Are You thinking of starting a towing business? Here is a couple of questions for anyone who has owned or just want to start a towing company.
Starting a towing company is a hard business. I bought an existing business about 13 years in business and ran in another 10 years before I sold out to my business partner a few years ago. So the towing company has been running over 25 years and is doing well.
If we had to start the towing company from scratch I can't imagine how long it would take to how to make money in the towing business and have become established and profitable. We bought into the companies largest and most profitable contracts. The phone was already ringing when we took over which is a huge difference compared to a new business.
Its a tough business all around. High overhead! Lots of licensing and regulations. Everyone is always angry that you are dealing with. Its usually long hours, many companies never close, and are always on call. Holidays. Bad weather. Middle of the night.
The competition in towing indutry can be tough and often you cannot control the rates. Police contacts are hard to come by, but will be the most profitable. You are bound to the regulated rates and rules. Equipment is expensive and needs constant maintenance. The older it is, the more you can expect to rebuild. A set of 6 decent tires on a typical truck is around $2000 these days.
Working for many companies and other motor clubs is tough because you have to follow their rules at their contracted rates which are usually 1/2 of retail or less. Trespass / Private Property towing is also very profitable but not a friendly business at all. People get pretty mad when you grab their car.
Financing is tough if not impossible when you first start up a towing company. We tried all sorts of loans and in the end the only option was private and creative financing. Dumping every dollar back in to the business. After a few years in business everyone is willing to give you some financing at not always the greatest rates.
We started with 3 trucks, with 1 as a backup really. 2 is a good number. Spend as much on the trucks as possible, because you will be paying to fix it later if not. Downtime is expensive. Mechanics are too. Wreckers are quicker to run, but these days with the huge amount of 4x4 and Awd vehicles, you might want to be sure you have tow dollies. People tend to prefer flatbeds and its a little less apt to damage a car. Plus you can load 2 on there.
We used the best towing business software. Its been a few years, but it was the best at the time. Don't skimp on software as its going to run your business. It took care of invoicing, bookkeeping, driver records, truck records, storage and more for us.
Towing in general is an interesting industry, but owning the company is a whole different situation. Prepare to become bookkeeper, mechanic, salesperson, dispatcher, parts researcher, HR, fabricator, and whatever else comes up.
How to start a towing company? If I could do it over again I would have chosen a different business. Some businesses are easier than others to turn a profit. Just my 2 cents!