How Much Does a Tow Business Profit?

Tow truck companies have high overhead expenses.

The amount of profit a tow business earns depends on a number of factors and varies from one company to another. Whether you have employees, how many trucks you operate and if you provide 24/7 towing services are some of the factors to consider. The amount of profit your business earns also depends on whether you serve as the towing company for local service garages or simply wait for calls to come in.

Factors Affecting Work Availability

Many factors decrease the amount of work available to tow truck companies. A poor economy reduces the need for this kind of service. When consumers spend less money at stores, fewer delivery trucks are on the road, cutting down on the number of heavy towing jobs. To help make up for this loss, some towing companies make agreements with banks, car loan companies and new car dealerships to tow repossessed vehicles. Likewise, even a good economy can negatively affect the towing business. When credit is available at lower rates, more consumers purchase newer cars, which are less likely to require towing. Still, with increasing traffic on the nation’s highways and roads, the job outlook remains positive.

Expenses

Tow truck companies have numerous overhead expenses. Tow trucks, especially heavy-duty tow trucks and equipment, are expensive to own and operate. It costs money to maintain the trucks and make repairs. Fuel is another major expense, and, for a tow truck company that runs trucks 24/7, the cost of fuel can be quite high. It takes skill to properly operate wreckers and other towing equipment; therefore, companies need to pay fair wages if they want to hire trained and experienced drivers.

Leasing

Leasing tow trucks is one way for a towing service to increase its profit margin. Some lease programs make it possible to own the truck at the end of the lease if you meet the purchase terms. Companies also have the choice of taking out a new lease on a newer tow truck. A tow company often leases its first tow truck instead of buying it. This can be a better option than investing in a tow truck only to find out that the business isn’t going to be successful.

Earnings Potential

The earnings of a tow truck operator vary depending on experience and the regional location of the company. In some areas, experienced operators, especially flatbed truck drivers, can earn an income of up to $35,000 per year. Individuals who own and operate their own trucks can earn as much as $100,000 annually, according to Career Cruising, an online career guidance and planning system. Rather than receiving a salary, some tow truck operators are paid a set fee for every vehicle they tow. Trained and experienced operators are offered the best-paying opportunities.

References

• StartTowing.com: How to Tow for Profit
• The American Repossessor: Can Towing Companies Perform Asset Recovery Work
• Career Cruising: Tow Truck Driver
• StateUniversity.com: Career as a Tow Truck Operator, Salary, Employment
• BigDog Towing and Recovery: Why Does Towing Cost So Much
• JobMonkey.com: Leasing a Tow Truck