you can use a site like Google News. Click on the link below to see what the media is covering today.

Latest News Related to Towing Businesses.

Featured Video

You will find a few YouTube videos about the towing industry interesting. Watch for related videos that appear as you watch. You may have yet to consider some of these topics.

Videos Related to Starting A Towing Business