Buying A Tow Truck Business
The tow truck business start up costs are higher than other business types, anywhere from $150,000 to over $1 million. This is due mostly to the initial investment in towing equipment. Here are some of the start up costs you can anticipate, as well as some of the recurring costs.
buying a tow truck business
One way to cut your tow truck business start up costs is to purchase equipment at a lower price point. Look for used tow trucks or something you can fix up if you have mechanical skills. Once your business starts to grow you can look for newer equipment that has the extra bells and whistles you want.
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Vehicles break down, are left stranded and are illegally parked every day. A tow truck business transports these vehicles to repair shops, impound lots and other locations as directed. Some tow truck businesses also offer emergency roadside assistance.
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your towing company . These steps will ensure that your new business is well planned out, registered properly and legally compliant.
The startup costs associated with opening a tow truck business are substantial, mainly because business owners must purchase a tow truck. Truck Paper lists tow trucks that are for sale, and they often sell for between $10,000 and $50,000.
Licensing fees are another major startup expense. In addition to paying for a Class B license, business owners often also need to obtain a permit from their state, and they may need other permits from local municipalities or highway departments. Business owners should check with their state and local city or county clerk office to find out what specific permits they need and how much they cost. They frequently are at least a few hundred dollars, and they can be much more.
The fixed ongoing expenses for a tow truck business include any licensing fees that must be renewed and insurance premiums. Variable costs include employee salaries, truck depreciation and repairs, and fuel.
Tow truck businesses receive calls from multiple outlets. Police departments, other municipal departments, individuals, motor clubs, repair shops, auto auction companies and property owners may all call a tow truck to move vehicles.
A tow truck business can diversify and increase its revenue by offering emergency roadside assistance. This usually includes providing emergency fuel deliveries, changing flat tires, offering jumpstarts and similar services.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
A tow truck business is always run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
Many tow truck businesses also seek out contracts with cities and towns, repair shops, apartment complexes and similar businesses. These contracts provide a more stable income stream than marketing towards individuals do.
Lots of companies also contract with automotive clubs, such as AAA. These clubs provide lots of business, but they often pay very little per tow. Businesses often start out relying on these contracts for calls, but successful businesses also look for other contracts that are more lucrative. WikiHow has a tutorial on how to become an AAA-contracted towing operator.
A tow truck can compete with other towing services by having fast response times. Individuals often want their vehicles towed quickly when they break down, and property owners want improperly parked cars removed from their property as quickly as possible. Providing speedy service keeps these customers happy.
Anyone who is mechanically inclined may be well-suited to start up a tow truck business. Towing vehicles is usually straightforward. Sometimes, however, hooking a damaged car up to a tow truck or extricating a car from a tight place can be challenging. A mechanically inclined mind can help in these situations.
A tow truck business owner spends most of his/her day driving to broken-down, stranded and improperly parked vehicles, hooking them up to the tow truck, transporting them to another location, and unhooking them from the tow truck. This work is almost entirely done outside, and the work must be done regardless of the weather.
A tow truck business owner must know how to -- and be legally licensed to -- operate a tow truck. In most states, tow truck drivers need a Class B license. A Class B license usually allows drivers to operate a vehicle weigh more than 26,000 pounds or a vehicle that is towing another vehicle that weighs 10,000 pounds or less.
For these reasons, many tow truck businesses hire at least additional drivers as soon as possible. Some owner-operators, however, elect to not hire employees despite the benefits that having additional drivers can provide.
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The main initial expense when opening a tow truck business is the truck itself. How much does it cost to buy a tow truck? The answer depends on the kind of vehicle you want and the current market. A new light-duty tow truck will be on the lower end of the spectrum, although still more than many used vehicles. On the high-end of the price range, an ultra-heavy-duty tractor-trailer can handle even the biggest towing jobs. You might choose to take out a mortgage, which lowers your initial costs and raises your monthly expenses.
A more affordable way to get your towing business up and running is to convert a pickup truck into a tow truck. You may already have a flatbed pickup, in which case all you need is a wheel lift. You can add a towing rig if desired. You can also consider buying a used pickup specifically for your towing business.
How much you can make owning a trucking company depends on the expenses you have. The more you can keep your upkeep costs in check, the more you can profit. Here are some of the ongoing monthly or yearly payments to consider:
Repairs can vary from month to month. You will have months when your truck requires little if any repairs and others when the costs will be higher. Still, you should budget money each month for repairs and preventive maintenance. Reserve a certain amount each month and save any leftover for more extensive repairs down the line. Contact some local repair shops to get current estimates for the most common repairs to get an idea of how much to earmark. You can cut down on repair costs by buying a newer truck with fewer miles on it.
While the amount can vary, your monthly marketing spending can help you maintain a strong presence on search engines and bring in steady business. If done right, marketing should cover itself and then some by bringing in new customers. Contact some marketers to see what kind of marketing investment you should be making.
Most tow truck companies charge by the mile with a base hookup fee. The average cost for towing services can vary by the company and the region. Many towing companies charge a base rate for the first few miles, then charge an additional cost per mile after that. You can also charge for roadside services like jumpstarts and tire services, which may vary depending on your area.
There are many ways you can increase your profits. One way is to build your business over time. After you pay off any loans or your truck mortgage and grow your customer base, you can begin making more money. As you gain a reputation within your market and earn great reviews online, you can justify charging higher rates. You might also be able to hire employees, allowing you to serve more customers each month. Diversifying your business to include emergency roadside assistance or impound services can also generate more income.
If you need a way to keep your tow truck business start-up costs low, check out the Lift and Tow Hidden Tow System. Our wheel lifts allow you to convert a pickup truck into a light-duty tow truck. We offer a variety of products made in the USA, including the Z Series hidden wheel lift, which is self-loading to complete towing or repo jobs without getting out of your car. We also offer expert installation and affordable financing to help tow truck business owners like you get started. 041b061a72