If you have been focusing on starting a business that helps stranded motorists in their time of need and handling heavy automobiles, then you are ready to start a towing company. Any time is always a good time to start a business, provided you get all pointers right. In 2019, the auto industry brought over $8 billion in revenue, and starting a business around it would be a noble idea.
But before you can proceed and enact the implementation, there are a couple of things you need to get right. Here are the important factors you need to consider.
Write your business plan
Your business plan will serve as a guide to building a profitable and successful tow truck business. In a business plan, there are key things you need to get right. First, consider which clients you want to serve. These can be;
- Roadside assistance for the general public
- Towing impounded vehicles
- Towing services for the city
- Auto repair shops
- Law enforcement
- Auction houses
Once you have identified your market, next is to have a solid financial plan. Capital is what will keep your business up and running. Your capital will also determine the type of equipment you choose, be it flatbed trucks, integrated tow trucks, hook and chain tow trucks among others.
You will be making your revenue through charging your customers and clients for towing vehicles. The charges will include a flat fee for the tow, a mileage fee and sometimes storage fee.
Register your business
You will need to sign some important paperwork before you can open your doors for business. To register your business with your state and local agencies, you will be required to complete a couple of steps.
First is choosing a business entity. The business entity you choose will affect the way you file your taxes and the types of risks you are exposed to.
There are three common options to choose from. These include; sole proprietorship, where you assume total liability, meaning both your personal and business assets are at risk.
Another option would be registering a limited liability company. LLCs can be formed as an individual or with a couple of business partners. This would be the most attractive option for registering a company.
The third option would be registering it as a corporation. This can be a good option if your goal is to aggressively grow your business.
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 if you are complying with all the requirements.
Tow truck businesses will need to secure licenses and permits including; indictment management permit, private property permit, consent tow permit, oversized vehicle permit and class B driver’s license. You will also need to purchase all the necessary tow truck insurance.
Lastly, a key step to ensuring success in your business is having a marketing plan. You will need to craft unique ways to promote your business.