Towing Company Start-Up

Hey everyone! So, my buddy has had a towing company for quite a long time now and wanted to contribute an article to those who may be reading and thinking of getting into business for themselves – maybe even a starting a tow company specifically! Hope you guys enjoy:

My name’s Jason Pryer and I’ve run a local towing service for over 15 years now and I just wanted to give back by sharing a little bit of information with all of you…

Owning your own business can be very rewarding both financially and personally. Just to see something that you thought of grow from the beginning stages and develop into something successful and helpful to the community and be profitable is great. But on the other side of the coin you could put your life savings into something that sounds almost fool proof, and then loose it all. In this article I will help you explore the costs on how to start a towing company.

You will be challenged to think of things you have probably never thought of. Some things that we will explore are:

  • How do I choose a good name?
  • What location for the business
  • What type of expenses are involved?
  • What about my competition?
  • What business losses should I expect?
  • Who will my customer be?

As you go through this article start a list of things you will need and the estimated cost associated with each item. I like to think of this like getting into the car and heading out to see some great, scenic spot you heard about. The likelihood of getting where want in a pleasant way will be much better, much cheaper, and faster if you do some research and planning.

Before we get into all the details about how to start a towing company I want to ask you to think about why you want to do this. If your motivation is that you know someone who made the big bucks in towing, you might want to think again. You should be desiring to help people, or you just really love big trucks, or something more like that, because you will need a love for what you’re doing to motivate you when the tough financial times come.

To start with you are going to need to decide two important things. What area will I start my business in and service, and what type of towing will I specialize in. When you have determined these two things then you can start developing a list of expenses. You may want to start in the area you currently work in due to people you already know, or you may want to be in an area by where you live. That’s OK but you still need to think like a business man and do some research to see if this is a good idea. The same thing applies toward the type of towing you will specialize in. You will need to look at your competition and see if they are meeting the customer’s needs well in the area you want to service, and for the type of towing service you want to do. Is there slow response, rude employees, long on hold time, late arrivals, dirty appearance of equipment and personnel? This is what you want to find. If price is your only angle, what will you do if the competition simply lowers his price until you run out of money? If you don’t find these problems with your competitors think seriously about changing your location or type of towing until you can bring some relief to ailing customers.

Next you will need to choose a name. Try something different so people will remember you. Then check into what business entity would be best for you. You could be a corporation, LLC, partnership, or a sole proprietorship. Each has its benefits and drawbacks as well as costs associated with each. Most start ups will be a sole proprietor, especially one man shops, just know that in this form you and your personal property can be at greater risk in a lawsuit.

Now that you know where you will start and what your specialty will be you need to think about who you want for a customer and who you don’t. Will you work for Police, motor clubs, insurance companies, private parties, or repair shops? It is wise to think about what type of customer you may not want as well. The reasons you may not want a certain type of customer is the work is low profit, risky, slow paying, or inconvenient. Once you have determined who you would like for a customer choose how to the best reach them. The normal methods are yellow pages, internet ads, truck signage, cards, soliciting, and promo’s. Some common promos are t-shirts, ball caps, pens, coffee mugs, and similar items.

Local laws are an important thing to check into as well. It is bad for business to have overlooked some agency requirement and be labeled a bootleg or illegal operation. So find out what licenses, permits, and agency fees will be needed. In all towing companies are required to have a number, and a motor carrier permit, and if you have any employees you will need workers comp insurance. Some cities are very picky about parking a commercial vehicle in a residential area or running a business out of your home, so check before you start.

Business losses are something to definitely factor in. All businesses suffer losses from non payment, bad checks, employee theft, outsider theft, vehicle damage claims, personal injury claims, and other. There will also be times you can’t work due to the flu, or a truck break down, or you’re in a training seminar or at a wedding. These things need to be figured in either by subtracting from revenue or adding an expense for them.


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