What is Needed to Start a Car Towing Business?

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It takes more than just a tow truck to get a towing business going. Besides knowing how to drive a truck, you need to acquire licenses and insurance, establish an accounting system, rent an office and a yard, and find someone to help with the dispatch work.

Tow Truck, Capital and Business Plan

  • All it takes is one tow truck to start a towing business and an experienced driver to operate it. It also takes capital, which Entrepreneur.com indicates can be from $10,000 to $50,000 as of March 2011. Design a business plan that lists your business's strengths and weaknesses; defines goals and opportunities; and outlines the strategy and tactics to implement the business. Tow truck drivers provide different services to different customers. Some may provide towing services to retail commercial buildings to tow unauthorized parked vehicles. Others offer towing services to people broken down on the road. Still others receive local police or highway contracts to tow vehicles left abandoned on the side of the road. A specialty field within the towing business includes repossession and recovery.

Licenses, Office and Secure Yard

  • Most state, county or city municipalities require a business license to operate a towing business and may require special driver's licenses as well. Because towing may involve the recovery of repossessed or illegally parked cars, a car towing business needs a secure yard and an office. This ensures the protection of the vehicles during their stay at the towing business. Tow truck services charge fees for vehicles in storage as well as fees for when the owners pick up their vehicles.

Radio Equipment

  • A dispatcher and radio equipment are a needed part of a tow truck service. When calls come into the office, the dispatcher sends the call to the available tow truck driver in the field. While cell phones do work for this, radio systems such as those used by police personnel also allow for the coverage of police and fire bands so that the towing company can monitor opportunities for work.

Insurance

  • A critical component of a tow truck business -- and one that such a service cannot work without -- is insurance. This goes beyond the normal automotive insurance requirements, which are also in place, to include such insurance as general liability to protect consumers and the company for any damages that arise when towing a vehicle. Ultimately, the idea is to avoid damaging a vehicle during towing, but accidents may occur.

Contracts

  • Because a tow truck driver relies on many avenues for revenue, obtaining police, highway patrol and commercial contracts helps to ensure consistent business. Another type of contract for which a tow truck service can apply is insurance contracts. Many insurance agencies offer a towing option with their policies and contract with local towing agencies.

Building a Fleet

  • As the business expands, it becomes imperative to build up the tow truck fleet. Often this entails obtaining a flatbed truck or other specialty equipment to transport vehicles that cannot be towed by any other means. Special equipment may be required to tow recreational vehicles, semi-trucks and trailers.

Certification

  • While not a requirement of becoming a tow truck driver, the Towing and Recovery Association of America offers certification programs and training resources for becoming a tow truck driver. Only drivers who have been employed in the field can obtain this certification, and all driving licenses must be up-to-date at the time of application.

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