Starting your own company is typically an incredibly challenging process.
There are many tiny details to worry about and a major element of risk.
Luckily, there are a few tips and tricks you can rely on to make the process simpler.
So, if you’re wondering how to start a tow truck business, we’ve got you covered.
In this article, we’ll walk you through everything you need to know about launching the company.
We’ll also discuss the benefits of running a tow truck business as a side hustle.
- How Profitable Is Owning a Tow Truck Business?
- What You’ll Need to Start a Tow Truck Business [& Associated Costs]
- Do I Need a License or Certificates to Start a Tow Truck Business?
- Why You Should Consider Starting a Tow Truck Business as a Side Hustle
- How to Start a Tow Truck Business in 6 Simple Steps
- Things to Consider When Building a Tow Truck Business
- Frequently Asked Questions
- Similar Businesses to Consider Starting
- Wrapping Up
How Profitable Is Owning a Tow Truck Business?
One of the most important aspects to consider when deciding to open up a business is profit.
Thankfully, with a tow truck company, there’s plenty of revenue to be made.
The mean hourly wage of a heavy and tractor-trailer truck driver is around $24.20.
According to the Bureau of Labor Statistics, that means they make around $48,310 annually.
On average, the lowest earners made about $30,710, while the highest profit margin was $72,730.
This is a sizable yield considering it only takes one tow truck operator into account.
As your business grows, you’ll be able to hire more drivers and increase your profits.
Even when you consider overhead costs like rent and the electrical bill, you’ll come out ahead
On top of that, you can offer auxiliary services to boost your income.
That includes providing roadside assistance, or even impound facilities.
Because of the high profit, people consider towing to be among the best driving jobs.
Although, the revenue can change based on your location and the cost of services.
What You’ll Need to Start a Tow Truck Business [& Associated Costs]
Starting your own business isn’t always easy.
Yet, there are a few things you can do to make the process a bit simpler.
In this section, we’ll talk about everything you’ll need to launch your company.
1. Licensing and Permits
First off, you’ll need a permit to operate your business.
On top of that, you’ll need a valid license to drive around the truck. This can run you anywhere between $300 and $1,000, depending on where you live.
Another crucial expense is advertising. You can’t expect customers to show up if they don’t know about your business.
On average, it’ll cost around $1,500 for flyers and a few online ads.
Sadly, this isn’t a one-time expense since you’ll need marketing for at least a few months every year.
Most tow truck services work out of a garage. You’ll need the space to act as your base of operations.
Paying for rent and office equipment, like chairs and printers, can cost anywhere from $1,000 to $5,000.
The only towing equipment you absolutely need is a truck. A new motor vehicle can cost around $75,000 to $130,000.
This will change based on the condition of the car and where you buy it.
Thankfully, most of the time, you can finance your truck and start off with a small down payment of around $20,000.
It’s always an excellent idea to sign up for tow truck insurance for your business. That way, you won’t have to worry about accidents or liability.
The average cost of liability insurance is about $750. This should cover most minor mishaps.
The cost of this portion can vary greatly. Based on how far you have to travel per client, the fuel needs will change.
Typically, gas can run you about $750 to $1,500.
To ensure your truck lasts for a long time, you’ll need to perform maintenance. You’ll need to check the oil, engine, and tire pressure frequently.
Usually, monthly maintenance trips only cost a couple of hundred dollars.
Although, when accidents happen, this number can skyrocket.
To run an office, you’ll need to take overhead expenses into account. These include items like the electric and water bills and the internet connection.
Generally, $1,000 should be enough to cover the monthly costs.
Hiring an extra driver can cost you an additional $4,195. This isn’t completely necessary, but it’ll free you up for administrative tasks.
Do I Need a License or Certificates to Start a Tow Truck Business?
There are a few licenses that are crucial for running a tow company.
For starters, you’ll need a business license. Besides that, you may also have to apply for a couple of permits.
However, this will change depending on the state or city you live in. That’s because some locations require special clearance.
Other than that, all your truck operators should have commercial driving licenses (CDL).
This is just one of the steps in the process of becoming a truck driver.
Finally, you must register your motor vehicles with the Department of Transportation (DOT).
Why You Should Consider Starting a Tow Truck Business as a Side Hustle
There are many benefits to choosing this type of business as a side hustle.
In this section, we’ll cover the most notable advantages of launching your own tow truck company.
- No Expertise Needed: You don’t need any towing service experience to start this company. That means you can launch the business with little help.
- Low Initial Cost: To start a towing business, you don’t need a lot of capital. As long as you have a truck and a phone, you should be good to go.
- Flexible Working Hours: With a towing firm, you won’t have fixed working hours. Unless you are on the road on a job, you can run the business from anywhere. This makes it the perfect side hustle.
- Help Others: As a tow truck driver, the people you meet will typically be having a rough day. With your help, you can get them back on the road and put a smile on their faces.
How to Start a Tow Truck Business in 6 Simple Steps
With the basics out of the way, we’re ready to move on to the steps of starting a business.
Let’s take a look at what you’ll need to do to open up a towing truck company.
Step 1: Research Towing in Your Area
Before you go all in on a business, it’s a good idea to do your homework first.
That’s why it’s best to start off with market research.
Spend a little time investigating the tow truck industry in your area.
Figure out how many competitors there are and what locations they service.
This will give you a better idea of the type of company you’ll be running.
In addition, you’ll get a chance to familiarize yourself with the prices of services.
Step 2: Choose the Service You Want to Provide
As a tow truck business owner, there are a few services that you’ll be able to provide.
- Impound and repossession services
- Roadside assistance (flat tires, dead batteries, empty gas tanks)
- Short distance hauls
- Long distance hauls
- Quick repairs
- Consensual towin
- Non-consensual towing
- Independent or subcontracted towing
You can choose to offer some or all of these. At this point, the market research you conducted should come in handy.
It’ll help you see what services are worth the effort and how much to charge per customer.
Step 3: Come Up With a Catchy Name
Naming your business is one of the most crucial steps in the process.
It’ll determine how easy your company is to find and the likelihood of people calling in for your services.
There are a few tips you can try out to come up with a catchy designation.
First off, it’s always better to go with a shorter name.
Long titles can be a pain to memorize and remember in the future.
Other than that, it may be a good idea to include your name in the branding.
This will give your company a friendlier feel and make it instantly recognizable.
Finally, avoid adding location names in the title.
That way, you won’t have to worry about rebranding when it’s time to branch out and expand your business.
Step 4: Create a Business Plan
A business plan is a document that acts as a guidebook for new companies.
You’ll include details like the name, location, services, and running costs.
It should help you see the bigger picture of operating the business.
This will make applying for a towing license much simpler.
On top of that, it’ll allow you to find partners, investors, or other types of financing in the future.
Step 5: Register the Business and Apply for Licenses
With your business name and plan in hand, you’re ready to make matters official.
To do that, you’ll need to apply for a few licenses.
We mentioned a couple of the certificates that you need.
Although, it’s best to check your state’s requirements.
Step 6: Market Your Business
Now that your company is officially legal, it’s time to bring in the clients.
Most small businesses rely on word of mouth to start off.
While this can be effective, it’ll take a long time to build up a clientele.
For that reason, marketing is the best way to go.
You’ll need to advertise your services to attract new customers and start making money.
Things to Consider When Building a Tow Truck Business
Aside from licenses and services, there are a couple of other factors to consider.
Can You Run a Tow Truck Business By Yourself?
To keep costs low in the beginning, most new business owners will hold off on hiring help.
They’ll try to take on all the tasks to avoid cutting into the profit margins.
This may sound like a good idea, but it can be tricky to pull off.
Remember, as the company owner, you’ll have administrative tasks like paying bills.
So, running out on tow drives may make running the business difficult.
With a service business like towing, revenue can vary greatly.
Some months the phone will ring constantly, while others you’ll barely hear a peep.
That means that your profit margin will shift throughout the year.
For that reason, you have to be ready to take a few financial hits in the first couple of months.
The only way around this issue is to build up your recurring revenue contacts.
Frequently Asked Questions
Is a Tow Truck a Good Investment?
If you’re starting a new towing company, then a tow truck is definitely worth the investment.
It’ll cost a lot less in the long run than renting a vehicle
Is Tow Truck Driving Stressful?
Driving a tow truck can be stressful.
There are many deadlines to worry about and you have to spend many hours on the road.
Similar Businesses to Consider Starting
Here are a few businesses that are similar to tow truck companies.
- How to Start a Box Truck Business: Box trucks are heavier than tow vehicles and can handle more weight.
- How to Start a Trucking Business: If you’d like to use your trucks to deliver goods, then this guide is for you.
- How to Start a Transportation Business With One Van: To start a business with one van, check out this guide for help.
Figuring out how to start a tow truck business can be tricky.
Thankfully, with the easy steps in our guide, the process should be easier than ever.
We talk you through the major costs of operation and the permits you need.
Let us know your thoughts in the comments and don’t forget to share the article with your friends.