How to Start a Towing Business
Towing is a service that will have a consistent demand for the near future. Even though cars are becoming more and more reliable, accidents and breakdowns happen, and drivers need somebody to give them a tow.
In this post, we’re going to cover everything you need to know about starting a tow truck business of your own. We will talk about the variety of towing services you can offer in your business, and the different audiences you can serve. From there, we will cover the eight steps you need to follow to launch a successful tow truck business.
Fire up your truck because we’re pulling out tons of valuable tidbits on how to start a successful towing business.
Here's What We'll Cover:
Why Start a Towing Company?
If you’re looking to start a business that provides a sense of consistency and very little stress or unnecessary excitement, a towing company could be the route for you.
It’s not that driving a tow truck is boring. In fact, truck drivers meet tons of interesting people day in day out that will make it quite enjoyable.
Even though the job likely won’t be stressful for you, the nature of towing is typically helping people through stressful situations. That in itself can be fulfilling.
Let’s take a quick look at some other benefits of starting a towing company.
Benefits of Starting a Towing Company
- It’s consistent: The life of a tow truck driver is relatively predictable with very little drama and rarely any surprises
- You’re helping others: Tow trucks often come in a time of need, so your towing company will truly be helping others in your community
- Anybody can do it: As long as you have great driving skills and a clean record, you could start a towing business
- Lots of specializations: There are several paths your business can take in terms of specialization
Can I Start a Towing Company With No Experience?
Yes, you can start a tow truck business with little to no experience.
However, you will need to learn the mechanics of your truck, how to drive with a heavy load, and safety practices for roadside assistance. Learning how to properly load vehicles onto your specific tow truck is also a must in order to avoid any damage to your clients' property.
Types of Towing Businesses
Just like there are thousands of different types of vehicles on the road, there are many types of towing. Most of these involve transporting vehicles from the spot where they broke down to somewhere that they can be fixed, but others are a bit more unique.
Here are a few of the most popular types of towing businesses.
- Post-accident clean up: Some towing companies are dedicated to picking up wrecked cars after a collision.
- Contractor for roadside assistance company: AAA and other roadside assistance companies bring work to lists of preferred local towing businesses.
- Oversized load: Have you ever seen a house (or half of a house) cruising down the highway? Oversized load-hauling is a kind of towing.
- Vehicle transport: Some tow truck drivers specialize in transporting vehicles long distances.
- Other: Some towing companies transport other things like boats.
Do I Need to Choose a Niche?
Choosing a niche for your business isn’t necessary. However, you’re only going to be able to tow vehicles that your tow truck can carry.
Certain types of towing will require specialization to some degree. For example, if your business has a truck designed to carry oversized loads, you’re probably not going to be the person showing up to get cars that are broken down on the side of the street.
While it isn’t necessary, specializing in a specific type of towing is good for building your business' reputation with your target audience.
What You Need to Get Started
In order to start a towing business and drive a tow truck yourself, you will need to have a Tow Driver ID.
The exact rules and regulations vary from state to state, and sometimes even county to county, but in general, you’ll require the following qualifications to apply for a Tow Driver ID in the United States:
- 18 years or older
- Valid driver's license
- Clean driving record
- No more than three accidents within a year in the past three years
- No DUIs in the past five years
- No more than one DUI in the past 10 years
- Speak English at a conversational level
More specific criteria may apply based on your location. Some jurisdictions may even have exceptions to these rules. The main purpose of these strict guidelines is to make sure that reliable people are operating tow trucks and handling people’s cars.
For a specific example, check out the Tow Driver Requirements for Palm Beach County, Florida. We’d like to reiterate that the rules and requirements vary from jurisdiction to jurisdiction, and this document will simply give you a general idea of what to expect.
How to Start a Successful Towing Business in 8 Steps
Starting a towing business isn’t hard if you’re qualified for a Tow Driver ID and you know how to load and drive with a vehicle in tow.
Here are eight actionable steps for starting a towing business of your own.
1. Create a Business Plan
Every great business starts with a good idea and a solid plan to back it. Writing a business plan may sound like an intimidating task, but it just entails getting your ideas out of your head and onto a piece of paper.
You’ll want to identify exactly what type of towing services your business will offer and who you’re going to offer them to. Are you going to do all of the towing by yourself or will a team of tow truck drivers work under you? Making these decisions early will help you determine the structure of your tow truck business.
Additionally, you should create an outline of your budget. How much will you invest in a truck and other startup costs for your business? Consider branding, marketing, licensing, insurance, materials and tools.
From there, determine how much you will need to charge for your business to be profitable. Will you offer flat rates or will you bill per hour? How much will you charge for after-hour services?
At this stage, it’s a good idea to hammer out specific processes for your tow truck business. For example, you should document the procedures you’ll follow every time you go out on a call from the moment your phone rings until you deliver the vehicle to its final destination.
Now is also an appropriate time to decide how you’ll approach billing, bookkeeping, payroll and other administrative tasks for your business. Documenting each of these processes will make it easy for you to hire an assistant to help you handle these tasks if you intend to spend most of your time on the road.
2.Take Care of the Legalities
Register your towing business to make it a legal entity. You can register your tow truck business as a limited liability company (LLC) or a corporation. An LLC should be fine to start.
You’re also going to need liability insurance and business insurance. We recommend speaking with a lawyer to determine what sort of liability insurance you require, and how to set up your contracts to protect yourself if a vehicle your business is towing is damaged.
Accidents happen, but accidents that involve something with a price tag like a vehicle can be very costly to your business. Make sure you have the appropriate insurance so that it doesn’t cost your business a fortune if something goes wrong.
3. Open a Bank Account
Once you’ve registered your tow truck business, you can apply for an employer identification number (EIN) on the IRS website, which is essentially a tax identification number. Your EIN gives you the ability to open a bank account on behalf of your new towing business.
Open a checking account with a debit card, so that you can put all business expenses on that account. This goes for vehicles, equipment, gas, insurance and anything else you require to do your job.
This will keep your tow truck business finances separate from your personal finances, which will help you avoid headaches at tax time.
4. Buy a Tow Truck
To offer towing services, you’re going to have to buy a tow truck. This will be your largest expense. Depending on the type of tow truck you’re buying, the investment will likely be between $40,000 and $100,000.
The type of tow truck you invest in will determine what kind of services your business can offer. For example, you won’t be carrying an oversized load with a truck designed to carry standard-sized vehicles.
Here are a few different types of tow trucks you can choose from for your business:
- Flatbed truck
- Oversized load tow truck
- Wheel lift tow trucks
- Hook and chain tow trucks
Keep in mind that you may save some money by purchasing a used vehicle for your business. A new vehicle will likely last you longer, but you’ll pay a lot less for a used one. Those lower startup costs will help you have a positive cash flow sooner.
However, if you’re buying used, you’ll want to have your mechanic take a look at it to make sure everything is in good shape before you buy so that no avoidable expenses rise soon after your purchase.
5. Determine Your Target Market
With everything worked out on the legal side, it's time to dive into the fun part: Identifying your business' target audience.
For towing, you’ll want to determine whether you’re going the B2B or B2C route. B2B is short for “business to business,” and that means that you’ll be serving other businesses. B2C means that you’ll serve consumers directly.
Making this distinction from the start will help you with everything you do for your tow truck business going forward.
If you are going to serve businesses, what sort will they be? Will they be companies like AAA that offer roadside assistance, or will they be local garages and auto repair shops?
For heavy load towing, your business could specialize in moving manufactured homes and heavy equipment, so builders or construction companies would be your target audience.
On the consumer side, you could tow vehicles for people that break down and want to take their vehicles home rather than to the shop.
Become very clear on who your business will serve in a broader sense, and from there, build a more specific ideal client profile.
Narrow down where your ideal client is located, and what sort of budget they have for your services. For B2C audiences, you could go as far as identifying your ideal client’s age, occupation and income.
Don't worry about being too specific, but the more fine-tuned your profile is, the easier it will be to speak to this audience.
6. Build Your Brand
Your brand is what gives your new company its own professional identity and breathes life into your business.
Once you’ve established the target audience for your business, building your brand will be a breeze. Your brand should be geared towards the audience that you plan to serve while representing what your business has to offer.
The visual elements of your brand will include the logo, fonts and color palette that you’ll use on your website, business cards, pamphlets and other marketing materials.
Your brand’s persona will be built around your core values. It is a good idea to establish a mission statement that you follow in everything that you do. It could be about serving your clients to the best of your ability, making a difference in the community, or whatever rings true to you.
The end goal would be to build a brand that connects with the members of your community, and develops a sense of brand loyalty. You want your brand to pop into people’s heads immediately whenever they require a tow truck.
7. Market Your Services
How you market your towing services will depend on whether you’re targeting businesses or consumers.
When you start a towing business, the B2B model will likely make it easiest for you to get started. You can develop contracts with the businesses mentioned above so that you’re their go-to tow truck driver when their clients require assistance.
If this is the approach you’re going to take, you should make a list of businesses that meet the ideal client profile that you created, and propose the partnership. You could cold call or send emails, but stopping by in person is likely the most effective, especially if the list is short.
Come prepared with a custom pitch that shows how your tow trucking company can meet their unique needs and help them better serve their clients. Have pricing estimates worked out and a rough outline of what the process of working together would look like.
However, marketing to consumers is a bit different. You have to put yourself in your ideal client’s shoes. Recognize that they are going to be looking for a tow truck in a time of need. Where will they turn to find you?
The first answer is likely Google or another similar search engine. This means that you'll want to make sure your business pops up when they search “tow truck near me” or “tow truck in [your location].”
To make this happen, you’ll want to invest in search engine marketing (SEM) or search engine optimization (SEO). SEM is when you pay for an ad to place your website and contact information at the top of search results, and SEO is when you optimize your content for it to rank as the top result organically.
Either option can be highly effective.
8. Prove Your Reliability
Reliability is huge in the towing industry. No matter if you serve businesses or consumers, you'll want to be on your game all the time, especially since you’ll likely be called in for time-sensitive jobs.
When you partner with a business to serve their clients, showing up and getting the job done to the best of your ability will prove that you’re reliable. You’ll likely be working with these clients regularly, so they will see the consistency.
However, if you’re working directly with consumers, collecting reviews on Yelp, Google and Facebook will help prove that you’re reliable. The reviews will pop up when they search for you, and they will speak for themselves.
Tips for Growing Your Towing Business
By now, you have a decent understanding of how to start your towing business. However, you can start laying the framework for long-term growth from the get-go.
Here are a few tips and tricks for growing your towing business:
- Maintain great relationships with your customers
- Be easy to reach during working hours
- Prioritize timeliness
- Hire an assistant to take care of administrative work
- Give your business card to every customer
- Ask happy customers to leave you a review on Google
Remember: Growth will not happen overnight, but as long as you treat your clients well and render your services as promised, you’re destined for success. Also keep in mind that many of your clients will be calling you in a time of need, so you must be compassionate, patient and kind when you show up.
Launch Your Towing Business
Launching your own towing truck company is an exciting step. It gives you so much more control over your career and your future.
We are confident that our eight steps for starting a towing business will set you up for success. Setting out with a solid plan and carrying it through until you have your first happy client will make for such an amazing journey.
Stay true to your mission and focus on serving your clients to the best of your ability, and you’ll be destined for great things.
More Resources for Your Towing Company