business plan for tow truck company

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How to Start a Tow Truck Business

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If you’re ready to learn how to start a business that is focused on cruising the roads, helping drivers in their time of need, and handling automobiles, then you might be ready to start a tow truck business.

Right now is the perfect time to join the tow truck industry: The automobile towing industry brought in $8 billion in revenue in 2019. This whopping figure proves that starting a towing business is possible and profitable, even in 2020.

If you’re ready to learn more, read on for how to start tow truck business in six steps.

Step 1: Write your business plan

Your business plan will serve as your guide to building a successful tow truck business. Also, it will be your key to securing a business loan , should you need it. Here are some areas to pay careful attention to when writing your business plan.

Consider which clients you want to serve

When you think of a tow truck, most will probably think about roadside assistance should you ever run into car troubles while driving. However, there are a variety of services you can offer and clients across several industries you can serve. Here are a few services and industries to consider:

Roadside assistance for the general public

Towing impounded vehicles

Towing services for the city

Auto repair shops

Law enforcement

Auction houses

Financial planning

Having a strong handle on your finances early on will prepare you for success down the road. Capital is what keeps your business up and running. Without it, you’ll quickly have to close your doors and shut down. Here are some steps to be mindful of when planning your finances:

Create a business budget

A carefully planned budget ensures that you have enough capital to afford overhead costs and expand your business. If your business is losing money, revisit your budget to see what costs you can reduce.

When creating a business budget for a towing business, here are some recurring expenses and startup costs that you’ll want to account for:

Licenses and permits

Purchasing tow truck(s)

Tow truck insurance

Employee salaries

Business insurance

Marketing expenses

Vehicle maintenance

Choose your equipment

Purchasing the right tow truck is probably the most costly but critical investment in your business. A new tow truck can cost $100,000 or more. However, you can save money by purchasing a used tow truck without sacrificing performance. Here are the various types of tow trucks you can expect to use for your business:

Flatbed trucks: This is the most commonly used towing vehicle. Its long, empty bed with a flat top makes it easy to move the towed vehicle in place and secure it onto the flatbed.

Integrated tow truck: These heavy-duty tow trucks are often equipped with extra axles for towing large vehicles, such as large trucks or buses.

Hook and chain tow truck: These tow trucks used to be popular before the flatbed truck took over. This type of tow truck is best suited for hauling wrecked vehicles to the junkyard.

Depending on what type of towing business you start, your equipment needs will vary. However, flatbed trucks are the most widely used and versatile type of tow truck. They should accommodate most situations you encounter when dealing with clients.

Separate your personal and business expenses

Neatly separating your personal and business assets is a must for any business owner. That’s why it’s recommended to open a business checking account . This extra step acts as a financial barrier that serves two useful purposes:

Taxes: When you’re reviewing your business expenditures for tax write-offs, you’ll find it easier when there’s a line drawn between your personal and business assets.

Personal liability: Should you form an LLC or corporation, you’ll need to separate your personal and business assets to enjoy your various personal liability protections. This protects your personal assets during any financial or legal disputes.

Opening a business bank account is just one way to distinguish your personal and business assets. Another tip is to open a business credit card , which you’ll use for all your business-related expenses.

Price your towing services

You’ll be making your revenue by charging your customers for towing vehicles. This charge includes a flat fee for the tow, a mileage fee, and sometimes a storage fee.

Many tow truck businesses price their services starting from $75 to $125. On top of this base cost, you can then charge between $2 and $4 for miles traveled when towing the car. If you’re keeping the vehicle within your custody for an extended time, you can also charge a storage fee for each night it's within your custody.

Step 2: Register your business

You’ll need to complete some important paperwork before you can open your doors for business. Registering your business with your state and local agencies will require you to complete the following steps:

Choose a business entity

The business entity that you choose will affect how you file your taxes and your risk exposure. We’ve narrowed down your options to the three most common ones:

Sole proprietorship: This business structure is the most simplistic and requires the least paperwork. Your personal and business taxes are filed together. However, this simplicity comes at a cost—you assume total liability (meaning both your personal and business assets are at risk). This may not be the best decision when working in an industry that’s exposed to a large degree of risk.

Limited liability company (LLC): LLCs can be formed as an individual or with multiple business partners. For tow truck businesses, this business structure is attractive because you enjoy some personal liability protection. During a legal dispute, you, the individual, are protected.

Corporation: If your goal is to aggressively grow your business to, for example, a nationwide brand, then forming a corporation may be for you. This independent entity shares many of the liability protections and tax perks that LLCs do and more. However, there is more paperwork involved, including writing bylaws and forming a board of directors.

Secure a unique business name

There are over 30 million businesses registered within the United States alone. A unique business name ensures that your business won’t be confused with other businesses. After you’ve found a business name that you’re satisfied with, confirm its availability with your secretary of state’s office and the U.S. Patent and Trademark Office .

Don’t forget to check if the domain name is available. Building an online presence is important for marketing purposes. Verify whether the domain name is available by using sites like Name.com or GoDaddy.com.

Register for an employer identification number

You’ll probably be hiring more drivers to expand your towing business. Before you do, you must register for an employer identification number (EIN) online with the IRS. This number is critical when filing your business taxes, applying for funding, and more.

Step 3: Secure startup funding

Securing startup capital is the catalyst that will manifest your business plan into reality. This is often necessary for starting a tow truck business because purchasing tow trucks can be a costly expense. Here are a few ways to secure the funding you need to kickstart your tow truck business:

Apply for a business loan

Checking with your bank is usually the first step for applying for a business loan. However, banks are often hesitant to work with new businesses that don’t have a history of profits. Fortunately, there are other options to consider, from online alternative lenders to SBA microloans that specifically target new entrepreneurs.

Another avenue to consider is a more specific type of financing. Your largest expenses will likely be your tow trucks, so you may want to explore commercial truck financing. This is essentially equipment financing , but specifically for trucks. In this case, your trucks will also serve as collateral for the loan, which could make them easier to qualify for, even if your financials aren’t perfect.

Self-finance your business

Also called bootstrapping, this route is for those who already possess the financial means to start their business. Self-financing requires financial discipline because you’ll be risking your personal cash reserves. Due to this, it’s advised that you spend extra time in the financial planning section of your business should you self-finance your business. However, this extra risk also carries the benefit of having full ownership of your business.

Friends and family

You also have the option to seek funding from your friends and family to help get your business off the ground. Keep in mind, even though this may feel informal, you’ll want to draw up formal paperwork to make sure both parties are on the same page as far as repayment terms. If your immediate network is tapped, you may also consider crowdfunding your business venture.

Step 4: Obtain licenses, permits, and business insurance

Operating a tow truck business requires you to register for certain licenses and permits. Be sure to check with your state’s Department of Transportation to confirm you’re complying with the necessary requirements. Generally, tow truck business owners will need to secure the following licenses and permits:

Indictment management permit to tow vehicles without consent when requested by law enforcement

Private property permit to tow vehicles without consent when requested by the parking facility owner

Consent to tow permit to tow vehicles with consent by the vehicle owner

Oversized vehicle permit to operate a tow truck that exceeds a certain weight load

Class B driver’s licenses to authorize drivers to operate a vehicle that weighs over 26,000 pounds or to tow another vehicle weighing 10,00 pounds or less

Purchase tow truck insurance

As you can imagine, operating a tow truck business exposes you and your drivers to various road-related risks and hazards. Purchasing insurance ensures that you’re covered during an unfortunate accident. There are various types of insurance to consider for your business:

Auto-liability insurance covers you when you’re at fault during an accident and must cover the other driver’s medical and property expenses.

Physical damage insurance covers any necessary repairs to your tow truck during an accident.

Comprehensive coverage is useful when your vehicle is damaged outside a collision, such as fire, theft, falling objects, or collision with an animal.

On-hook coverage is necessary for protecting you should any vehicles get damaged while hooked up to your tow truck.

Uninsured motorist insurance covers any injury to you or your passenger caused by a driver who doesn’t have insurance or during a hit-and-run incident.

Step 5: Promote your business

You’ve done the legwork to get your towing business off the ground, but now you need to find clients. After all, no clients mean no money for your business. Here are some tips for how to promote your business.

Rank for local SEO

Social media has revolutionized the marketing industry. However, tow truck business owners would likely see more returns if they invested in SEO over social media. Drivers are more likely to do a quick Google search for a tow truck rather than connect with your business through social media.

When optimizing your content for SEO, you’ll want to rank for terms specific to your area like “tow truck California” or “towing in Ohio.” You can even narrow your geographic region by county. When local residents are entering these search terms in Google, this increases your chances of getting found on the first page.

Also, make sure you complete online business profiles on sites like Google and Yelp to increase your chances of being found.

Become a AAA contractor

The American Auto Association is a nationally recognized brand for offering roadside assistance. You might be surprised to learn that many of the tow trucks they dispatch are local contractors.

There are many benefits to partnering with AAA. Many drivers are AAA members and use them as their dedicated roadside service provider. That means more business for you, should any of their members call in for help. Also, you boost your own reputation and credibility by association with this trusted brand. Visit your nearest AAA to inquire more about signing on as a contractor within their network.

Hire more employees

As your business grows, you’ll receive more requests for your services. To keep pace with demand, you can hire more employees and purchase more tow trucks. Also, consider creating a central dispatch office. All calls will be fielded by the dispatch office and those representatives will coordinate with tow truck drivers to execute the job. Training your call representatives in customer service will improve relations with your customers. Customer service, fast response times, and unbeatable service are marketing tools in and of themselves and will increase brand loyalty.

Step 6: Know your responsibilities as an employer

The early stages of starting a tow truck business can feel overwhelming. Before hiring staff, you’ll probably assume several responsibilities, such as answering phones, driving to the client’s location, marketing, and balancing the books.

If you hire employees, you’ll want to research the OSHA Employer Responsibilities to ensure that you’re complying with your obligations as an employer. Some key points to consider are:

Posting the employee’s rights and responsibilities in plain view (especially important if you open a central dispatch office)

Provide safety training using clear language and vocabulary

Confirming that all your tow truck drivers are properly trained and have Class B Driver’s Licenses

Keeping tidy records of work-related injuries and illnesses

Final thoughts

Starting a towing business is doable, but requires some grit and dedication on your part. Don’t be afraid to spend extra time writing your business plan. It will guide you to success and will help you secure startup funding—especially when it’s time to buy your tow trucks. If you follow these steps, secure the necessary startup funding, and have a love for servicing your clients, you'll maximize your tow truck business's chance of success.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Towing Business

Back to All Business Ideas

How to Start a Towing Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on October 14, 2021 Updated on October 22, 2023

Investment range

$18,000 - $66,000

Revenue potential

$60,000 - $89,000 p.a.

Time to build

0 - 3 months

Profit potential

$40,000 - $62,000 p.a.

Industry trend

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We like to be on the move, zipping here and there, but the sad truth is that cars do sometimes break down. That’s why vehicle towing in the US is an $11 billion industry. It’s also a growth market, so if you enjoy driving and helping people out of tight spots, you could start a towing business, be your own boss, and grab a slice of this massive market. 

Starting any kind of business, however, takes a lot of work. The key is to obtain the right knowledge and avoid all the usual mistakes. Thankfully, you’ve come to the right place, as this step-by-step guide lays out all you need to know to launch a successful towing business.

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Starting a towing business requires time and effort. You need to fully understand what is involved before you decide if it’s right for you. 

Pros and cons

• Fast and easy to start; no expertise required
• Flexibility — can start from home
• Cars break down, so demand is constant
• Trucks are expensive, which may hinder growth
• Need to be available around the clock

Towing industry trends

As the pandemic recedes, people are sure to be moving about more, which means more vehicle breakdowns and greater demand for towing. All of this means there is a great deal of opportunity for the entrepreneur. 

Industry size and growth

• Industry size and past growth – The US automobile towing industry is worth $11 billion in 2022, after growing more than 5% annually over the past five years.(( https://www.ibisworld.com/industry-statistics/market-size/automobile-towing-united-states/ ))  
• Growth forecast – The global towing market is projected to grow 4% annually through 2024.(( https://www.researchandmarkets.com/reports/4835374/global-towing-vehicle-market-forecasts-from )) 
• Number of businesses – There are 47,000 towing businesses in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/automobile-towing-united-states/ )) 
• Number of people employed – The industry employs nearly 114,000 people.(( https://www.ibisworld.com/industry-statistics/employment/automobile-towing-united-states/ ))

Trends and challenges

Trends in the towing industry include:

• Higher probability of car accidents as more people return to onsite work
• Advanced safety features in new cars

Challenges in the towing industry include:

• Risk of accidents and injuries
• Bad weather

What kind of people work as tow truck driver?

• Gender – 96% of all tow truck drivers employed in the US are male, while 4% are female.(( https://www.zippia.com/tow-truck-driver-jobs/demographics/#gender-statistics ))
• Average level of education – The most common degree for tow truck drivers is high school diploma with 57% graduates(( https://www.zippia.com/tow-truck-driver-jobs/education/ ))
• Average age – The average age of a tow truck driver is 48 years old.(( https://www.zippia.com/tow-truck-driver-jobs/demographics/#age-statistics ))

How much does it cost to start a towing business?

Starting a towing business costs between $18,000 and $66,000, averaging about $42,000.

The largest is of course the tow truck itself. A new tow truck will run you about $100,000, which means the down payment could be $20,000. But you might be able to find a used truck for $25,000, and pay half that amount upfront to take the keys. You might want to pay a visit to the Truck Paper . 

While it may not be absolutely necessary, getting your commercial driver’s license (CDL) is a good idea when starting a towing business, as you might at some point cross the weight threshold (26,000 pounds). Check with your state for details. You will also need to gain Light Duty certification from the Towing and Recovery Association of America, which requires at least 90 days of tow truck experience. 

How much can you earn from a towing business?

The average cost per tow service is about $95, and after your expenses, of fuel, insurance, and marketing, you should have a profit margin of 70%. 

In your first your or two working as a solopreneur, you might respond to two service calls per day for six days a week. This would give you about $60,000 in annual revenue and a profit of more than $40,000. 

As your business gains recognition, you can expect to get three service calls per day, giving you annual revenue of $89,000 and a profit of nearly $62,000. At that point, you could save up, add another truck or two to your fleet and start making serious money. 

What barriers to entry are there?

The biggest barrier to entry is financing, particularly the buying of a truck, along with maintenance. You will also pay a high insurance premium every year to protect your assets from accidental damage and theft. 

Another barrier to entry is the stringent regulations, as you may need a permit from the state as well as your CDL and towing certification. This will require significant training and experience. 

The competition is also fierce in the towing industry as all businesses offer the same services and most will have more experience than your startup.

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Step 2: hone your idea.

Now that you know what’s involved in starting a towing business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research towing businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a towing service that offers a mobile app. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as partnering with taxi and limousine services.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your products or services

Vehicles break down at unexpected times. It may happen during your road trip or commute to work as well as in the parking lot or in your garage. You may also get involved in a road accident. You can’t do anything except call a towing company to come to your aid.

Towing companies use different types of trucks depending upon what and how they need to tow. The following are four common types of trucks and their common uses:

• Flatbed Tow Trucks — These trucks are very common in the tow industry. They carry a long, flat, empty, and hydraulic bed on their back. A ramp is used to move up the vehicle on the bed.
• Boom Trucks — Unlike conventional but unsafe hook and chain tows, boom trucks use slings or belt lifts to tow a car which is much safer. They have a telescopic crane fixed on a commercial truck chassis which is called a “boom”. Boom trucks use outriggers to stabilize the body while the crane lifts the vehicle.
• Integrated Tow Truck — These trucks are designed for heavy-duty towing as they are self-loaders that are capable and stable. These are often used to tow buses. They are also used for repossessions.
• Wheel-Lift Tow Truck — These trucks are equipped with a metal yoke which is used to hoist the rear or front wheels of the towed car. They also use a hydraulic system to ensure safe carriage of towed vehicles on a bumpy surface.

While the main service of a tow company is to move a vehicle from point A to point B, some businesses offer roadside assistance to maximize their revenue. These emergency roadside services include:

• Dead batteries
• Empty gas tanks
• Other quick repairs

How much should you charge for towing services?

Tow truck service charges range between $2 and $4 per mile, depending upon your location. The average cost per tow is about $100, but can vary widely. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

You will mainly get calls from people who get into road emergencies and need to tow their vehicle to the nearest auto repair shop. You should also expect to get calls from the local police department, car clubs, service stations, auto auctions, and property owners to tow and move a vehicle. You could reach out to all these organizations and let them know of your services, and you could also contact hotels and other tourist accommodations, and look for related businesses on LinkedIn and Google Maps. 

Where? Choose your business premises

In the early stage of business development, you may want to operate your business from home to help you keep your overhead expenses in check. But as your business grows and operations intensify, you will hire workers for various job roles and may need to rent out a shop or office. 

You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices . When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Towing Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “towing” or “car towing”, boosts SEO
• Name should allow for expansion, for ex: “Rapid Response Towing Services” over “Junk Car Removal Solutions”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Tow Truck Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis .
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to towing. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your towing business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans : This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans : The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants : A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital : Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Friends and Family : Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding : Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal : Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a towing business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Licenses/Permits

To run a tow truck business, you need to comply with a number of local, state, and federal regulations. Below are some of the licenses and permits that you’ll need to operate your towing business:

• You may need to get a permit from the local municipality, state, and even from the highway department. Check with the relevant authorities to find out what permits you need to run a towing business.
• The truck driver will most likely need to obtain a Class B driving license , giving legal permission to drive a vehicle weighing 26,000 pounds or heavier or tow another vehicle that weighs 10,000 pounds or less.
• Private property permit will be needed if you are towing an illegally parked vehicle without the owner’s consent.
• Indictment management permit will be needed to tow a vehicle without its owner’s consent at the request of law enforcement authorities.
• Consent to tow permit will be needed to tow a vehicle with the consent of its owner.
• Oversized vehicle permit will be needed if you occasionally tow a vehicle exceeding the permitted weight.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your towing business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to consider using AutoRepair Cloud , TowManager , and MedinyX to easily communicate with customers, manage and keep track of inventory, allow customers to track the repair process, send quotes and invoices to customers, and more. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like  WordPress ,  Wix , or  Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.

Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Call Now”. This can sharply increase the number of customers.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

• Signage – Put up eye-catching signage at your store and website. 
• Flyering – Distribute flyers in your neighborhood and at industry events. 
• Post a video – Post a video about your towing service. Use humor and maybe it will go viral!
• Seek out referrals – Offer incentives to generate customer referrals to new clients. 
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Testimonials – Share customer testimonials about how your towing service helped them.
• Create infographics – Post infographics and include them in your content.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your towing service meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your towing business could be: 

• Fast towing, 24/7
• We offer towing and much more! 
• Full-service towing for your luxury car 

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a towing business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as a towing truck operator for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in towing. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business. 

Step 12: Build Your Team

You may not need to hire any employees if you are starting out small from a home-based office. But as your business grows, you will likely need to recruit full-time employees for various job roles, such as:

• Marketing Lead
• General Manager

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Towing Business – Start Making Money!

Roadside assistance service provider Agero says almost 70 million vehicles break down in the US each year, costing the economy more than $40 billion and posing road hazards that sometimes lead to fatal accidents. By starting a towing business, you would be clearing the roads of these traffic hazards and helping your community while earning good money at the same time. 

You’ll have to be mindful of the risks and make sure you have safety systems in place. Now that you’ve done all your business homework, it’s time to hit the road to entrepreneurship and start your towing business! 

• Towing Business FAQs

A towing business can offer emergency roadside assistance, vehicle recovery, long-distance towing, heavy-duty towing, motorcycle towing, and vehicle transportation services. Additional services may include battery jump-starts, tire changes, lockout assistance, and fuel delivery.

The tow truck business is indeed profitable. You can expect to make around $40,000 in annual net profit as a solopreneur. However, starting a towing business will require a sizable investment since buying a tow truck could be extremely expensive. Given this, the return on investment may be low as compared to alternate business options that you may consider before pursuing this business venture.

Buying a tow truck is regarded as a safe investment because it has great resale value. If your towing business is underperforming and you have decided to shut your operations, your business will undergo liquidation. The tow trucks will be sold in the second-hand truck market and a major chunk of investment will be easily recovered if the trucks are in good condition.

The insurance premium may range between 2% to 3%, but it will vary greatly depending upon your truck value, condition, location and insurance company. You may expect to incur $100 to $500 per month on tow truck insurance.

Based on job listings on Indeed , the top five states where truck drivers get paid the most are given below:

• Philadelphia, PA
• Chicago, IL
• Las Vegas, NV
• Fort Worth, TX
• San Diego, CA

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Towing Company Name
• Create a Tow Truck Business Plan
• Register your Business
• Register for Taxes
• Fund Your Business
• Apply for Licenses/Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Towing Business - Start Making Money!

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BUSINESS STRATEGIES

How to create a tow truck business plan

• Nirit Braun

When starting a business in the towing industry, crafting a well-structured business plan is akin to having a reliable GPS system—it's indispensable. A tow truck business plan acts as a guiding compass, outlining the goals, objectives, strategies and financial projections for your tow truck company. Keep reading to learn the ins and outs of mapping out your business plan.

Looking to promote your business online by building a website ? Test drive Wix's website builder .

Why create a tow truck business plan? Top benefits to consider

When you're in the tow truck business, a well-structured business plan packs a punch, offering a perks like:

Raising capital with confidence : Your business plan becomes your persuasive ally when approaching investors or lenders. It serves as a detailed pitch, laying out your business's value proposition, target market, competitive analysis and financial projections. This comprehensive information helps potential backers assess the potential return on investment, increasing your chances of raise money for your business .

Strategic resource allocation: Your plan prompts you to rigorously assess the resources, supplies and equipment essential for the effective launch of your tow truck business. It assists in determining the appropriate number and types of tow trucks, as well as the tools and safety equipment required. By identifying these needs, your plan ensures that your business begins with the right infrastructure to deliver reliable services.

Building a skilled team: Your plan outlines key roles—such as drivers, dispatchers, mechanics and administrative staff—specifying the qualifications and expertise needed for each position. This clarity streamlines the recruitment process and ensures that your business assembles a skilled team ready to provide top-quality service.

Preparing for challenges: In the tow truck business, surprises are inevitable. Your business plan helps you spot potential curveballs like vehicle breakdowns, accidents or shifts in market demand. You'll be prepared with contingency plans, bolstering your business's resilience.

Competitive edge: Your plan dives deep into the tow truck market, revealing customer needs and identifying competitors. Armed with this knowledge, you can find ways to stand out, whether through unique services or strategic pricing, giving your business a competitive edge.

Financial clarity: Financial projections within your business plan provide a clear picture of anticipated revenue, expenses and profitability. This information helps you evaluate the financial feasibility of your business, make informed decisions and set achievable growth goals.

How to write a tow truck business plan in 6 steps

In the following sections, we’ll guide you through six essential steps to craft an effective tow truck business plan that sets you on the path to achieving your entrepreneurial goals.

Executive summary

Company and domain names

Market analysis and research

Operations plan

Marketing and advertising plan

Financial plan

01. Executive summary

The executive summary is a concise overview of your tow truck business plan, providing a snapshot of the key elements and goals of your business. It's usually the first section of the business plan and serves as a compelling introduction to capture the reader's attention. For a tow truck business, your executive summary should succinctly outline the purpose of your business, your unique value proposition, target market and your financial projections. It should also convey your business's mission and goals in a compelling manner.

02. Company and domain names

Picking the right business name is crucial for building brand awareness and trust within the towing industry. A memorable and descriptive name can resonate with customers and convey your business's essence. Consider utilizing business name generators to brainstorm creative options that align with your services and values.

Be inspired: Trucking business names

When choosing a domain name for your website, aim for simplicity and relevance. The domain name should ideally match or closely relate to your company name. Conduct thorough checks to ensure the domain name is available and doesn't infringe on trademarks. A clear, easy-to-remember domain name enhances your online presence and makes it easier for potential customers to find you.

Remember to register your business once you've landed on the right company name and legal structure.

03. Market analysis and research

The market analysis section of your tow truck business plan delves into the competitive landscape of the towing industry. Conduct thorough research to understand market trends, customer preferences, and your competitors' strengths and weaknesses. Identify your target market and analyze their needs, ensuring that your services align with their expectations.

Effective market research allows you to develop a strategic business approach that highlights your competitive advantages. This insight helps you tailor your services, pricing, and marketing strategies to stand out in a crowded market.

04. Operations plan

The operations plan outlines the practical aspects of running your tow truck business. It includes details about your business location, facilities, equipment and staffing requirements. Specify the number and types of tow trucks you'll need, along with any specialized equipment for efficient service delivery.

Determine the optimal location for your business, considering factors such as proximity to high-traffic areas and accessibility. Outline staffing needs (including drivers, dispatchers, mechanics and administrative staff), highlighting the qualifications and roles required for each position.

05. Marketing and advertising plan

The marketing and advertising plan outlines the strategies and campaigns you'll employ to promote your tow truck business. Focus on a mix of online and offline marketing efforts to reach your target audience effectively.

Online strategies may include making a business website , utilizing social media platforms for engagement and employing search engine optimization (SEO) techniques to increase your online visibility. Offline efforts could involve partnerships with local auto repair shops, distributing flyers and participating in community events.

06. Financial plan

The financial plan is a crucial component of your tow truck business plan. It details your startup costs, projected income, expenses and profitability timelines. Determine your initial funding sources, whether through personal savings, loans or investments. Include estimates for vehicle acquisition, equipment, employee salaries, maintenance and marketing expenses.

Develop realistic financial projections for the first few years of operation, factoring in things like seasonal fluctuations, competition and market growth. Your financial plan demonstrates your understanding of the financial aspects of your business and helps potential investors assess the viability of your venture.

Example of a tow truck business plan

Here’s a draft of a business plan template for hypothetical tow truck business. Keep in mind that this is a simplified template and you can modify and expand it according to your specific needs and ideas.

TowPro Towing Solutions business plan

Part 1: executive summary

TowPro Towing Solutions is dedicated to offering top-tier towing services to the urban and suburban regions of Crescent City. With a focus on prompt, professional and reliable assistance, we aim to redefine the towing experience for stranded motorists. Our fleet of advanced tow trucks, operated by experienced professionals, will set new standards in the industry.

At TowPro, our core values center around customer satisfaction, safety and efficiency. By providing unparalleled service, we strive to become the preferred choice for towing needs in Crescent City and surrounding areas. Our comprehensive business plan outlines our strategy for success and sustainable growth.

Part 2: company and domain names

We've chosen the name "TowPro Towing Solutions" to reflect our expertise and commitment to professionalism. Our domain name, www.TowProSolutions.com, complements our brand identity and ensures easy online access for our customers.

Part 3: marketing analysis and research

Our extensive market research has highlighted a consistent demand for dependable towing services in Crescent City due to its busy roadways and high incidence of breakdowns. TowPro aims to address this demand by offering specialized towing solutions that cater to various vehicle types and situations.

Through competitive analysis, we've identified a need for exceptional customer service and transparency within the towing industry. By emphasizing these aspects, TowPro seeks to differentiate itself from competitors and build lasting relationships with clients.

Part 4: operations plan

TowPro's operational hub will be strategically located to cover Crescent City and neighboring areas efficiently. Our fleet will comprise a variety of tow trucks, including flatbeds and wheel-lifts, to cater to different vehicle sizes and towing requirements. A team of well-trained drivers, dispatchers, mechanics and administrative staff will ensure smooth operations around the clock.

Part 5: marketing and advertising plan

Our marketing strategy combines online and offline tactics to build brand awareness and reach our target audience effectively. A user-friendly website will showcase our services, rates and contact information, making it easy for customers to engage with us. Social media platforms will be leveraged for engagement, customer interaction and advertising campaigns.

We'll also collaborate with local auto repair shops and insurance agencies to establish referral partnerships. Additionally, community engagement through sponsorships of local events and participation in safety workshops will contribute to our reputation as a reliable towing service.

Part 6: financial plan

The financial plan outlines the initial investment required to launch TowPro Towing Solutions, covering vehicle procurement, equipment, staffing and marketing expenses. We anticipate an initial funding of $200,000 through a mix of personal savings and a small business loan.

Based on thorough financial projections, we expect to achieve profitability within the first two years. Our revenue forecast considers factors such as service demand, competition and market trends—while our expense estimates encompass all operational costs, allowing us to make informed decisions about pricing and resource allocation.

TowPro Towing Solutions is poised to make a significant impact in the towing industry by providing exceptional services in Crescent City. With a comprehensive business plan in place, we are confident in our ability to offer timely assistance, build strong customer relationships and establish TowPro as a trusted and dependable towing partner.

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The Complete Guide on How to Start a Tow Truck Business in 2023

• Last Updated: October 18, 2023

• Establishing a tow truck business requires securing the required permits, insurance, and licenses in addition to adhering to safety and environmental regulations.
• Efficiency and service quality can be increased by spending money on dependable, well-maintained tow vehicles as well as specialized equipment and gear.
• Providing extra services like tire replacements, jump starts, and roadside assistance can increase customer satisfaction and provide new revenue streams.
• Accounting and tax reporting can be made easier and compliance with requirements can be ensured by maintaining correct records and paperwork, such as tow logs and invoices

Do you want to know how to start a tow truck company? Do you wish to start your own business but don’t know where to start? 

You’ve come to the right place.

The tow truck industry is rife with opportunities. The automobile towing industry in the United States is worth $11.3 billion and is expected to grow by 2.9% by 2022. This staggering figure shows that starting a tow truck business is feasible and profitable.

This article will help you with everything you need to know about starting your own tow truck company. We’ll go over the various towing services you can offer in your small business and the steps you need to take to start a successful tow truck company.

Start your engines because we’ll pull out valuable information to help you start a successful towing business .

Table of Content

• Why Start a Towing Business?

Things to Know Before You Start a Towing Company

• How to Start a Tow Truck Business in 10 steps

Know How Upper Route Planner Helps Your Tow Truck Business Become More Profitable

Why start a towing business .

A towing company may be the way to go if you want to start a business that provides stability and little stress or excitement. Also, the towing business provides you with the following benefits.

1. High-profit margins

Starting a towing business offers the potential for strong profit margins. On average, tow truck businesses typically see net profit margins in the range of 10% to 15%. However, it’s essential to recognize that these figures are estimates, and the actual profit margins can vary based on the unique circumstances of each business.

In some cases, astute business owners have achieved remarkable profit margins, reaching as high as 70%. This substantial profit potential is one of the compelling reasons to consider launching a towing business.

2. You are your boss

You are responsible for almost all operations when you purchase a towing truck. Making decisions can be both empowering and liberating.

3. You have a good eye for mechanics

While a tow truck operator may not have to repair the vehicles they tow, understanding mechanics can help you identify automotive issues and advise customers. Furthermore, if something goes wrong with a truck, you might be able to fix it yourself.

4. You thrive in high-stress scenarios

You will almost certainly encounter many uncooperative vehicle owners who argue and become aggressive when you attempt to tow their vehicle, even if you are following the law. But, if you know how to handle these stressful situations well, you are suited to the towing industry.

5. It is highly scalable

Your company will always need new services, features, and products, with businesses and processes evolving daily. Furthermore, you can implement various business models and pricing tiers to reach a wide range of customers.

Before we dive deep into the steps, you need to start a towing and recovery business. There are a couple of things that you should be aware of.

Do you need the experience to start a towing business?

No, even with no experience, you can start a towing company.

However, you will need to learn a few things, such as the mechanics of your truck, how to drive with a huge load, and how to load vehicles onto your tow truck to avoid damaging your client’s property.

What are the different types of towing businesses?

There are many different types of towing, just as there are thousands of different types of vehicles on the road. Most of these involve transporting vehicles from where they broke down to the workshop, but others are a little more unique.

The most common types of towing companies are:

1. Light duty towing services

These services are appropriate for most small cars, motorcycles, vans, and light commercial vehicles.

2. Medium duty towing services

It involves trailer and horse box towing.

3. Heavy duty towing services

It involves towing commercial vehicles, up-righting rolled-over trucks, load shifts, etc.

4. Transportation services

It involves the transportation of compressors, generators, construction equipment, etc.

How to get your tow driver ID?

A Tow Driver ID is required to start a towing business and drive a tow truck yourself.

To get a Tow Driver ID in the United States, you’ll need the following qualifications:

• 18 years of age or older.
• A commercial driver’s license.
• A perfect driving record.
• In the previous three years, no more than three accidents occurred within a year.
• No DUIs in the last five years.
• No more than one DUI in the previous ten years.
• Conversational English is required.

Based on your location, exceptions and more specific criteria may apply to these rules. The main goal of these stringent guidelines is to ensure that only trustworthy individuals operate tow trucks and handle vehicles. Additionally, ensuring your dispatch office and parking facility meet required guidelines adds to a more secure and reliable towing service.

Uplevel Your Truck Towing Operations with Upper

Want to perform your truck towing responsibilities in an efficient manner? Upper is here to reduce hassles in route optimization so you can reach your destinations on time.

10 Steps to Start a Towing Business

A towing company is a profitable and evergreen venture that cannot be affected by the recession. However, getting started necessitates preparation. Let’s detail the steps you need to know before you start your towing business.

Step 1: Choose the towing service you want to provide

Starting a towing business is simply the initial step; you must also decide what type of towing business you want to open. Tow truck companies are classified into two types: retail towing, also known as consensual towing, and non-consensual towing .

• Consensual towing is when a company offers roadside assistance to a customer whose vehicle has broken down or been damaged in an accident.
• Non-consensual towing companies work with private property owners and law enforcement to tow vehicles illegally parked or otherwise in violation of the law. 

However, non-consensual towing companies face their own challenges, such as belligerent, uncooperative vehicle owners and strict local regulations governing where and how long vehicles can be impounded. Non-consensual towing company owners spend a lot of time in court, but they rarely lose cases.

Therefore, understanding the dynamics of each type of towing and taking into account your actual location is essential before starting your business venture.

Step 2: Make a business plan

Every successful company begins with a good idea and a solid plan to back it up. Writing a towing business plan may appear daunting, but it simply entails getting your ideas out of your head and onto paper.

You’ll need to decide what type of towing services your company will provide and who will receive them. Business expenses also play a crucial role in your planning.

Will you do all the towing yourself, or will you have a team of tow truck drivers working for you? 

Making these decisions early on will assist you in determining the structure of your towing business.

In addition, you should figure out your business budget and choice of location. You should know how much you will spend on a truck and other startup expenses for your company. 

While business planning do consider insurance, marketing, and branding materials. Also determine how much you will need to charge for your business to be profitable. 

Will you charge flat rates or by the hour? 

It’s a good idea to develop specific processes for your tow truck business at this point. For example, you should write down the steps you’ll take every time you go out on a call, from when your phone rings until you deliver the vehicle to its final destination.

Step 3: Register your business

You must first complete some important paperwork before you can open your doors for business. To register your company with state and local agencies, you must choose the business legal entity that will influence how you file your business taxes and risk exposure. This decision also plays a crucial role in establishing your business name and brand identity in the market.

We’ve narrowed it to the two most common:

Limited liability company

Limited Liability Company (LLC) can be formed as a single entity or with several business partners. This business structure appeals to tow truck companies because it provides some personal liability protection. You, the individual, are protected during a legal dispute.

Corporation

Forming a corporation may be the way to go if you want to grow your business into a national brand. This independent business entity enjoys many of the same liability protections and tax advantages as LLCs and others. However, more paperwork is required, such as creating bylaws and forming a board of directors.

You will also require liability insurance and business insurance. You can consult with a lawyer to determine what type of liability insurance you need and how to structure your contracts to protect yourself if a vehicle towed by your company is damaged.

Accidents happen, but accidents involving something with a monetary value, such as a vehicle, can be extremely costly to your company. Ensure you have adequate insurance not to cost your company a fortune if something goes wrong.

Step 4: Open a bank account and register for EIN

After registering your towing business, you should apply for an employer identification number (EIN), which is essentially a tax identification number, on the IRS website. Your EIN allows you to open a business bank account on behalf of your new towing company.

Open a bank account with a debit card and charge all business expenses. This includes towing vehicles, equipment, gasoline, tow truck insurance, truck financing, and anything else required to perform your duties.

Business accounts will keep your tow truck business finances separate from your personal finances. This will help to avoid tax headaches and build business credit. Business credit helps to qualify for credit cards and other lines of credit. 

Step 5: Obtain licenses and permits

To operate a towing and recovery business, you must obtain the necessary licenses and permits. Check with your state’s Department of Transportation to ensure you meet all requirements for the business license. Business owners need to check with their state and local city county clerk office to check for specific permits. 

Tow truck vehicle owner will typically need to obtain the following company license and permits:

• Indictment management permit 
• Private property permit
• Consent to tow permit 
• Oversized vehicle permit
• Overweight vehicle permit
• Class B driver’s licenses

Step 6: Purchase a tow truck

To provide towing services, you’ll need to purchase a tow truck. As it will be your most expensive purchase so you can go for business loans. Depending on the model, the tow truck cost will likely range between $40,000 and $100,000.

The type of tow truck you purchase will determine the services your company can provide. You won’t be able to transport an oversized load, such as a standard-sized vehicle, with a truck designed for regular vehicles.

Here are various types of tow trucks you can choose for your business:

• Flatbed trucks
• Tow truck for oversized loads
• Tow trucks with wheel lifts
• Tow trucks with hooks and chains

Step 7: Look for a route planner 

Fast response times enable a tow truck to compete with other towing services. Individuals frequently want their vehicles towed as soon as possible when they break down, and property owners want improperly parked cars removed as soon as possible. Providing prompt service keeps these customers satisfied.

However, manually planning routes is time-consuming, and this method results in going on fixed routes with no real-time data about the current condition.

Route planning strategies are essential if a company wants to reduce all unnecessary overhead  costs.

Avoiding route planning hurts both performance and fleet management.

Therefore, it is preferable to use intelligent route planning software to find efficient routes.

Step 8: Identify your target market

With the legal issues settled, it’s time to move on to the fun part: determining your company’s target audience.

Regarding towing, you should decide whether you want to go the B2B or B2C route. B2B is an abbreviation for “business to business,” meaning you’ll serve other businesses. B2C implies that you will serve customers directly.

Making this difference from the start will help you with everything you do for your tow truck business in the future.

What types of businesses will you serve if you do? 

Will they be roadside assistance companies like AAA, or will they be local garages and auto repair shops?

For heavy load towing, your company could specialize in moving manufactured homes and equipment, so your target audience would be builders or construction companies.

And on the consumer side, you could tow vehicles for people who have a breakdown and prefer to take their car home rather than to the shop.

Determine who your company will serve, and then create a more specific ideal client profile.

Step 9: Build your brand

Establishing your brand will be a piece of cake once you’ve identified your target audience.

Your brand’s visual elements will include your website’s logo, fonts, color palette, business cards, pamphlets, and other marketing materials.

The ultimate goal is to create a brand that connects with members of your community and fosters brand loyalty. You want your brand to be the first thing that comes to mind when someone needs a tow truck.

Step 10: Promote your business

Consider how you will publicize your business. Here are some marketing suggestions for your tow truck business to reach their potential customers:

Create a website

Create a website that includes an online request a quote or booking form, as well as a list of your services, experience, and relevant licenses and permits. Make sure your website is optimised for search  engines, this will ensure your site ranks high when someone searches for two truck services. Finally, make sure your website is designed for both desktop and mobile users.

Create an account on social handles

Establish business pages and accounts on Yelp, Facebook, Google my Business, and Twitter for online presence where you can share updates, news, images, and reviews.

Spend your marketing budget on advertisements in local newspapers, online forums, radio, and highway billboards. Print flyers and business cards and hand them out to local businesses.

Upper is now used by most tow truck businesses to streamline routes for truck drivers. Business owners want to save money and time by developing automated routes.

Manual route planning was difficult to follow, resulting in increased fuel costs, slow services, vehicle maintenance costs, and poor customer feedback.

So, we introduced one of the best route planning software to assist businesses in addressing these issues.

You will not only be following a well-optimized route with Upper Route Planner, but you will also have customer details and their location readily available on the portal.

Why not try us out for a 7 days free trial? You will have full access to our features, which you can use in your towing business. Check to see if it helps you save money and time.

Find Efficient Routes for Your Tow Trucks

Don’t spend too much time manually planning routes, instead use Upper Route Planner. Import your delivery information, plan and optimize routes within just a few seconds.

A flatbed truck is a large truck with a flat body that lacks sides and a roof that surrounds the bed. These trucks are typically used to transport large loads that will not be damaged by inclement weather or rough roads. Their unique bed design is ideal for loads too large for an enclosed-body truck.

A tow truck driver earns between $43,544 and $71,789 per year, with a median wage of $56,074. There are strict salary regulations, so make sure they qualify because misclassifying someone as a salary can be costly.

Towing professionals offer a wide range of towing services under emergency roadside assistance. If a customer runs out of gas, they can rely on your experts to provide gas services to refill the tank, or if they need assistance with deflated tires, your towing providers will replace the tire or re-inflate, depending on the situation.

Physical damage refers to a group of insurance policies that protect your vehicle. This broad term encompasses collision insurance as well as the option of purchasing full comprehensive insurance or the more limited fire and theft with Combined Additional Coverage (CAC) insurance.

Starting a towing business is doable, but it will take some grit and dedication on your part to make it successful. Don’t be afraid to devote extra time to developing your business plan. It will help you succeed and secure startup funding, especially when purchasing your tow trucks.

You’ll increase your tow truck business’s chances of success if you follow these steps, secure the necessary startup funding, and have a passion for serving your customers.

Alongside, you require quick route options that streamline your towing business, and Upper Route Planner is the best option to save time and increase productivity for your operations.

To experience the transformation, sign up for a free 7 days trial.

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.

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How To Write a Winning Tow Truck Business Plan plus Template

Creating a business plan is essential for any business, but it can be especially helpful for tow truck businesses who want to improve their strategy and/or raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every tow truck business owner should include in their business plan.

Download the Ultimate Business Plan Template

What is a Tow Truck Business Plan?

A tow truck business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Tow Truck Business Plan?

A tow truck business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Tow Truck Business Plan

The following are the key components of a successful tow truck business plan:

Executive Summary

The executive summary of a tow truck business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your tow truck company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your tow truck business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your tow truck firm, mention this.

Industry Analysis

The industry or market analysis is an important component of a tow truck business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the tow truck industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a tow truck business’ customers may include:

• Local businesses with a fleet of vehicles
• Individuals who own one or more vehicles
• Auto body shops and auto mechanics
• Car dealerships

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or tow truck services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, launch a direct mail campaign. Or you may promote your tow truck business via word-of-mouth marketing.

Operations Plan

This part of your tow truck business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a tow truck business include reaching $X in sales. Other examples include expanding to new markets or launching new services.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific tow truck industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Tow Truck Company

Balance sheet.

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Tow Truck Company

Cash flow statement.

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:

• Cash Flow From Operations
• Cash Flow From Investments
• Cash Flow From Financing

Below is a sample of a projected cash flow statement for a startup tow truck business.

Sample Cash Flow Statement for a Startup Tow Truck Company

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your tow truck company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

A business plan is not a static document but should be updated as your tow truck company grows and changes. Review and revise your business plan regularly to ensure it remains relevant and accurate, especially if you plan to attract investors.  

Finish Your Business Plan in 1 Day!

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Tow Truck Business Plan

It was 1916 when the first tow truck was invented, and towing industry has only grown since then. So starting a towing company can indeed be an attractive and profitable business endeavor.

Starting and managing a tow truck business can be challenging, but a solid business strategy and a well-thought-out business plan will help you succeed.

Need help writing a business plan for your tow truck business? You’re at the right place. Our tow truck business plan template will help you get started.

Free Business Plan Template

Download our Free Business Plan Template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write a Tow Truck Business Plan?

Writing a tow truck business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your business:

• This section may include the name of your tow truck business, its location, when it was founded, the type of tow truck business (E.g., light-duty towing, medium-duty towing, heavy-duty towing.), etc.

Market opportunity:

Product and services:.

• For instance, your towing services may include, towing services, vehicle recovery, transport service, roadside assistance, and salvage services.

Marketing & sales strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business description:

• Light-duty towing
• Medium-duty towing
• Heavy-duty towing
• Describe the legal structure of your towing company, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.

Mission statement:

Business history:, future goal:.

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

• For instance, a towing company may target commercial business owners, municipalities, law enforcement agencies, and insurance companies that require towing assistance.

Market size and growth potential:

Competitive analysis :, market trends:.

• For instance, safety is a top concern in the transportation industry, so explain how you deal with this concern. This may include focusing on safety measures, such as driver training, safety equipment, and accident prevention.

Regulatory environment:

Here are a few tips for writing the market analysis section of your tow truck business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products offered to customers. To write this section should include the following:

Describe your services:

Mention the towing services your business will offer. This list may include services like,

• Towing services
• Roadside assistance
• Storage services
• Vehicle recovery
• Salvage services
• Vehicle transport
• And other towing services.

Describe each service:

• For instance, towing services include towing of light-duty, medium-duty, or heavy-duty vehicles, such as cars, RVs, trucks, and motorcycles.

Quality measures:

• This may include regular inspections and maintenance, driver training and certifications, and safety equipment.

Additional services:

In short, this section of your tow truck business plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique selling proposition (USP):

• For example, a diverse fleet of tow trucks, 24*7 availability, and quick response time could be some of the great USPs for a towing company.

Pricing strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your towing company business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your towing business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & training:

Operational process:, equipment & machinery:.

• Explain how these technologies help you maintain quality standards and improve the efficiency of your business operations.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your tow truck business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founder/CEO:

Key managers:.

• It should include, key executives, senior management, and other department managers (e.g. operations manager, safety manager.) involved in the tow truck business operations, including their education, professional background, and any relevant experience in the towing industry.

Organizational structure:

Compensation plan:, advisors/consultants:.

• So, if you have any advisors or consultants, include them with their names and brief information consisting of roles and years of experience. This section should describe the key personnel for your towing services, highlighting how you have the perfect team to succeed.

This section should describe the key personnel for your towing services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

• This exercise will help you understand how much revenue you need to generate to sustain or be profitable.

Financing needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the towing industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your towing business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample tow truck business plan will provide an idea for writing a successful tow truck plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our tow truck business plan pdf.

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Frequently asked questions, why do you need a tow truck business plan.

A business plan is an essential tool for anyone looking to start or run a successful tow truck business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your tow truck company.

How to get funding for your tow truck business?

There are several ways to get funding for your tow truck business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

Small Business Administration (SBA) loan

Crowdfunding, angel investors.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your tow truck business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your tow truck business plan and outline your vision as you have in your mind.

What is the easiest way to write your tow truck business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any tow truck business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Start a $40K/Month Tow Truck Business

Nearly 70% of people have experienced abuse or workplace discrimination when working .  Kenneth Orme was one of them, so he figured out how to start a tow truck business and work for himself.

Kenneth Orme is the owner of  K.O. Towing. When we asked how he did it, he started by telling us about overcoming cancer and getting laid off, just to find out he was “ too old ” and no one wanted to hire him. 

Everybody wanted me in their office till they found out I was 59. I can’t find a job. I’ll make a job. This is America.

Instead of giving up, he started his own towing business and makes $100K per truck each year. It gets even better, though. He shares strategies and tips to have year-round work before you even buy a truck. Get ready to learn how to start a towing company.

What is a tow truck company?

Tow truck drivers have all kinds of ways to make money besides just towing cars. They can offer roadside assistance to people whose batteries died, tire went flat, or even combine it with mobile mechanic services. 

You’ll need special licensing, equipment, and insurance to run a tow truck company. We’ll cover all that and more, but first, let’s discuss the towing industry.

Step 1. Research the Towing Industry

Before you start offering towing services, it would help to learn a bit about the automobile towing industry. Consider these concepts:

• What type of business models are used in the tow truck industry? Which model is best for me?
• Who are the major players in the towing industry?
• What is the automobile towing industry outlook?

Keep reading to find out more.

Which business model is best for a tow truck company?

Tow truck companies use multiple business strategies to make a great living. Some of the strategies towing companies use include:

• Partnering with insurance companies for towing and roadside assistance
• Impound and repossession services 
• Independent towing for people or subcontracting

Let’s look at each.

Partner with Insurance Companies

These tow truck companies are the good guys in the industry. IF you want to help people, this is the best towing business for that service. Most insurance companies have roadside assistance, and Triple-A members love the help and security of knowing help is available.

WikiHow recommends gathering all your documents together and going to the nearest American Auto Association ( AAA office ) to apply to become a roadside service provider. You can also apply online.

Kenneth partners with Roadside America (link contains business inquiry contact) to offer roadside assistance. He told us:

It makes up about 15% of my revenue and is about 90% roadside and 10% towing.

Partnering with insurance companies can be great money, but they will often define the terms. Make sure you can make a profit with a tow truck based on their terms.

Auto Auctions

You might also want to partner with auto auctions. Kenneth told us:

Insurance Auto Auctions is 90% of my business.

He went on to describe how they pay. He showed us two cars he had on his truck and told us:

The Highlander is $100 and this vehicle is an $85 vehicle. They have zones for every vehicle. If I go up to Anacortes (Washington), which I’ve done,

that’s $240 per vehicle… At the end of the day, I can profit 300 for towing six cars.

Check out our interview on YouTube !

Impound and Repossession Services

Impounding and repossession services have contracts with various organizations to send tow truck drivers to pick up vehicles if people aren’t maintaining their responsibilities.

Kenneth told us:

I have three trailer parks, two apartment complexes (that I work with to tow impounds).

Some tow truck companies partner with:

• Loan companies
• Governments
• Apartment complexes
• Other businesses

When they do this, it is because the vehicle has been parked illegally, gotten in a wreck, or the owner didn’t pay their loan. There are laws in each state that govern a truck business towing cars this way. 

For instance, in Nevada, there have to be signs posted or a 24-hour notice to move the vehicle. If a towing business takes a car outside of the regulatory environment, it can face lawsuits. If you start this kind of business, make sure to consult an attorney that is familiar with the truck business in your area.

Repo.org is a great place to start learning repo laws for the truck business.

Independent Towing for People

Sometimes people need a tow truck because they have a flat tire or the car needs to go to an auto repair shop. These businesses will have higher fluctuations based on weather than some of the other tow truck businesses, but they should be a part of any independent towing company’s services. Kenneth told us:

I’m trying to get deeper into the personal towing, but I don’t have the budget everybody else has for advertising.

Who are the major players in the towing business?

Some of the largest tow truck businesses include: 

• United Road Towing : Dun & Bradstreet (D&B) estimates United Road Towing’s revenue at $99 million
• Jamie Davis Towing : ZoomInfo estimates revenue is under $5 million from the towing company
• Certified Towing: Estimated $1M according to D&B

What is the industry outlook?

IBIS World values the U.S. towing industry at $11.3 billion in the US and expects it to grow around 2.9% in 2022. They expect it to continue growing at a faster rate after inflation settles down.

Any industry that exceeds the GDP growth in the U.S. is a great industry to get into as a business owner. Just make sure you follow the laws because you are driving around a vehicle that can do serious damage if you get in a wreck. 

What are the requirements for a tow company?

You will need a variety of tools, permits, and licenses before starting a tow truck company. Remember to consult with the local Small Business Office, the DMV, or a lawyer that specializes in tow truck businesses.

A tow trucking company will normally need:

• Drivers with class B driver’s licenses
• Business structure as a Limited Liability Company (LLC) or corporation 
• Auto Liability Insurance: Comprehensive coverage with uninsured motorist insurance and higher limits than the state minimum (no less than $250K, but $1M is better)
• Business insurance 
• High physical damage insurance
• An oversized vehicle permit (depending on what your business entity will be towing)
• Indictment management permit (if towing without consent)

How to get a tow truck license

To drive a truck under 26,000 towing capacity, you only need a regular driver’s license.

You’ll need a commercial driver’s license (CDL) for anything bigger because of the weight of the vehicle.

They want to make sure you have the experience. That means you’ll need to take a CDL course, which takes about a month. They provide safety training and teach you how to properly operate the vehicle.

Then you’ll need to pass the DMV test.

Step 2. Create a Business Plan for How to Start a Tow Truck Business

You don’t have to write a towing business plan, but it won’t hurt. It will help you keep track of how your towing company is progressing toward your goals. Kenneth told us:

You should find clients that will agree to contracts pending the purchase of a tow truck. There’s no point in buying tow trucks if you don’t tow vehicles.

Check out the rest of his interview .

The plan should follow a process similar to this:

• Find customers.
• Get your permits and licenses to drive a tow truck.
• Start Your company.
• Buy a tow truck.
• Start towing vehicles.
• Market your business to take on more work.
• Buy more trucks.

We’ve provided some templates and resources for you to create a tow truck business plan.

Business Plan Templates

Here are some of the best templates for business plans:

• Download our Business Plan Template
• One-page business plan
• U.S. Small Business Administration (SBA) Business Guide

Learn to Write a Business Plan

We even provide resources for how to write a business plan:

• UpFlip’s blog on How to Write a Business Plan
• Resources from Score
• The Complete Business Plan Course (Includes 50 Templates)

I’d also suggest checking out our interview with Mike Andes on how to write a business plan below:

Step 3. How Much Is a Tow Truck to Buy?

You can find used tow trucks for around $6,000 and new ones for around $50,000. We asked Kenneth, “How much does a tow truck cost?” 

He told us:

This is a 2013 Ford F 650. The bed on this truck is rated at 12 thousand pounds. … The wheel-lift is rated at 4,000 pounds. The truck is rated at a grand total of 26,000 pounds. So, I can put a medium or a heavy-duty vehicle on this bed, but I can’t tow anything else with it at that point.

He went on to tell us:

Expect to spend $25,000 on reliable ones.

Where to Find a Tow Truck for Sale 

Some of the places you can find the different types of tow trucks include:

• A bank repo tow trucks sale
• Auto auctions
• Failing tow truck businesses
• Commercial Truck Trader

When considering, “How much does it cost to buy a tow truck?” you’ll want to consider the type of truck. There are a few different types of trucks:

• Flatbed tow truck for sale
• Ramp trucks for sale
• Wrecker truck for sale
• Integrated tow truck for sale

How Much To Start A Tow Truck Business?

Kenneth told us a tow truck business requires around $10,000 to get a truck, licenses, and towing equipment. We’ll discuss individual costs more in other sections.

How to start a successful tow truck business with no money

You have to start somewhere. Kenneth suggested the following solutions:

• Can you finance?
• Can you get a lease? 
• Can you ask friends and family?

He also told us:

I went looking for a loan so I could buy a tow truck and found out that you can’t get a loan to start a business unless you’ve been in business for two years.

I wound up going into it on a lease, rent to own. The truck sold for $50,000. By the time I’m done paying for the truck, it’ll be $106,000.

He went on to say:

The benefit of leasing is you can get into a vehicle with a limited amount of money. The downfall of it is, if you don’t find the right leasing company, you’re gonna be paying them to double whatever the original amount was. So do a little diligence and find out. If they say there’s no puny penalty for prepayment, make sure that the amount is going to be adjusted.

If you want some additional resources, keep reading for ways to fund a towing company.

Tow Truck Businesses: Startup Costs

Common funding paths include:

• Personal funds or personal assets
• A loan from family or friends
• Funds from a business partner
• Government programs

The SBA offers free courses on financing options and funding programs . For info on using personal funds to start a business, check out this article from The Hartford.

Alternative sources of funding include:

• Crowdfunding  
• Credit cards
• Home equity loan
• Business loan ( Check out our partners .)
• Rollover for business startups (ROBS)

How much profit can a towing business make?

Based on the amounts Kenneth discussed, many tow truck businesses should be able to make the following profit:

Step 4. Naming Your Tow Truck Business

When naming a tow truck company, you’ll want to consider questions like:

• Does it include a reference to towing?
• Can people remember the business name?
• Does the name create acronyms? Are they good or bad?
• Is the domain name available? Check on GoDaddy .

Try our business name generator .

Get a domain name

Besides GoDaddy, you can buy domain names through sources like these:

• NameCheap .
• Google Domains

You’ll also need to meet other legal requirements before you can tow vehicles.

Meeting the legal requirements for a towing company

Make sure you are prepared to follow all legal requirements before you start a small business with tow trucks.

Every state has different requirements. Use the SBA License and Permits page to identify what your towing company needs. Keep reading for information on legal structures.

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because the company protects the owner’s assets. You’ll need this because a vehicle could fall off a truck and kill someone. You don’t want personal liability for that if one of your employees failed to secure the vehicle properly.

Look for your state’s requirements when you file an LLC.

Delaware is the most common place to file an LLC or corporation because of the low costs and business-friendly environment. That’s why more than 67% of the Fortune 500 are incorporated in Delaware.

Here’s a blog on the top 10 states to get an LLC.

Corporations

Corporations are also a great way to protect business owners when running a towing company. They are more complicated than an LLC, but they offer a lot of options for growth. 

I suggest tow truck businesses consider incorporating if they know they want to try to grow across state lines. Other than for high growth desires, an LLC is better during the early stages. 

To become a corporation, find your state’s Secretary of State.

Apply for an EIN

Apply for an employer identification number on the IRS website. It’s used on tax forms when filing taxes and to tie employees’ pay to the proper employer.

Sales Tax Permit

Most states have a sales tax, and you need to adhere to their requirements. This blog isn’t the place to discuss the permits for all 50 states, but Avalara has a guide on Sales Taxes . Check it out.

Tax filing and withholding

Federal and state tax filing requirements apply to new employers.

You must keep records of employment taxes for at least four years, including special forms and accounting for state taxes.

Don’t worry! We’ve got you covered! Check out the IRS guide for employers .

Federal employment and labor law posters

All employers must display Workplace Posters , which you can download from the website.

Other requirements include:

• Employment Eligibility Verification (Form I-9)
• State’s New Hire Program
• Worker’s Compensation Insurance
• Disability Insurance (varies by state)
• Occupational Safety and Health Administration (OSHA)

Unemployment Insurance (UI)

The U.S. Chamber of Commerce has a ton of information on unemployment, and it offers links to each state agency that handles state unemployment.

You’ll have to pay about $420 per employee on a federal level plus any state UI.

Now that you are familiar with the aspects of starting your own towing company, let’s look at launching a website.

Launch a Website

Kenneth suggests using a third party to manage your website. He said:

I work so many hours a day. I don’t have time to deal with managing my website.

I wish I did have the time to do that because the first company I hired, the storyline they told about my company was a lie, and I can’t have anything in my business that’s a lie.

He also told us he has one company do his video, one for search engine optimization, and one for social media.

Step 5. Operating a Tow Truck Business

Kenneth’s strategies for opening day were fairly simple:

• Find a customer that would keep him busy.
• Take as many runs as possible.
• Invest in more tow trucks.

He gave some other advice about advertising that’s worth considering.

How to market a tow truck company

There are a variety of advertising strategies that you can try when starting a tow truck company, but Ken told us:

My most successful one is word of mouth. I pick up your car after it (breaks) down. I give you an experience unlike any other tow company has ever given you. Now, you’re gonna tell your friends.

How much should you spend on advertising?

Kenneth told us he spends about $300 per month on advertising. 

I’ve got three different companies that are working on my website. One does take care of all the video and all the information and everything. The other one’s trying to constantly keep me updated and keep me at the top of the list.

How much of that goes to Google?

We asked Ken about Google Ads. He told us:

I tried that in the beginning.

The problem with Google is I’m gonna spend $500 a month, but I may have people calling from 80 miles away that aren’t going to utilize my service. It’s costing me $1.50 every time those people call. 

There’s probably a way to put a demographic and make sure that those people ask. I’m not computer smart though.

Check to see if Google Local Services applies to tow companies in your area. Junk Removal is the only category showing that may apply to tow companies in my area. Check your local area’s listings in case they are different.

Tow Trucks Win With Customer Service

Kenneth emphasized that he focuses on trying to be more ethical than other towing businesses. Here’s some of what he had to say:

The one way I’m different from everybody else, is I have no hidden fees. Most towing companies will charge you anywhere from $75 to $125 just to use the winch to pull your vehicle onto their towing vehicles.

I consider that part of the job because nine out of 10 times, you’re calling because your car won’t run. So why is it fair to you if I charge you an extra $125 for five minutes of work? 

It’s a business, but I’ve been the person trying to figure out how to pay for emergency roadside assistance. I wouldn’t be happy about it as a customer. It’s not fair to put somebody through that.

Step 6. Running Your Towing Services

Running the tow truck company is what you will spend most of your time doing. This includes aspects like hiring employees, helping customers, keeping inventory in stock, accounting, and payroll.

Hiring Tow Truck Drivers

Kenneth had a lot to say about hiring drivers. He said the most important aspects of drivers are:

• Do they have the required licensing?
• Do they stay in communication with the owner?
• Do they have mechanical experience or are they willing to learn?

Without the required licensing, they won’t be able to earn money. But the other ones are more important to focus on for the bigger picture. Here’s what he had to say about communication:

When they stay in contact with you and they keep you aware of what’s going on with your vehicle. If they’re having any problems, just tell me what your problem is. And I will give you the answer, ’cause my job is to help you.

He also emphasized the importance of being mechanically inclined:

I’ve hired three people in the last month. I had to fire one quick because I explained to ’em, you know, the truck needs maintenance. I can’t be driving 16 hours a day and work on my truck, your truck, and everybody else’s truck.

It’s just not gonna happen. You have to take care of the truck. So, if you don’t know how to be a car mechanic, that probably is a tough spot to begin with.

I’m even willing to teach you what you need to know. I don’t have a problem with that because we succeed together as a team or we fail as a team.

Job Posting 

You can post job ads in places like:

• Zip Recruiter

Make sure to include screening questions like:

• Do you have a CDL license?
• Do you have a clean driving record?
• Are you available during all business hours? If not, explain:

During interviews, test potential drivers on their familiarity with the tools for the job. One of the best ways to get an idea of whether they are fit to do the job is to have them do a ride-along.

How much does a tow truck driver make?

When you hire employees, you have to pay them. There are three main ways to pay an employee:

Commission seems like the best option based on current labor laws, but remember to consult with a professional HR representative or lawyer to establish laws in your area.

Find out the differences below.

According to Salary.com , drivers make between $43,544 and $71,789, with a median income of $56,074. There are strict regulations about salary, so you need to make sure they qualify because it can be quite costly if you misclassify someone as salary.

Zippia estimates an hourly rate between $14 and $29 for drivers. This may not be the best way to pay drivers as they may have lots of idle time. 

You can use on-call laws in many states, but there are strict federal restrictions that are hard to fight. The Fair Labor Standards Act (FLSA) considers on-call as normal hours worked unless:

• The employee can legitimately do normal personal activities
• The state law is stricter than the federal law

According to Replicon , California allows lower pay during the on-call time, but all on-call time must be paid. 

• Three states have written FLSA into law.
• New Mexico requires full payment for both employees and day laborers while on-call.
• Twenty-two states require you to pay all employees their hourly for on-call hours.
• The rest have not written laws and the FLSA applies.

Paying truck drivers based on commission is probably one of the best ways because then you can control your business costs. There are two primary ways to do this:

• Per billable mile : You want to exclude miles that aren’t earning revenue.
• Percent of fees earned : This is the method that Kenneth mentions in the interview.

He tells us:

I pay my drivers 33% of each job they take.

This seems like the most reasonable option to me; it gives flexibility without having to pay employees when they are not actively working.

Outsourcing

New tow truck owners might want to outsource to another vehicle owner to help during busy times. Just make sure they have the permits tow trucks need.

You’ll need to withhold taxes for your employees and pay them to the Internal Revenue Service and any state agencies (if applicable).

Step 7. How to Retain Customers for Your Towing Services

Ken told us the secret to retaining customers and getting referrals:

I treat ’em like family. You know, I don’t look at you as a mark. The next person on the line (repair shops try) to read your pocket …I help you in your time (of) need. Now you’re gonna pay me for those services.

If I treat you right, the next time you need help, you’re gonna call me. You’re gonna think of Ken with Charlie. I don’t care how long it takes me to do whatever I do. I don’t get upset. I don’t get mad. I do the job.

Top Influencers

Find out what other people in the industry are doing:

• Jamie Davis Towing : Check out his YouTube Channel
• Get Hooked : A towing industry Podcast

Hauling It Away

We’ve covered how to start a tow truck company; now it’s your turn to get the licenses and permits, find some customers, get a truck, and start towing. 

What has been the most challenging part of starting an independent towing service?

Brandon Boushy

Brandon Boushy started his company after years of working in customer service, engineering, and project management. After receiving his MBA, he turned his diverse skills into a business helping other small business owners find resources and strategies that further their business objectives. He focuses on assisting businesses with their marketing, communication, and research needs.

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Resources for Your Growing Business

How to start a towing business.

Towing is a service that will have a consistent demand for the near future. Even though cars are becoming more and more reliable, accidents and breakdowns happen, and drivers need somebody to give them a tow.

In this post, we’re going to cover everything you need to know about starting a tow truck business of your own. We will talk about the variety of towing services you can offer in your business, and the different audiences you can serve. From there, we will cover the eight steps you need to follow to launch a successful tow truck business.

Fire up your truck because we’re pulling out tons of valuable tidbits on how to start a successful towing business.

Here’s What We’ll Cover:

Why Start a Towing Company?

Can i start a towing company with no experience, types of towing businesses, what you need to get started, how to start a successful towing business in 8 steps, tips for growing your towing business.

Launch Your Towing Business

More Resources for Your Towing Company

If you’re looking to start a business that provides a sense of consistency and very little stress or unnecessary excitement, a towing company could be the route for you.

It’s not that driving a tow truck is boring. In fact, truck drivers meet tons of interesting people day in day out that will make it quite enjoyable.

Even though the job likely won’t be stressful for you, the nature of towing is typically helping people through stressful situations. That in itself can be fulfilling.

Let’s take a quick look at some other benefits of starting a towing company.

Benefits of Starting a Towing Company

• It’s consistent: The life of a tow truck driver is relatively predictable with very little drama and rarely any surprises
• You’re helping others: Tow trucks often come in a time of need, so your towing company will truly be helping others in your community
• Anybody can do it: As long as you have great driving skills and a clean record, you could start a towing business
• Lots of specializations: There are several paths your business can take in terms of specialization

Yes, you can start a tow truck business with little to no experience. 

However, you will need to learn the mechanics of your truck, how to drive with a heavy load, and safety practices for roadside assistance. Learning how to properly load vehicles onto your specific tow truck is also a must in order to avoid any damage to your clients’ property.

Just like there are thousands of different types of vehicles on the road, there are many types of towing. Most of these involve transporting vehicles from the spot where they broke down to somewhere that they can be fixed, but others are a bit more unique.

Here are a few of the most popular types of towing businesses.

• Post-accident clean up: Some towing companies are dedicated to picking up wrecked cars after a collision.
• Contractor for roadside assistance company: AAA and other roadside assistance companies bring work to lists of preferred local towing businesses.
• Oversized load : Have you ever seen a house (or half of a house) cruising down the highway? Oversized load-hauling is a kind of towing.
• Vehicle transport: Some tow truck drivers specialize in transporting vehicles long distances.
• Other: Some towing companies transport other things like boats.

Do I Need to Choose a Niche?

Choosing a niche for your business isn’t necessary. However, you’re only going to be able to tow vehicles that your tow truck can carry. 

Certain types of towing will require specialization to some degree. For example, if your business has a truck designed to carry oversized loads, you’re probably not going to be the person showing up to get cars that are broken down on the side of the street.

While it isn’t necessary, specializing in a specific type of towing is good for building your business’ reputation with your target audience.

In order to start a towing business and drive a tow truck yourself, you will need to have a Tow Driver ID. 

The exact rules and regulations vary from state to state, and sometimes even county to county, but in general, you’ll require the following qualifications to apply for a Tow Driver ID in the United States:

• 18 years or older
• Valid driver’s license
• Clean driving record
• No more than three accidents within a year in the past three years
• No DUIs in the past five years
• No more than one DUI in the past 10 years
• Speak English at a conversational level

More specific criteria may apply based on your location. Some jurisdictions may even have exceptions to these rules. The main purpose of these strict guidelines is to make sure that reliable people are operating tow trucks and handling people’s cars.

For a specific example, check out the Tow Driver Requirements for Palm Beach County, Florida. We’d like to reiterate that the rules and requirements vary from jurisdiction to jurisdiction, and this document will simply give you a general idea of what to expect.

Starting a towing business isn’t hard if you’re qualified for a Tow Driver ID and you know how to load and drive with a vehicle in tow.

Here are eight actionable steps for starting a towing business of your own.

1. Create a Business Plan

Every great business starts with a good idea and a solid plan to back it. Writing a business plan may sound like an intimidating task, but it just entails getting your ideas out of your head and onto a piece of paper. 

You’ll want to identify exactly what type of towing services your business will offer and who you’re going to offer them to. Are you going to do all of the towing by yourself or will a team of tow truck drivers work under you? Making these decisions early will help you determine the structure of your tow truck business.

Additionally, you should create an outline of your budget. How much will you invest in a truck and other startup costs for your business? Consider branding , marketing, licensing, insurance, materials and tools.

From there, determine how much you will need to charge for your business to be profitable. Will you offer flat rates or will you bill per hour? How much will you charge for after-hour services?

At this stage, it’s a good idea to hammer out specific processes for your tow truck business. For example, you should document the procedures you’ll follow every time you go out on a call from the moment your phone rings until you deliver the vehicle to its final destination.

Now is also an appropriate time to decide how you’ll approach billing , bookkeeping , payroll and other administrative tasks for your business. Documenting each of these processes will make it easy for you to hire an assistant to help you handle these tasks if you intend to spend most of your time on the road.

2.Take Care of the Legalities

Register your towing business to make it a legal entity. You can register your tow truck business as a limited liability company (LLC) or a corporation. An LLC should be fine to start.

You’re also going to need liability insurance and business insurance. We recommend speaking with a lawyer to determine what sort of liability insurance you require, and how to set up your contracts to protect yourself if a vehicle your business is towing is damaged.

Accidents happen, but accidents that involve something with a price tag like a vehicle can be very costly to your business. Make sure you have the appropriate insurance so that it doesn’t cost your business a fortune if something goes wrong.

3. Open a Bank Account

Once you’ve registered your tow truck business, you can apply for an employer identification number (EIN) on the IRS website, which is essentially a tax identification number. Your EIN gives you the ability to open a bank account on behalf of your new towing business.

Open a checking account with a debit card, so that you can put all business expenses on that account. This goes for vehicles, equipment, gas, insurance and anything else you require to do your job.

This will keep your tow truck business finances separate from your personal finances, which will help you avoid headaches at tax time.

4. Buy a Tow Truck

To offer towing services, you’re going to have to buy a tow truck. This will be your largest expense. Depending on the type of tow truck you’re buying, the investment will likely be between $40,000 and $100,000.

The type of tow truck you invest in will determine what kind of services your business can offer. For example, you won’t be carrying an oversized load with a truck designed to carry standard-sized vehicles.

Here are a few different types of tow trucks you can choose from for your business:

• Flatbed truck
• Oversized load tow truck
• Wheel lift tow trucks
• Hook and chain tow trucks

Keep in mind that you may save some money by purchasing a used vehicle for your business. A new vehicle will likely last you longer, but you’ll pay a lot less for a used one. Those lower startup costs will help you have a positive cash flow sooner.

However, if you’re buying used, you’ll want to have your mechanic take a look at it to make sure everything is in good shape before you buy so that no avoidable expenses rise soon after your purchase.

5. Determine Your Target Market

With everything worked out on the legal side, it’s time to dive into the fun part: Identifying your business’ target audience. 

For towing, you’ll want to determine whether you’re going the B2B or B2C route. B2B is short for “business to business,” and that means that you’ll be serving other businesses. B2C means that you’ll serve consumers directly.

Making this distinction from the start will help you with everything you do for your tow truck business going forward.

If you are going to serve businesses, what sort will they be? Will they be companies like AAA that offer roadside assistance, or will they be local garages and auto repair shops?

For heavy load towing, your business could specialize in moving manufactured homes and heavy equipment, so builders or construction companies would be your target audience.

On the consumer side, you could tow vehicles for people that break down and want to take their vehicles home rather than to the shop.

Become very clear on who your business will serve in a broader sense, and from there, build a more specific ideal client profile.

Narrow down where your ideal client is located, and what sort of budget they have for your services. For B2C audiences, you could go as far as identifying your ideal client’s age, occupation and income.

Don’t worry about being too specific, but the more fine-tuned your profile is, the easier it will be to speak to this audience.

6. Build Your Brand

Your brand is what gives your new company its own professional identity and breathes life into your business. 

Once you’ve established the target audience for your business, building your brand will be a breeze. Your brand should be geared towards the audience that you plan to serve while representing what your business has to offer.

The visual elements of your brand will include the logo, fonts and color palette that you’ll use on your website, business cards, pamphlets and other marketing materials.

Your brand’s persona will be built around your core values. It is a good idea to establish a mission statement that you follow in everything that you do. It could be about serving your clients to the best of your ability, making a difference in the community, or whatever rings true to you.

The end goal would be to build a brand that connects with the members of your community, and develops a sense of brand loyalty. You want your brand to pop into people’s heads immediately whenever they require a tow truck.

7. Market Your Services

How you market your towing services will depend on whether you’re targeting businesses or consumers.

When you start a towing business, the B2B model will likely make it easiest for you to get started. You can develop contracts with the businesses mentioned above so that you’re their go-to tow truck driver when their clients require assistance.

If this is the approach you’re going to take, you should make a list of businesses that meet the ideal client profile that you created, and propose the partnership. You could cold call or send emails, but stopping by in person is likely the most effective, especially if the list is short.

Come prepared with a custom pitch that shows how your tow trucking company can meet their unique needs and help them better serve their clients. Have pricing estimates worked out and a rough outline of what the process of working together would look like.

However, marketing to consumers is a bit different. You have to put yourself in your ideal client’s shoes. Recognize that they are going to be looking for a tow truck in a time of need. Where will they turn to find you?

The first answer is likely Google or another similar search engine. This means that you’ll want to make sure your business pops up when they search “tow truck near me” or “tow truck in [your location].”

To make this happen, you’ll want to invest in search engine marketing (SEM) or search engine optimization (SEO). SEM is when you pay for an ad to place your website and contact information at the top of search results, and SEO is when you optimize your content for it to rank as the top result organically. 

Either option can be highly effective.

8. Prove Your Reliability

Reliability is huge in the towing industry. No matter if you serve businesses or consumers, you’ll want to be on your game all the time, especially since you’ll likely be called in for time-sensitive jobs.

When you partner with a business to serve their clients, showing up and getting the job done to the best of your ability will prove that you’re reliable. You’ll likely be working with these clients regularly, so they will see the consistency.

However, if you’re working directly with consumers, collecting reviews on Yelp, Google and Facebook will help prove that you’re reliable. The reviews will pop up when they search for you, and they will speak for themselves.

By now, you have a decent understanding of how to start your towing business. However, you can start laying the framework for long-term growth from the get-go.

Here are a few tips and tricks for growing your towing business:

• Maintain great relationships with your customers
• Be easy to reach during working hours
• Prioritize timeliness
• Hire an assistant to take care of administrative work
• Give your business card to every customer
• Ask happy customers to leave you a review on Google

Remember: Growth will not happen overnight, but as long as you treat your clients well and render your services as promised, you’re destined for success. Also keep in mind that many of your clients will be calling you in a time of need, so you must be compassionate, patient and kind when you show up. 

Launch Your Towing Business 

Launching your own towing truck company is an exciting step. It gives you so much more control over your career and your future.

We are confident that our eight steps for starting a towing business will set you up for success. Setting out with a solid plan and carrying it through until you have your first happy client will make for such an amazing journey.

Stay true to your mission and focus on serving your clients to the best of your ability, and you’ll be destined for great things.

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Tow Truck Company Business Plan Sample

OCT.02, 2018

Do you want to start towing business?

Do you want to start a towing business? Well, this business has so wide scope and opportunities, that you need to plan wisely before initiating it. Basically, a towing business is based on removing the impaired or inoperable, or illegally parked vehicles from the road.

Sometimes, special types of tow trucks are also used to remove the equipment and illegally kept cargos from the road. The towing business for roadside assistance is often needed as during the traffic hours, undesired vehicles or property on the road can cause inconvenience and even accidents on the roads.

So, if you are looking for how to start a tow truck business , you must decide first whether you want to buy and run a tow truck by yourself, opening a franchise or want to organize a number of trucks to start your own business. After taking the decision, you have to devise a detailed business plan covering all the details. In case, you need assistance on how to start your own roadside assistance business , you can take help from this sample business plan for a tow truck business startup named, ‘Texas Towing’.

Executive Summary

2.1 the business.

Texas Towing Company will be located at a 10-minute drive from SeaWorld, San Antonio, a rich colonial city in Texas. Texas Towing will be, a registered and licensed company owned by Michael Finney, with towing trucks operating in the whole city. All the trucks will be kept in the best condition for working on urgent basis, and all the drivers will be well-trained to resolve common technical issues before provided with a CDL license. Texas Towing business will be based on moving emergency, impounded, inoperable or improperly parked vehicles from the roads throughout the city, timely and efficiently.

2.2 Management

If you are going to start a roadside assistance business , you will all be dependent upon the work efficiency of your drivers. So, the management is the core concept, upon which your whole towing service depends. Michael has been associated with the automobile industry for more than 5 years, after doing a pervasive research on how to start a towing business , he has decided to manage the business by himself by purchasing trucks and employing drivers.

2.3 Customers

Before thinking about how to start a towing company , you should know the category of the people will need to avail your service. Our major customers will be the traffic policemen, road district officers, and the local residents of the city. There can be various phenomena when residents and road users will require our services, for instance, their vehicle can get out of order in the mid road, run out of gas or they may have accidentally locked them up in their own property!

2.4 Target of the Company

Company summary, 3.1 company owner.

Michael Finney will be the owner of the Texas Towing. Michael has been working in vehicle-related industry for more than 5 years. His two-year successful experience as a senior manager of a truck transport business and his friendly affiliation with all his employees has made him passionate enough to start his own business.

3.2 Why the Business is being started

Michael has excellent management skills, which he wants to devote to a profitable business. He has studied about many businesses and finally found starting a towing business , the most suitable for him. San Antonio is the seventh most populous city in the United States, that’s why Michael has chosen this as his marketplace, as the need to keep streets and roads clear for the incoming traffic is more in populous areas. Moreover, the larger the audience, the more will be the requirement of a towing service, and the more profit you can generate.

3.3 How the Business will be started

The detailed startup requirements and expenses are given in the table below.

Services for customers

Your services will mark your position in the market, if you want to enhance or grow your business, you must upgrade your services timely according to the market demand.

This sample business plan will help you for starting your own tow truck business , and determining the services you can provide. Texas Towing will provide the following services to its customers.

• Roadside Assistance: Probably you will be worried if your car has run out of gas in the middle of a busy road, or has locked up in such a manner that you are unable to move it. Rest assured if you are in San Antonio, as we will be providing roadside assistance in the whole city 24 hours a day. Our drivers are trained to fix the problem in a very few minutes when it is possible to repair the vehicle on the road. Otherwise, our tow trucks will be helpful in moving your vehicle and saving others from the inconvenience or possibly an accident.
• Long Distance Towing: We have special flatbed tow trucks to carry your vehicles for long distances. Our service is more useful for the traffic maintenance department in case they want to capture improperly parked vehicles.
• Heavy Duty Towing: For loading large-sized trucks, or more than one vehicle at a time such as when we have to remove illegally parked vehicles, our drivers will reach timely and perform their duty.
• Equipment & Cargo Hauling: Our specialized drivers will also lift the heavy equipment and cargo within the city.

Marketing Analysis of Towing Business

What do you think will be required to open up a new tow truck business? Trucks, office, employees, yes of course, but what will you do with all these things if you fail to attract your target customers? So, before you start your new business, you must think about the reason of failure of so many startups. Well, it all depends upon how successfully you market your services. Understanding the marketing trends before making your towing business plan , will help you in developing your strategies. It is really important to consider the market demands and the requirements of your potential customers before finalizing your towing company business plan sample . A preliminary study of your target market will not only help you in writing a productive tow truck business plan but also tell you which program and policy will work and how. There are thousands of tow truck business plans  available on the web, but a better practice is to make solely yours, focusing on your own market area. This tow truck business plan sample  is written for Texas Towing focusing the marketplace of San Antonio. If, you have a different marketplace, then instead of depending upon this sample business plan for towing company , you should hire the services of marketing analyst to do accurate analysis of your market and make a perfect tow truck company business plan  for you.

5.1 Market & Industry Trends

Having an idea of the market trends and tendency before designing your towing business plan template  can assist you in determining your business strategies. The demand of tow truck business is facing a decline in the United States since the past few years as newer vehicles are equipped with modern systems to avoid accidents. Moreover, people usually prefer to help themselves instead of calling a tow truck company. A pre-knowledge about the reasons that caused decline in people’s interest in taking help from tow truck businesses will help you in running yours. After pointing them out you can amend those prior practices to ensure that you are doing well. According to IBISWorld, there are about 46 thousand towing businesses in the United States generating a revenue of £7 billion annually. The business is the cause of employment for more than 96 thousand people. The statistics are not really bad, but apart from them, you must focus on increasing the customer’s trust in you, if you want your startup to succeed.

5.2 Marketing Segmentation

The success or failure of a startup depends upon how accurately you know your target customers. Marketing segmentation must be included in your tow truck business plan sample, covering the details that how will you gain and maintain more and more customers inside and outside your target groups. Considering the importance of marketing analysis, Michael has hired the services of a marketing expert to identify his target customers and devising efficient sales strategy. You can take help by downloading this towing business plan pdf, we are providing towing company business plan sample  free of cost for everyone who want to start this business. The detailed marketing segmentation of our target audience is as follows:

5.2.1 Local Residents

This group comprises of the residents or tourists who live in San Antonio. These people will surely need to come on the roads, their vehicle can damage, can run out of gas, the engine may seize, or may accidentally locked up in such a way that even the owner become unable to move his/her vehicle. These all situations seem worse when you imagine that you are in the middle of a busy road. Here this group of our target customers will need our service to either get the issue resolved by our technically skilled driver or by moving the vehicle to some other place or workshop.

5.2.2 Police & Road Maintenance Department

In big cities, and especially populous cities, there are many instances when people park their cars improperly or in prohibited places. Same is the case with cargo and equipment which shopkeepers or retail salesmen install on the road. In all these cases the police department needs our services to move or seize those equipment and vehicles. We’ll be providing discount to the police department so that they will use only our services whenever they need a tow truck.

5.2.3 Accident Responders

In the rush times, the rate of accidents and collisions increase in big cities. Whenever an accident occurs, there is a need of towing services to remove the damaged vehicle from the place to avoid inconvenience for incomers ensuring smooth flow of the traffic. We’ll also provide discount to this category, to remove the hesitation of people to acquire our services. The detailed market analysis of our potential customers is given in the following table:

5.3 Packages Pricing

We have decided to keep the price of our services low initially, as it is necessary to gain people’s trust for the business. We have different discount packages for all our customers in the first three months, and for accident responders, and road maintenance department throughout our servicing period. Due to our less prices, people will surely try our services at least for once, after the first contact we believe, that they will blindly trust our services for the rest of their lives.

5.4 Target of the Company

Our main business targets to be achieved over the course of next three years are as follows:

• To become the most renowned and most successful towing company in the whole San Antonio, by providing high-quality services
• To achieve the net profit margin of £10k per month by the end of the first year, £15k per month by the end of the second year, and £25k per month by the end of the third year
• To balance the initial cost of the startup with earned profits by the end of the first year

After identifying the groups of people, whom you need to attract, the next step is to advertise your services and come up with the incomparable competitive edges, so that more and more people avail your services whenever they need a tow truck. Before you think about how to start your own tow truck business , you must think that what will you be providing to the people that others are not, and why would they prefer you over all your competitors. In case, you are new to this business and need assistance while making an appropriate sales strategy, you can take help from this sample business plan written for how to start a roadside assistance company .

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6.1 Competitive Analysis

Our biggest competitive advantage is our fast and quick service. On a call, our all-time ready and equipped tow truck will reach at the location in the nick of time and fix the problem. Our next biggest competitive advantage is that our truck drivers are specialized and trained to fix common vehicle issues, like if your car has stopped in the half-way, the first attempt of our drivers will be to fix the problem instantly, and if the issue can’t be resolved at the moment, then your vehicle will be taken away in a very careful and quick manner. Lastly, we are in a location where we can serve a lot of people as well as the road maintenance department. San Antonio is the second most populous city in Texas and the seventh most populous city in the whole United States, and for Michael’s, a larger population means enormous business opportunities!

6.2 Sales Strategy

If you are looking for how to start your own towing business  and how to develop an effective sales strategy, you can take help from the following brilliant ideas, our experts have presented to advertise our services,

• We will advertise our company on social media and by setting up a company webpage by which our customers can contact us
• We will offer 20% discount to the accident responders to remove damaged cars
• We will initially offer 20% discount on all services for first three months
• We will offer 10% discount to the departmental police on our servicing

6.3 Sales Monthly

6.4 sales yearly, 6.5 sales forecast, personnel plan.

Personnel plan is the most important part of a tow truck business plan sample, as this business will be solely dependent upon the skill of the drivers. If you are looking for how to start a roadside assistance company , put your major focus to the staff you hire. The staff required for a tow truck business startup and an estimate of their salaries is given here to help you in evaluating your startup costs and determining how to run a tow truck business  successfully.

7.1 Company Staff

Michael will act as the General Manager of the company and will initially hire the following people:

• 16 Tow Truck Drivers
• 2 Accountants for maintaining financial and other records
• 2 Sales Executives responsible for marketing and discovering new ventures
• 3 Technicians for maintaining trucks and resolving technical issues of trucks
• 1 IT Expert for managing the company’s official website and social media pages
• 1 Customer Representative for interacting with customers
• 2 Telephone Operators for receiving calls and orders

To ensure the best quality service, all employees will be selected through vigorous testing and will be trained for a month before starting their jobs. Especially the truck drivers will be trained to resolve common technical issues of vehicles.

7.2 Average Salary of Employees

Financial plan.

The last but the most important step you have to take if you are initiating a business, is to develop a precise and detailed business plan covering all the details of how you will be able to balance the startup costs, the salaries of your employees, and the expense of your trucks and parking area with your   tow truck business income . A comprehensive and effective financial plan is the one which contain the planning of how the company will achieve its goals and financial targets. So, before starting a tow truck business plan sample , you must formulate a detailed financial plan estimating your expenses and investment group business plan on the startup and its marketing, and roughly calculating the tow truck business profit that can be earned after meeting all the expenses. It is good to hire a financial expert to make an accurate financial plan for you, especially if you aim at widening your business scales. However, if you are starting at a small scale, then you can make your financial plan by yourself taking help from the sample business plans available on how to start a roadside assistance business . The details of sample financial plan for Texas Towing company are given here for your help:

8.1 Important Assumptions

The financial projections of the company are forecasted on the basis of following assumptions. These assumptions are conservative and can show deviation but to a limited level such that the major financial strategy of the company will not be affected.

8.2 Brake-even Analysis

8.3 projected profit and loss, 8.3.1 profit monthly, 8.3.2 profit yearly, 8.3.3 gross margin monthly, 8.3.4 gross margin yearly, 8.4 projected cash flow, 8.5 projected balance sheet, 8.6 business ratios.

Download Tow Truck Business Plan Sample in pdf

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OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than £1.5 billion in funding, and they can do the same for you.

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Tow Truck Business Plan Template

Tow truck business plan.

You’ve come to the right place to create your Tow Truck business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Tow Truck businesses.

Below is a template to help you create each section of your tow truck business plan.

Executive Summary

Business overview.

TJ’s Tow Truck Service is a startup towing company located in Tacoma, Washington. The company was founded by Tory Jane Jamison, a tow truck driver who has driven tow trucks for a former employer for ten years. She was known among customers as the “most friendly and most experienced” tow truck driver they’d ever met and her former employer gave her the award most years as the “Best in Class Tow Truck Driver” within the company overall.

TJ’s Tow Truck Service will provide a comprehensive array of products and towing services, including towing of cars and pickup trucks, along with smaller recreational vehicles or trucks with trailers. In addition, services such as battery servicing, tire changes, lockouts, and fuel delivery are offered to customers in need of assistance. Because of Tory Jane’s background, her expertise in her role, and her customer reviews, she believes that she can start a successful tow truck business.

Product Offering

The following are the services that TJs Tow Truck Service will provide:

• Towing services within a fifty-mile radius for cars, trucks and vans or small recreational vehicles
• Proprietary app that offers up-to-the-minute service details for clients
• Battery charges, startups, and servicing
• Tire changes, repairs and installations
• Lockout repair and key retrieval
• Fuel delivery when vehicles is out of gas

Customer Focus

TJ’s Tow Truck Service will target residents within a fifty-mile radius. TJs Tow Truck Service will target interstate and state highway travelers within a fifty-mile radius. TJs Tow Truck Service will target retail tire stores, auto repair companies and insurance companies. Commercial fleets (businesses that use multiple vehicles and need long-term contracts) and law enforcement agencies will also be targeted.

Management Team

TJs Tow Truck Service will be owned and operated by Tori Jane Jamison. She recruited three former tow truck driver associates, Ron Harbinger, Track Masters, and Bill Acker, to join her business to take on management roles in the tow truck company.

Tori Jane Jamison started her career as a U.S. Marine, where she was assigned to a truck driving role and service attendant for the U.S. Marines. She served four years within that capacity and ended her career after those years with an exemplary record of duty and expertise in her field.

Ron Harbinger is a thoroughly experienced tow truck driver, with a twenty-year background of successfully towing vehicles of all sizes without a single “event” or “injury” attached to his service. Ron will take on the new role of Tow Truck Supervisor, overseeing the truck-driving team and handling all human resources issues.

Track Masters is a well-trained master of driving in all weather conditions, including snow, ice and thunderstorms. He has seven years of experience and will take on the role of Scheduling & Service Supervisor, overseeing the scheduling of service calls and the customer service environment overall.

Bill Acker is a veteran tow truck driver with almost twenty years of experience. He is joining the team as the Maintenance Supervisor, overseeing the care and safety of all tow trucks, including replacements, repair and serving of all vehicles on the property. He determines when roads are safe to travel or when other weather conditions or events preclude allowing drivers to venture out onto the area roadways.

Success Factors

TJs Tow Truck Service will be able to achieve success by offering the following competitive advantages:

• Friendly, knowledgeable, and highly qualified team of TJs Tow Truck Service
• Proprietary app that tracks services and allows up-to-the minute response times
• Emergency service as requested by law enforcement or fire department
• TJs Tow Trucks Service offers the best pricing in town. Their pricing structure is the most cost effective compared to the competition.

Financial Highlights

TJs Tow Truck Service is seeking $200,000 in debt financing to launch TJs Tow Truck Service. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:

• Office space build-out: $20,000
• Office equipment, supplies, and materials: $10,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $10,000
• Working capital: $10,000

The following graph outlines the financial projections for TJs Tow Truck Service.

Company Overview

Who is tjs tow truck service.

TJs Tow Truck Service is a newly established, full-service tow truck company in Tacoma, Washington. TJs Tow Truck Service will be the most reliable, cost-effective, and efficient choice for residents and travelers in Tacoma and the surrounding communities. TJs Tow Truck Service will provide a comprehensive menu of products and services for any customer to utilize. Their full-service approach includes a comprehensive array of services to be offered to the analyst..

  TJs Tow Truck Service will be able to cover an extensive area of Tacoma, as well as the surrounding communities in several rural directions. The team of professionals are highly qualified and experienced in towing and ancillary services. TJs Tow Truck Service removes all headaches and issues usually experienced by customers who need emergency towing and ensures all issues are taken care of expeditiously while delivering the best customer service.

TJs Tow Truck Service History

Since incorporation, TJs Tow Truck Service has achieved the following milestones:

• Registered TJs Tow Truck Service, LLC to transact business in the state of Washington.
• Has a contract in place at one of the office buildings, where the tow truck company will set up its 10,000 square foot staff lounge and office area.
• Reached out to numerous contacts to include former customers as new customers.
• Began recruiting a staff of six tow truck drivers and office personnel to work at TJs Tow Truck Service.

TJs Tow Truck Service Services

The following will be the services TJs Tow Truck Service will provide:

• Roadside Assistance

Industry Analysis

The tow truck industry is expected to grow over the next five years to over $39 billion. The growth will be driven by:

• an increased number of calls for roadside assistance due to crowded freeways, self-driving cars, electric cars, and other forms of travel not yet known.
• The growth will also be driven by an increased number of customers who own digitally-controlled vehicles that they cannot move (as when batteries die).
• the increased number of accidents on roadways and highways. These will be due to an increase in semi-trucks on the highways and vehicles that crowd city streets.

The two truck industry costs will likely be reduced as tow truck products will be less-expensive to purchase from wholesalers or distributors and new methods of vehicle assistance will come into play, such as apps that can open locked vehicles, or apps that demonstrate the exact issue within the car when it stops unexpectedly.

Customer Analysis

Demographic profile of target market.

TJs Towing Service will target residents within a fifty-mile radius. TJs will target interstate and state highway travelers within a fifty-mile radius. They will target retail tire stores, auto repair companies and insurance companies. Commercial fleets (businesses that use multiple vehicles and need long-term contracts) and law enforcement agencies will also be targeted.

Customer Segmentation

TJs Tow Truck Service will primarily target the following customer profiles:

• Residents of Tacoma, Washington and nearby regions
• Travelers on highways in or near Tacoma, Washington
• Retail tire stores
• Auto repair companies
• Insurance companies
• Commercial fleets
• Law enforcement agencies

Competitive Analysis

Direct and indirect competitors.

TJs Tow Truck Service will face competition from other companies with similar business profiles. A description of each competitor towing truck company is below.

Midway Towing Services

Midway Towing Services is a tow truck service catering to the needs of medium-sized trucks and cars. Midway focuses on the unique requirements of these vehicles and provides assistance with an eye on safety, efficiency, and customer satisfaction. Midway Towing Services is located 30 miles away from Tacoma, Washington and serves travelers on the highways the feed the web of freeways through Tacoma. The towing truck company does not typically take routine service calls, but remains committed to emergency services when charges for services will be more lucrative for the company.

Midway Towing Services is owned by a partnership of family members who concentrate on the superior usage of their trucks and they ensure that medium-weight vehicles, including other tow trucks, vans, box trucks and others can be lifted and towed successfully. The company operates on a 24-hour a day basis and offers a special “Snow Package” to put chains onto trucks and heavy vehicles on a discounted basis.

Titan Towing Solutions

Titan Towing Solutions is owned and operated by Jack Higgins, a former semi-truck driver with over twenty years of experience. Titan Towing Solutions is focused on one type of customer: semi-trucks on the highways or city roadways that need either scheduled assistance or emergency assistance. The company does not offer roadway assistance for any other class of vehicle. Titan Towing Solutions has been in business since 1999 and has garnered several community awards and the “Most Reliable Towing Company in Tacoma.”

Titan Towing Solutions offers products to semi-truck drivers within a small convenience store that can ease the pains of driving shifts; such as semi-truck accessories, snow removal products, apparel, refreshing beverages, caffeine-loaded sodas, snacks and packaged appetizers.

AutoCall Roadway Services

Autocall Roadway Services is a retail store and tire repair service center that also provides tow truck service when the single tow truck owned by the company is available. The main theme of the AutoCall Roadway Services company is that driver safety of vehicles is the most important aspect of driving, so the company representatives will often stop to assist any driver with information or offers to call for tow truck service. As a for-profit company, the retail-comfort side of products available for purchase by drivers is the primary driver of revenue, rather than those of a tow truck service company.

Autocall Roadways Services prides itself on being open 24/7 every day of the year and offers an inventory of multiple food and beverage choices for drivers.

Competitive Advantage

TJs Tow Truck Service will be able to offer the following advantages over their competition:

• TJs Tow Truck Service offers the best pricing in town. Their pricing structure is the most cost effective compared to the competition.

Marketing Plan

Brand & value proposition.

TJs Tow Truck Service will offer the unique value proposition to its clientele:

• Highly-qualified team of skilled employees that is able to provide a comprehensive array of towing services and vehicle products for everyday or emergency use.
• Proprietary app that allows up-to-the-minutes resources and response times for clients.
• Unbeatable pricing for customers; they will offer the lowest pricing in Tacoma.

Promotions Strategy

The promotions strategy for TJs Tow Truck Service is as follows:

Word of Mouth/Referrals

TJs Tow Truck Service has built up an extensive list of contacts over the years by providing exceptional service and expertise to former customers. Those customers have already indicated they will use TJs Tow Truck Service when services or products are needed. They’ve also agreed to help spread the word of TJs Tow Truck Service.

Print Advertising

Direct mail response cards will be mailed to all residents, select businesses, and law enforcement procurement offices in the region. The offer will be a discount on services during the first three months of service. In addition, an offer to provide long-term contract pricing will be added for law enforcement or commercial fleet companies.

Website/SEO Marketing

TJs Tow Truck Service will fully utilize their website. The website will be well organized, informative, and list all the services and products that TJs Tow Truck Service provides. The website will also list their contact information and a map of regional service areas. The website will utilize SEO marketing tactics so that anytime someone types in the Google or Bing search engine “tow truck company” or “towing near me”, TJs Tow Truck Service will be listed at the top of the search results.

The pricing of TJs Tow Truck Service will be moderate and on par with competitors so customers feel they receive excellent value when purchasing their services.

Operations Plan

The following will be the operations plan for TJs Tow Truck Service. Operation Functions:

• Tori Jane Jamison will be the Owner and President of the company. She will oversee all staff and manage client relations. Tori Jane has spent the past year recruiting the following staff:
• Ron Harbinger, a thoroughly experienced tow truck driver, with twenty years of experience, will become the Tow Truck Supervisor, overseeing the drivers and handling all human resource issues.
• Track Masters is a master of all-weather driving and has been a tow truck driver for seven years. He will take on the role of Scheduling & Service Supervisor, overseeing the service calls and customer service.
• Bill Acker, also an experienced tow truck driver, will become the Maintenance Supervisor, overseeing the care and safety of all tow trucks, including replacements, repair and serving of all vehicles on the property.

Milestones:

TJs Tow Truck Service will have the following milestones completed in the next six months.

• 5/1/202X – Finalize contract to lease office space
• 5/15/202X – Finalize personnel and staff employment contracts for TJs Tow Truck Service
• 6/1/202X – Finalize contracts for TJs Tow Truck Service clients
• 6/15/202X – Begin networking at community events
• 6/22/202X – Begin moving into TJs Tow Truck Service office
• 7/1/202X – TJs Tow Truck Service opens its doors for business

TJs Tow Truck Service will be owned and operated by Tori Jane Jamison. She recruited three former tow truck driver associates, Ron Harbinger, Track Masters, and Bill Acker, to join her business to take on management roles in the startup company.

Financial Plan

Key revenue & costs.

The revenue drivers for TJs Tow Truck Service are the fees they will charge to customers for the products and services they provide.

The cost drivers will be the overhead costs required in order to staff TJs Tow Truck Service. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

TJs Tow Truck Service is seeking $200,000 in debt financing to launch its tow truck driving company. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of Customers Per Month: 65
• Average Revenue per Month: $162,000
• Office Lease per Year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, tow truck business plan faqs, what is a thrift store business plan.

A thrift store business plan is a plan to start and/or grow your thrift store business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Thrift Store business plan using our Thrift Store Business Plan Template here .

What are the Main Types of Thrift Store Businesses? 

There are a number of different kinds of thrift store businesses , some examples include: Vintage thrift store, Consignment thrift store, and Goodwill thrift store.

How Do You Get Funding for Your Thrift Store Business Plan?

Thrift Store businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Thrift Store Business?

Starting a thrift store business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Thrift Store Business Plan - The first step in starting a business is to create a detailed thrift store business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your thrift store business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your thrift store business is in compliance with local laws.

3. Register Your Thrift Store Business - Once you have chosen a legal structure, the next step is to register your thrift store business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your thrift store business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Thrift Store Equipment & Supplies - In order to start your thrift store business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your thrift store business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful thrift store business:

• How to Start a Thrift Store

How to Start a Towing Company

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.

Learn how to start your own Towing Company and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Start a towing company by following these 10 steps:

• Plan your Towing Company
• Form your Towing Company into a Legal Entity
• Register your Towing Company for Taxes
• Open a Business Bank Account & Credit Card
• Set up Accounting for your Towing Company
• Get the Necessary Permits & Licenses for your Towing Company
• Get Towing Company Insurance
• Define your Towing Company Brand
• Create your Towing Company Website
• Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

• What are the startup and ongoing costs?
• Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Towing Company Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your towing company ?

Business name generator, what are the costs involved in opening a towing company .

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.

A business must also purchase insurance. The first month’s premium may be a few hundred dollars.

What are the ongoing expenses for a towing company ?

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.

Who is the target market?

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.

How does a towing company make money?

A tow truck business makes money by charging customers for tows. A typical charge will include a flat fee for the tow, a mileage fee, and a storage fee.

Tow truck businesses charge an average of $120 per tow (including both a flat fee and mileage charge). It’s also standard practice to charge a daily storage fee for any vehicles that are stored on the company’s property. The average storage fee is $20 per day.

How much profit can a towing company make?

The average tow truck business owner makes between $30,000 and $40,000 annually . The exact amount varies depending on the region that a business is in.

How can you make your business more profitable?

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.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your towing company is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

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 .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Licensing is normally required to operate a towing service. Most states require tow trucks to have three types of permits

• indictment management, which is required for a tow truck to perform a non-consent tow initiated by a law enforcement officer.
• private property, which is required for a tow truck is used to perform a non-consent tow authorized by a parking facility owner.
• consent tows, which is required for a tow truck used to perform a consent tow authorized by the owner.

Certain local licensing or regulatory requirements may also apply. For more information about local licenses and permits:

• Check with your town, city or county clerk’s office
• Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources .

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 .

Oversize Vehicle Permits

Some states, including Michigan, require a towing businesses to obtain an oversize/overweight vehicle permit for its tow trucks, sometimes also referred to as “wreckers.” More information about state weight load permitting can be found here.

Class B Driver Licensing Requirements

In most states, licences are issued by classes, operating according to the weight of the vehicle being driven. Drivers of standard cars and trucks require a class A commercial driver’s license (CDL), while operators of heavier vehicles, including most tow trucks, require a Class B CDL to operate. More information can be found here.

Certificate of Occupancy

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.

• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an tow truck business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for you business’ location to ensure your tow truck business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Towing Company needs and how much it will cost you by reading our guide Business Insurance for Towing Company .

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

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.

How to promote & market a towing company

Every tow truck business should have an online presence so that individuals who need a tow can find the business. Tow truck companies shouldn’t completely ignore marketing channels like social media, but they’re usually wiser to direct most resources towards local search engine optimization (SEO). Individuals are more likely to use a search engine to find a nearby towing service when they need one than they are to engage with one on Facebook or Twitter.

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.

How to keep customers coming back

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.

When contracting with municipalities and police departments, speed of service can be the difference between getting a call and not. Many government agencies contract with multiple towing services -- and they’ll notify each company when a vehicle has to be moved. The company that gets to the vehicle first typically gets to tow it, and the others don’t receive any work from the call.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

TRUiC's Startup Podcast

Welcome to the Startup Savant podcast , where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.

Is this Business Right For You?

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.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a towing company ?

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.

What are some skills and experiences that will help you build a successful towing company ?

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.

What is the growth potential for a towing company ?

Most tow truck businesses serve a single geographic region. In large metropolitan areas, they may only serve the city -- or even just part of the city. In less-populated areas, they may cover more territory, but they’re usually still limited to one region.

A few companies advertise nationwide towing services. These companies, however, usually accept calls for tows but contract with local towing companies to actually tow vehicles. They effectively provide a referral service, for a fee.

TRUiC's YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.

Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

How and when to build a team

While it’s not absolutely necessary to have employees, most tow truck businesses have employees so that they can provide towing services around the clock. Without providing 24/7 towing, it’s difficult to get contracts with repair shops and government organizations. Additionally, the more hours a tow truck is used to tow vehicles, the faster the investment in the truck can be recouped.

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.

Useful Links

Industry opportunities.

• Towing and Recovery Association of America
• US National Towing Associations

Real World Examples

• Detroit Towing Service
• Find Local Towing & RoadSide Assistance

Further Reading

• 5 Things To Consider When Starting Your Towing Business
• Tow Company Marketing
• How to Make Money In the Towing Business

Additional Sources

• CDL Classifications

Have a Question? Leave a Comment!

How to Start a Tow Truck Business

Starting a tow truck business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful tow truck business.

Importantly, a critical step in starting a tow truck business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

14 Steps To Start a Tow Truck Business :

• Choose the Name for Your Tow Truck Business
• Develop Your Tow Truck Business Plan
• Choose the Legal Structure for Your Tow Truck Business
• Secure Startup Funding for Your Tow Truck Business (If Needed)
• Secure a Location for Your Business
• Register Your Tow Truck Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Tow Truck Business
• Buy or Lease the Right Tow Truck Business Equipment
• Develop Your Tow Truck Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Tow Truck Business
• Open for Business

1. Choose the Name for Your Tow Truck Business

The first step to starting a tow truck business is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own towing company:

• Make sure the name is available . Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
• Keep it simple . The best names are usually ones that are easy to remember, pronounce and spell.
• Think about marketing . Come up with a name that reflects the desired brand and/or focus of your tow truck business.

2. Develop Your Tow Truck Business Plan

One of the most important steps in starting a successful towing company is to develop your tow truck business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

• Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your tow truck business.
• Company Overview – this section tells the reader about the history of your tow truck business and what type of tow truck business you operate. For example, are you a passenger car towing business, a commercial vehicle towing business, a repossession towing business, or a specialty towing business. 
• Industry Analysis – here you will document key information about the tow truck industry. Conduct market research and document how big the industry is and what trends are affecting it.
• Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
• Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
• Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product : Determine and document what products/services you will offer 
• Prices : Document the prices of your products/services
• Place : Where will your business be located and how will that location help you increase sales?
• Promotions : What promotional methods will you use to attract customers to your tow truck business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
• Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
• Management Team – this section details the background of your company’s management team.
• Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your tow truck business make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business

Finish Your Business Plan Today!

3. choose the legal structure for your tow truck business.

Next you need to choose a legal structure for your tow truck business and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the tow truck business and the business are the same legal entity. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a tow truck business together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a tow truck business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a tow truck business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your tow truck business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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4. Secure Startup Funding for Your Tow Truck Business (If Needed)

In developing your tow truck business plan , you might have determined that you need to raise funding to launch your business. 

If so, the main sources of funding for a tow truck business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a tow truck business that they believe has high potential for growth.

5. Secure a Location for Your Business

When starting a towing business, it’s important to find the right location. You’ll want to choose a place that is central to a maximum number of highways. You’ll also need to consider your parking situation, as you’ll need to be able to store your trucks and equipment on-site. Different locations have different pros and cons, so you’ll need to consider your own individual situation when choosing the best place for your business.

6. Register Your Tow Truck Business with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

7. Open a Business Bank Account

It is important to establish a bank account in your tow truck business’ name. This process is fairly simple and involves the following steps:

• Identify and contact the bank you want to use
• Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
• Complete the bank’s application form and provide all relevant information
• Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your tow truck business to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

The licenses and permits you will need to start a tow truck business depend on your state. You may need a business license, a tow truck operator license, and a vehicle storage license. You may also need to get permits for certain tow truck equipment, such as a wrecker boom. Learn more about the types of licenses and permits you are required to have in your state or jurisdiction by contacting your local Department of Transportation.

10. Get Business Insurance for Your Tow Truck Business

The type of insurance you need to operate a tow truck business depends on the state in which you reside. Contact your state’s department of insurance for more information.

Some of the business insurance policies that you should consider for your tow truck business include:

• General liability insurance : This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
• Auto-liability insurance: t his covers you when you’re at fault during an accident and must cover the other driver’s medical and property expenses.
• Physical damage insurance: T his covers any necessary repairs to your tow truck during an accident.
• Comprehensive coverage: This is useful when your vehicle is damaged outside a collision, such as fire, theft, falling objects, or collision with an animal.
• On-hook coverage: This is necessary for protecting you should any vehicles get damaged while hooked up to your tow truck.
• Uninsured motorist insurance: This covers any injury to you or your passenger caused by a driver who doesn’t have insurance or during a hit-and-run incident .
• Workers’ compensation insurance : If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs. 

11. Buy or Lease the Right Tow Truck Business Equipment

In order to run a tow truck business, you’ll need the following towing equipment: 

• License plate reader 
• Two way radio 
• Computer with internet access 
• Smartphone 
• Tow truck software 
• Dash camera  

There are a lot of options out there all at different price points. 

It is important before you make a purchase that you do some research into these products and see what will suit your needs best. Some tow operators have specific requirements that will need to be considered when choosing their equipment, for example, fleet operators will likely require more robust tow vehicles with heavier towing capacities while single operators may not need these capacities.

12. Develop Your Tow Truck Business Marketing Materials

Marketing materials will be required to attract and retain customers to your tow truck business.

The key marketing materials you will need are as follows:

• Logo : Spend some time developing a good logo for your tow truck business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
• Website : Likewise, a professional tow truck business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
• Social Media Accounts : establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your tow truck business.

13. Purchase and Setup the Software Needed to Run Your Tow Truck Business

To run a tow truck business, you will need software to manage your finances, dispatch trucks, and track customers. Some popular software programs for towing companies include QuickBooks, dispatching software like TOWsmart, and customer management software like GoldMine.

14. Open for Business

You are now ready to open your tow truck business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.  

Additional Resources

Tow Truck Mavericks

How to Finish Your Ultimate Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

How to Start a Tow Truck Business FAQs

Is it hard to start a tow truck business.

No, it's not hard to start a tow truck business. All you need is a commercial driver's license, a tow truck in good condition, and the right equipment. To get started in this field, one must be 18 years or older and have a good driving record. It is also necessary to have a good credit rating.

How can I start a tow truck business with no experience?

If you're thinking of starting your own tow truck business, there are a few things you need to know. First, you'll need to research the industry and find out what kind of regulations and permits you'll need to operate legally. You'll also need to come up with a business plan and find some investors or partners who can help you get started. Finally, you'll need to find a good location for your business and hire qualified tow truck drivers .

What type of tow truck business is most profitable?

There is no definitive answer to this question as it largely depends on the specific area in which the tow truck business is operating. However, a tow truck business that specializes in towing large vehicles, such as buses and trucks, is likely to be more profitable than one that specializes in towing smaller cars.

How much does it cost to start a tow truck business?

A new tow truck business’ startup costs are largely dependent on the type of tow truck purchased. Tow trucks can cost anywhere from around $60,000 to $850,000. However, once this major expense is factored in, there are a number of other expenses that should be considered when starting a tow truck business, such as insurance, licensing fees, and marketing costs.

What are the ongoing expenses for a tow truck business?

The ongoing expenses for a tow truck business are the costs that are incurred on a regular basis in order to keep the business running. This includes things like the cost of insurance, the cost of licenses, the cost of gasoline, and the cost of maintaining the towing vehicles . 

How does a tow truck business make money?

Towing businesses make money by charging a fee for towing a vehicle. The fee is usually based on the size of the vehicle, the distance it was towed, and the time of day. Towing businesses usually have set rates that are regulated by local ordinances or laws. They also bill for things like administrative fees and storage charges.

Tow truck businesses also make money by selling auto parts and accessories from older vehicles that they have taken in as scraps. Tow truck companies might also choose to focus on a specific type of services such as impounding abandoned vehicles or providing various forms of management for parking facilities such as issuing tickets, unlocking cars that have been towed, etc.

Tow truck companies can also make money by offering towing services through contracts that are negotiated with other businesses or institutions.

Is owning a tow truck business profitable?

There is no one-size-fits-all answer to this question, as the profitability of a towing company will depend on a variety of factors, including the location of the business, the type of services offered, and the competition in the area. However, in general, tow truck companies can be profitable if they are run efficiently and offer high-quality services.

Why do tow truck businesses fail?

The most common reason is a lack of customer base. If there is no one who needs a tow truck, the business won't succeed. Another reason is price. If tow truck companies charge too much for their services, they will not get enough work. The last reason that a business might fail is if it charges too little for its services. Even if the business manages to become well-known, it won't be profitable and will face bankruptcy.

To avoid this fate, many tow truck companies work to increase demand or decrease expenses. No tow truck company will be able to succeed if it charges too much, so companies should aim to charge a competitive price.

Tow truck companies must be competitive with their prices to avoid bankruptcy, but they also need enough customers. To accomplish this, tow truck business owners have to find the optimal price for their services.

Other Helpful Business Plan Articles & Templates

Sample Towing Truck Business Plan Template

Tow truck business plan sample.

Are you interested in making money by running a towing business? A towing business as with all businesses can be challenging as well as rewarding, especially when a solid foundation for its success is put in place.

With stranded motorists usually not possessing legal tow permits and at the same time, auto repair shops not maintaining tow trucks as part of the auto repair shop; it presents a great investment gap for entrepreneurs to fill in.

Independent car towing companies come to the rescue of stranded passengers as auto repair shops largely rely on their services to bring damaged vehicles to them.

Get a License

In North America, getting a license to operate a towing business is very difficult and challenging due to heavy regulation. Some operators of towing companies have devised a means of going around this problem.

They contract their services to property managers and car dealerships to carry out this work (towing). But this is fraught with risks as they are not covered by proper towing business liability insurance.

The solution to this is to purchase this license from an already established franchise towing company, but this comes at a high cost. Purchasing a license and tow truck can cost as much as $200,000! But if the buyer can get a license and tow truck at a fair price, the possibility for an increased profit margin is unlimited after buying a towing truck business for sale.

Your Target Market

Your target market consists of areas where your services are much in need and putting this in context, there are several thousands of car breakdowns on highways and off highways, vehicles parked illegally in private spaces or property, improperly parked outside public spaces such as roadsides need to be towed.

To enable customers to recall your company/business, a serious and aggressive marketing campaign needs to be carried out to register your business in the memories of potential clients for use whenever they are in a fix. To achieve this, a catchy name and phone number can do the trick. All these should be well captured in your towing business plan.

Startup Procedure

What do I need to start a towing business? What are the requirements for a towing company ? There are procedures or steps to take when starting a towing business and among these procedures, filing the necessary paper works with the state or the authorities is required.

Also, it is best if the business is registered as a limited liability company or a corporation because these legal structures protect businesses to a large degree as compared to businesses registered under sole proprietorship. Also, inquires about business permits and other documentation need to be made.

What Cars Make up Your Fleet?

What are the costs of running a towing business? Depending on how large or small a tow business may be, functionally tow trucks or wreckers have to be put in place. The number of towing businesses using the flatbed model of two trucks is on the rise, and you will do well to have one. This is because they can tow badly-damaged vehicles, unlike the hooked wreckers where the rear-wheel axle of the damaged cars needs to be in good shape, including the tires to enable easy towing.

As your towing company expands, more tow trucks and equipment are inevitably needed, and hence, for example, instead of a single cell phone call to the tow driver, a dispatch system would provide easy management and mobilization.

Holding Yard

A secured parking lot is crucial to the smooth operation of a towing company. Impounded cars whose owners are unable to pay for their release are kept in such secure yards pending when their owners offset their bills.

These holding yards can hold vehicles for days and even weeks. Having this is very invaluable to the smooth running of a towing business as it presents another way of generating critical income.

Market Access

To gain a fair share of market access, tow companies both new and old need to make their presence felt by both the authorities and potential customers. How may this be achieved? You may ask, by simply making contact with the local police jurisdictions for your tow company to be included in their roster of accident responders.

Also, you can visit local auto shops around to strike a mutual referral agreement. Also, your towing business company must have an online presence where customers can easily make a tow request if you wish to have a fair share of the local market.

Colorful towing company business cards should be spread across strategic locations such as bulletin boards, auto repair shops and also in local bars. This serves to register your presence and create awareness in the minds of your potential customers about the availability of this service.

Employees/Drivers

For your business to move smoothly, only drivers with good track records of driving and also possessing commercial driving licenses should be hired. They must be polite and helpful and also, they must also possess clean driving records.

Purchase High-Quality Equipment

What are some basic towing business start-up costs? A good and functional tow truck is crucial to tow business success, hence, investing in one or several as your financial strength may allow is necessary.

When buying a tow truck or trucks, the services of an independent vehicle inspector should be enlisted. This is to enable him/her carry out examinations on the car to find out if it is worth buying and would serve the purpose or not.

Commercial Liability Insurance

This is so important to towing business survival as it provides coverage, protections, and insurance against sudden damage or accidents involving either the client’s car or your tow truck. The minimum required coverage as spelled out by the state should be provided or made available and costs should be prepared from your annual towing business income.

Here is a sample business plan for starting a towing company.

TOW TRUCK BUSINESS PLAN EXAMPLE

Here, I will be sharing a sample of how a tow truck business plan should look like. It is expected that you already understand how the business is operated so I don’t need to go into that.

One of the very important documents of all businesses is the business plan which should not be taken for granted when you are about to launch your business.

Business Name: Safe Towing Truck Services

• Business Overview
• Executive Summary
• Products and Services
• Vision Statement
• Mission Statement
• Target Market
• Competitive Analysis

BUSINESS OVERVIEW

A tow truck is also known as a recovery vehicle or wrecker that is used to move broken down vehicles, improperly parked or damaged vehicles away from the road to avoid obstruction of traffic. Tow truck companies also include incidental services in their services such as emergency road repair services and storage for profit maximization.

Reports have shown that over five years, the age of vehicles and the number of vehicles on roads has increased making the number of repairs and towing services increase. The fact that the higher the number of vehicles the higher the need for towing services is very true.

Therefore, the towing industry is a successful and thriving industry in the world, it is one of the major sectors of the economy and is responsible for the employment of a large number of people including staff members and professional drivers.

Starting and managing a tow truck business can be challenging and tasking but at the same time rewarding. The business is open for both aspiring entrepreneurs and big-time investors.

EXECUTIVE SUMMARY

Safe Towing Truck Services is a towing truck company based in South Dakota. This is a standard towing truck business that will provide essential services in South Dakota and United States as a whole by moving broken down, indisposed and improperly parked cars away from the road to avoid obstructing the free flow of traffic and also town both light and heavy vehicles over long and short distances depending on the agreement.

The company’s services will focus majorly on the following cities: South Dakota, Memphis, Chicago, St. Louis, North Dakota, Western Kentucky, Tennessee, Nashville, Evansville, and Missouri.

The business as already being registered and licensed. All licenses and permits required to operate in the United States have been secured and we will ensure that all rules and regulations guiding the industry are obeyed.

The goal of the business is to become one of the leading towing truck company within the first few years of operation.

This is a family business owned by David Steve and his immediate family.

PRODUCTS AND SERVICES

The company is determined and set to deliver brilliant services to customers by helping them move their broken-down vehicles from one place to another. This is because we want to be known and seen as a company that has its clients at heart.

The following are the products and services that will be offered to customers:

• Towing of motor vehicles
• Emergency road repair of vehicles
• Towing of trucks
• Towing of light-duty truck
• Towing of a passenger car towing
• Motor vehicles wrecking services
• Roadside assistance services

VISION STATEMENT The vision statement of the company is to become one of the leading and best companies whenever people are talking about tow truck companies and their services in the whole of the United States.

MISSION STATEMENT

Safe Towing Truck Services’ mission is to have the best and very reliable towing truck drivers to boast of and also to establish a towing truck company that will operate well in the whole of the U.S.

BUSINESS STRUCTURE

Safe Towing Truck Services’ business structure will be designed in a way that both full time and part-time employees will be able to work there. The company intends to start the company with many full-time employees and qualified truck drivers. There will also be adequate provision and packages for full-time employees.

Below is the business structure of the company:

• Chief Operating Officer
• Admin and H.R Manager
• Transport Manager
• Sales and Marketing Manager
• Professional Towing Truck Drivers
• Customers Service Executive/ Front Desk Officer

TARGET MARKET

The target market of the company majorly is transportation and haulage companies and every individual with cars in the United States. The towing will be done within short distances and long distances, that is, both intra and interstate.

The company has a list of people and organizations that we intend to do business with and they are:

• Vehicle Owners
• Haulage Companies and
• Transportation Companies.

COMPETITIVE ANALYSIS

We are fully aware of the fact that the towing industry is highly competitive and the company is ready to compete with other players in the towing industry favorably. The major competitive advantage we have is the industry experience, good business structure and solid reputation of our owner, David Steve who happens to have adequate knowledge about the industry.

Also, some of the basic factors that will give our company a competitive advantage are: good network, honesty, trust, excellent relationship with customers, direct access to major highways, and having a well-qualified and trained management team.

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Tow Truck Business Plan Template & Guidebook

Launching a tow truck business requires thoughtful planning to ensure the foundation of the venture is built on solid ground. To make this task easier, the #1 Tow Truck Business Plan Template & Guidebook is here to provide you with an expert guide through the process of creating a comprehensive, strategic business plan. This template and guidebook breaks down the creation process into manageable steps and provides valuable advice and resources to help you succeed.

Get worry-free services and support to launch your business starting at $0 plus state fees.

• How to Start a Profitable Tow Truck Business [11+ Steps]
• 25 Catchy Tow Truck Business Names:
• List of the Best Marketing Ideas For Your Tow Truck Business:

How to Write a Tow Truck Business Plan in 7 Steps:

1. describe the purpose of your tow truck business..

The first step to writing your business plan is to describe the purpose of your tow truck business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a tow truck business:

The purpose of our Tow Truck business is to provide quality, efficient, and affordable towing services to individuals and businesses in our local community. We are committed to ensuring customer satisfaction through timely service and excellent customer service. Our goal is to become the industry leader in providing towing services, while also providing a safe work environment for our employees and customers.

2. Products & Services Offered by Your Tow Truck Business.

The next step is to outline your products and services for your tow truck business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your tow truck business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your tow truck business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your tow truck business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

Form an LLC in your state!

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a tow truck business?

• Tow truck vehicle
• Car towing accessories, such as hooks and straps
• Business license and registration
• Insurance coverage for the tow truck, workers, and customers
• A flatbed trailer or dolly
• Appropriate safety equipment and training materials
• Towing service software to manage invoices and keep records

5. Management & Organization of Your Tow Truck Business.

The second part of your tow truck business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your tow truck business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Tow Truck Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a tow truck business varies based on many different variables, but below are a few different types of startup costs for a tow truck business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your tow truck business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your tow truck business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your tow truck business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Tow Truck Business Plans:

Why do you need a business plan for a tow truck business.

A business plan for a tow truck business serves as a roadmap for success. It outlines the goals and objectives of the business, as well as its strategies on how to achieve them. A tow truck business plan also serves to highlight potential risks, such as competition and regulations, and provides guidance on how to mitigate those risks. A well-written business plan also offers insight into financial projections, marketing initiatives, operational procedures, and more.

Who should you ask for help with your tow truck business plan?

An experienced business consultant or mentor would be the best person to ask for help with your tow truck business plan. They will be able to provide you with tailored advice and guidance that is specific to your business goals and needs, as well as helping you to plan for any potential risks and future challenges. Depending on where you are located, there may also be local government agencies or organizations that offer small business assistance and advice.

Can you write a tow truck business plan yourself?

Yes, it is possible to write a tow truck business plan yourself. However, it is recommended to seek professional help from an expert in the field who can ensure that all necessary components are included and that the plan is comprehensive and well-written. Additionally, many business planning services offer support and guidance in writing a business plan.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

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9 Steps for Building a Reputation Management Plan That Wins Customers and Gives You an Edge Your company's reputation is its most valuable asset. Learn how to build a strategy to protect it.

By Adam Petrilli • Nov 7, 2023

Key Takeaways

• In our hyper-digital business landscape, a strong reputation management plan is not just recommended; it's essential.
• Your reputation affects your ability to attract and retain customers, differentiate yourself from competitors, and weather crises when they arise.
• Building an effective reputation strategy is more than worth the effort.

Opinions expressed by Entrepreneur contributors are their own.

As an entrepreneur, you probably already know that your company's reputation is one of your most valuable assets. In an era where information spreads like wildfire, your reputation can make or break your business in a hurry.

This underscores the importance of a solid reputation management plan, something that can help you not only protect your brand but also leverage consumer sentiment to win more customers and gain a competitive edge.

Below, I outline how to build a reputation management plan that will protect your business and set you up for success. Let's delve into the steps you can take to create a plan that will not only protect your brand but enhance your company's image and bottom line.

1. Define your brand identity

Before taking steps to manage your reputation, it's crucial to clearly define your brand identity . That means creating clear statements on what your business stands for, your core values and, critically, what sets you apart from competitors.

Once you have a firm grasp on those core pillars of the brand and what your company is built on, you can better align your reputation management efforts with those principles.

2. Monitor your online presence

Managing your reputation effectively means tracking the online conversation surrounding your business. Generally, that includes setting up alerts and regularly monitoring social media platforms, review sites and news outlets for mentions of your company, when and wherever they pop up.

Fortunately, there are various tools available (with varying degrees of reach and effectiveness) that can automate this process, making it easier to stay on top of the online chatter.

Related: Is it Time to Strengthen Your Company's Reputation? Here's How to Get Your Online Image (and Reviews) Back on Track

3. Turn positive experiences into positive reviews

Positive online feedback can be a powerful tool for cultivating trust and strengthening your online reputation. Bulking up your positive review presence starts by encouraging satisfied customers to leave reviews on platforms like Google, Yelp and the social media channels they enjoy the most.

It's also crucial to make it as easy as possible to leave great feedback . Providing links and reminders at important touchpoints can help facilitate this process. Responding to these reviews promptly and thanking customers for their feedback also goes a long way toward encouraging positive comments and praise in the future.

4. Build a strategy for addressing negative feedback

In business, negative feedback is inevitable. But how you respond to it can be a game changer, especially for the image you create across the web.

When you come across negative reviews or comments online, it is essential not to ignore them or lash out in anger. Either can make the situation far worse in a hurry.

Instead, focus on crafting a solutions-based review response framework–one centered on polite, professional responses that address customer concerns and seek resolution in every scenario. This shows not only that you care about customer satisfaction but have prioritized it as part of your customer service model and are willing to go the extra step to make things right.

5. Create content that strengthens your position

Managing your online reputation is about more than just tracking your brand and dealing with reviews. To really shape and control your online image, it's critical to create, share and promote quality content that touts your value and strengthens your credibility with customers.

This includes blog posts, articles, videos and social media updates that can consistently reinforce your expertise and authority in your industry, as well as any content containing information that educates and inspires your target audience.

6. Reach out to your audience

Engaging with customers is vital to building a positive reputation. On the surface, that means responding to comments and messages on social media. On a deeper level, it means publicly showing that you value customers' input and are willing to engage in meaningful conversations outside the customer service process.

Conducting meaningful interactions with your audience helps humanize your brand while strengthening long-term connections between your business and your customers.

7. Create buy-in through authenticity

For a reputation management plan to work, you have to incorporate authenticity . Being honest about your products, services, company updates, and any challenges your business faces demonstrates your willingness to make consumers a trusted part of the brand journey .

Transparency builds trust and buy-in with your audience, and customers are far more likely to forgive and support your business when you're upfront about where you've been, what you're doing, and what steps you plan to take down the road.

8. Follow your competitors closely

To build a reputation strategy that puts you on top, it's important to keep a close eye on your competitors' online behavior, interactions and sentiment. Understanding what's being said about the competition can provide unique, helpful insights into industry trends and what customers are looking for at any given moment. It can also help you identify areas where you can outshine the competition, allowing you to build on those strengths and maximize your advantage.

Related: 4 Ways to Pull Ahead of Your Competitors in Business

9. Be ready for a crisis

No matter how well you monitor brand mentions or navigate online reviews, there will likely be a time when you face a PR crisis . This could be anything from a minor customer dust-up to something more substantial, such as a product recall, data breach or other public relations disaster.

In any case, having a crisis management plan in place is essential, allowing you to identify potential crisis scenarios, outline a response strategy and empower a crisis management team to handle such situations quickly.

Whatever you do, have a plan to protect your reputation

In our hyper-digital business landscape, a strong reputation management plan is not just recommended; it's essential. Your reputation affects your ability to attract and retain customers, differentiate yourself from competitors, and weather crises when they arise, and because of that utility, building an effective reputation strategy is more than worth the effort.

Entrepreneur Leadership Network® Contributor

CEO & Founder, NetReputation.com

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Flying into Moscow on July 11 for 3 nights; looking for guide/tour company to show us key sights in Moscow and St. Petersburg. Leaving St. Petersburg on July 18th. Need transportation between 2 cities.

This post was determined to be inappropriate by the Tripadvisor community and has been removed.

I would only warn you that while you can get from Moscow to St. Peterburg very affordably via train, paying a tour company to arrange this will I fear be quite expensive. But, maybe if you are already paying an arm and a leg (or more likely 2 of each!) for fully guided tours in each city, the transportation costs might not seem like that big a deal.

I am not trying to talk you out of using a tour company, but maybe consider (check out other opinions here at Moscow forum by doing simple queries), you may be better served by perhaps using an agency or guide in each city for maybe a full day, but otherwise doing more on your own with some preliminary light reading, research...

I understand that you are trying to be helpful by saving us money; however, we are seniors and feel the need to have someone or group to be responsible for us in Moscow, St. Petersburg and travel in between. Can you recommend a tour group that might be reasonable for us. If not, what suggestions do you have for a safe and comfortable way to proceed. Thank you for any assistance you can give us.

if you think you need to be accompanied by other people to feel safer than a prearranged group tour might be a choice. group tours normally include both Moscow and St. Petersburg and if you have already have a specific date in mind it might be more difficult to find a group tour that would coincide with your arrival. another option - a tailor made prearranged tour

We are going to do a Moscow-St. Petersburg tour next year. We also don't want to do it on our own and are willing to spend to have someone hold our hand from the time we plan until we get home. We inquired of several companies we found on line and ended up with Travel-All-Russia. This is for several reasons. The first is, while other companies mailed brochures, an advisor called us and offered to answer any questions we had about traveling to Russia. I know this was a "low key" attempt to get business, but this is the only company bothering to make personal contact. We eventually did more research and are booking with them. While we cannot vouch for how the trip will go, I can say that any time we have a question or request, the response has been immediate. We opted for "5 star" hotels and, from what I can find on line, we are booked into two of the most desirable hotels in the two cities. We are also going with an individual tour...private driver and guide. This sounds really extravagant, however the cost is in line with the Russian river tour we had originally booked and decided against. And this way we stay in great hotels and don't tour with a group. The company is based in Russia but has an office in Washington, DC. I felt bad leaving my regular travel agent out of the trip but was told, if I wanted, they would do all the work and pay him his full commission. This has worked out very well as he has spoken with them and is watching our backs. Also, because we included him, he worked to get us some super air fares, something I know a TA does as a pure customer service. I do plan on an extensive trip report after we are done.

> I do plan on an extensive trip report after we are done.

Please do report. "Russia from the limo window" is a rare genre here.

I sure hope I don't detect any snark in that reply!

Actually, we're not big on guided tours, preferring to do it ourselves. However, my wife has some health issues where we can be doing just fine and all of a sudden she can't continue. Earlier this year we you exploring a city on foot and were two blocks from our destination when she sat on a wall and said she could not go another step. We could actually see our destination but there was no public transportation nearby and we could not get a taxi. We ended up moving a painful few steps at a time and, by the time we got there, she was in tears and it pretty much ruined the experience. I don't want to do this in Moscow and St. Petersburg.

On last year's trip to Hawaii, we booked a private tour on one of the islands. We were picked up by a native Hawaiian in a jeep and he drove us all over the island, showing us things that interested us and passing on stuff that did not. He even stopped at the home of a native Hawaiian family he knew where we sat in the back yard talking and looking out over the ocean while eating banana cream pie she had made from bananas grown in her back yard. We also got a good education in history, flora and fauna as our guide was also a college professor. It was one of the great tours we've had and nothing we could have done in a group or on our own.

I realize from reading these forums that many of the posters take great pride in how independent they are and how much money they can save. What's wrong with saying you plan to see a country in luxury as a once in a lifetime experience. Does everyone have to rough it and save money?

No, please don't take it as a "snark" - I have read your other posts about your wife's condition and I think you are doing exactly the right thing, moreover I applaud her willingness to travel the world when her legs can fail her any moment.

The pride in having taken an independent trip to Russia for most people is not about saving some money but mostly about proving that it IS possible to do it on their own the way they prefer and have a blast despite Western media picturing Russia as a scary and dangerous place.

Sorry if I sounded testy.

We've always wanted to visit Russia. It is an especially "mysterious" place to those of our generation who lived through the cold war, which may account for some of our generation having some trepidation about doing it alone, though it is assuredly not warranted.

This topic has been closed to new posts due to inactivity.

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'The China Project' media company shuts due to funding problem

BEIJING, Nov 7 (Reuters) - One of the few independently funded English-language publications to cover China in depth for Western audiences, "The China Project", is to close because of a lack of funding, its editor-in-chief, Jeremy Goldkorn, wrote in a post.

The China Project, which began as a newsletter in 2016 and was formerly known as SupChina, expanded to become a "news and business intelligence company focused on helping a global audience understand China", it says on its website.

Its products included the popular China news and society-themed Sinica podcast, articles on a wide range of China-themed topics on its website, a business intelligence data product "ChinaEDGE" and organising conferences.

Staff numbers increased too. But as with a number of online-based media companies in recent years, such as Buzzfeed News, financing became a problem.

"The media business is precarious," Goldkorn wrote in a statement on the website.

"This week, we learned that a source of funding that we had been counting on was no longer going to come through, and we have had to make the difficult decision to close down."

The company sought to produce "balanced" reporting on China and U.S.-China-themed topics. But this attracted criticism as relations between the two powers sank to new depths.

"We have been accused many times in both countries of working for nefarious purposes for the government of the other," Goldkorn said.

"Defending ourselves has incurred enormous legal costs, and, far worse, made it increasingly difficult for us to attract investors, advertisers, and sponsors. While our subscription offerings have been growing strongly and steadily, we are not yet in a position to rely on these revenues to sustain our operations."

Media companies globally have had mixed success with subscription models.

The China Project's subscription package offered "the internet's best birds-eye view of China" for $120 a year, which was still on offer to site visitors on Tuesday, according to a Reuters check.

"We do not have a business model problem," company CEO Bob Guterma told Reuters via email.

"We made big plans and pursued them boldly with the full backing of our investors. But in the past six months, investor interest has dropped off precipitously due to economic and geopolitical headwinds. We became unable to sustain what we had grown into."

Reporting by Martin Quin Pollard, additional reporting by Laurie Chen, Casey Hall, Brenda Goh ; editing by Robert Birsel

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Martin is a (China) political and general news correspondent based in Beijing. He has previously worked as a TV reporter and video journalist and is fluent in Mandarin and French.

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