How to Start a Towing Business – The Complete Guide

Thinking about starting your own towing business? Don’t know where to begin?  Anyone with a tow truck and a little bit of business sense can operate their own successful towing business.

There are a few critical things to consider when making the decision to become a tow truck business owner. Do you want to be your own boss? Do you want to be solely responsible for the business, the employees, the expenses, etc.? Do you want to be on-call 24 hours a day to build your business and turn a profit?

With some homework, an investment, and some hard work, it can all be within your reach. Read on for some tips and strategies to get you started in your new business.

Licensing and Permit Requirements

To operate any type of business, you will need the proper licensing and permits issued by your state and local government. These ordinances and requirements vary by state and by municipality.

Contact your local government and the office of the secretary of state to determine the requirements specific to your location. If you plan to operate an impound lot along with your towing business, you should also check the local zoning ordinances and permits.

Liability insurance is another must have as you begin to build your towing business. Insurance should cover yourself, your tow truck(s) and your clients. Your insurance broker will advise you on the minimum level of coverage required.

And, finally, consider the type of driver’s license required for yourself and anyone else that you plan to employ. Many cities and states require a CDL license for tow truck drivers and all of your employees should be properly licensed before they make their first run.

how to start a towing business with a flatbed

Financing

If you plan to run a one-truck operation, financing may not be much of a problem. A traditional bank loan should be sufficient to cover the cost of one truck and related equipment.

But if your plan includes a fleet of tow trucks and flatbeds, you should consider your financing options carefully.  While there are plenty of financing options to choose from, be sure to work with a financing company that understands the trucking and towing business.

Your business history will help the lender to determine your qualifications for financing. If you’ve only been in business a short period of time, you should be prepared with either great credit or some collateral to help with financing.

The type of vehicle you are planning to purchase (or even lease) will also make a difference in your financing options. For example, in most cases it’s easier to finance a vehicle that’s less than 10 years old.

Be up front and open with your lender so they thoroughly understand your situation, your equipment needs, and your business’s cash flow. The cash flow for any business, especially a start-up or small business, is critical to maintaining operations and growing the business.

Carefully consider your operating costs when deciding how much you can afford to finance for your towing equipment. Look to your financing company to assist you in building a finance package with a payment schedule that fits your budget and profit goals.

Attracting Customers

Your business’s next challenge is finding customers and understanding the local towing market. Building your customer base depends as much on building relationships as it does on running a dependable towing service.

You can start by forming relationships with local repair facilities. Garages typically maintain partnerships with towing companies and the companies, in return, discount on their standard fee for the repeat business. Visit the garages in your area to establish yourself and your business.

Another good lead for repeat business is your local police department. You can get your business on the list of accident responders.

Contact the auto clubs in your area for additional towing opportunities.  The towing fees from these clubs may be lower than your typical rate, but it’s a good way to start building business.

Don’t forget the standard advertising options. An ad in the yellow pages, business cards, and your logo on the side of your truck go a long way in gaining direct paying customers. Set up a website where people can quickly find your business through a quick search.

Hiring Employees

For most people, this is the most daunting part of owning your own business. Hiring, supervising, and sometimes firing employees isn’t always easy, but it can be very rewarding to hire and manage a great team.

Finding employees with mechanical skills and towing experience probably won’t be too hard. But technical skills aren’t the only thing to look for. You should be looking for an employee who will represent you and the business well.

As you interview potential employees, imagine how your customers will respond to each of the candidates. Picture how the candidate will deal with customers stranded on the side of the road or how they will interact with the local auto repair shop owner.

Ask yourself: Does this candidate have the interpersonal skills to deal with people? Can this candidate talk mechanical issues in simple terms? How will the candidate represent your business?

Taking the time to do your homework will help you to start your own successful towing business. Check the licensing requirements, review your financing options, source your customers and hire great employees. You’ll be on your way to starting a towing business that will prosper.

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