How to Become a Towing Service Provider

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(Image: no parking tow zone sign image by Stephen Orsillo from Fotolia.com)

If you want to own your own business, you might not have considered the possibility of owning a towing company. Towing companies might not sound glitzy or glamorous, but they can provide stable work and profits. Although the initial capital requirements might seem high, you will find ongoing costs much lower than other businesses that require, for example, large stocks of inventory. Building your business might go slowly, but once you become established, you can enjoy relative stability even in volatile economies.

Decide what type of truck your prefer. Tow trucks typically come in two types: winch and carriers. Winch trucks lift a vehicle's front end off the ground. Carriers pull the entire vehicle up onto a trailer. Both vehicles cost roughly the same, but carriers secure the entire vehicle.

Rent a small office in a central location. You need to offer quick services to customers, and the best way to do that involves selecting a central location. Attempt to find not only a central location but one adjacent to a busy street, so drivers can see your business sign and your tow truck.

Identify your market. For instance, you need to know the area that will provide the most business. You'll need to identify high-traffic areas, but you also need to identify high-demand-to-car-type areas. For instance, a well-to-do part of town might have high traffic, but if that traffic consists of new cars, you might only receive occasional business.

Decide if you want to lease or buy a truck. Leasing a tow truck offers you the ability to offer services with the minimum amount of upfront capital. Leasing, however, creates a fixed monthly payment. A fixed monthly payment requires that you have enough sales to break even or profit. If you can purchase a used tow truck, you will not have ongoing monthly payments, but you might have occasional repair costs.

Consider purchasing an existing tow company. Existing companies come with built-in customers and name recognition. You can examine their bookkeeping to determine if they have enough current demand to make purchasing a company worth it. Websites such as www.businessesforsale.com sometimes have tow truck businesses for sale.

Partner with insurance companies and mechanics. Successful towing companies do not wait idly for drivers to wreck. They offer discounted services to insurance companies that can provide high-volume business. Mechanics can also provide valuable advertising that helps build name recognition. When necessary, customers dedicated to certain mechanics will call you to tow their vehicles.

Offer related services. For instance, if you offer locked car services or 24-hour road assistance, people will call you to unlock their cars or jumpstart their batteries. If they ever need towing services, they will have your company already in mind.

Make sure you have enough startup capital. For instance, you can expect to spend $10,000 to $65,000 depending on the types of trucks you purchase. A new truck with a winch or carrier bed can run $30,000 to $40,000. A used truck with a winch or an incline car carrier can run $8,000 to $20,000. Business licensing can run $300 to $3,000 depending on what city you live in. Office space can run $400 to $700 per month. Total first-year costs could range from $22,800 to $61,000.

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