How to Start a Towing Company in 2020 :: Towing Business Startup

Tow truck drivers work in an industry where consumer satisfaction swings more quickly than Captain Jack Sparrow’s compass needle. Their services get praised when people get roadside assistance at 3 AM in the morning but despised when used to remove an illegally parked vehicle.

Even though the customer experience varies on a large scale, one thing is for sure. Start a towing company is one of the most lucrative on-road business there is in our time.

You had a brilliant idea to start a tow truck business. Congratulations. But, you don’t even know the ‘T’ of Towing, no worries because we are here to help you. The best thing about starting a towing business is that the competition is quite less in this market.

There are not enough towing companies in any given city, so you are safe from cut-throat competition. Almost all the existing towing businesses are making a decent profit and are quite stable.

There are some key aspects that you should know about how to start your own towing service company

Types of Towing Services

There are a lot of ways that you can make a living by towing.

Tow Disabled Cars
Roadside Assistance
Tow for Law Enforcement
Tow Impounded Vehicles

Tow for a City Government Body
Motor Club Towing
Tow for an Auto Repair Shop
Tow for an Auction House

Take your time to consider your options, what kind of work you want to do and then make a decision to follow a particular option.

You need to select which type of towing service you want to offer with your towing business startup.

Bike Towing Service Startup

Bike towing services use lightweight trucks for towing multiple bikes at once.

Heavy-duty Tow Trucks Service

Heavy-duty tow trucks for towing cars.

Boat Towing Service Business

Boat towing service used at lakes, rivers, and sea.

We will be considering Heavy duty car towing for this article as this service holds the majority in the towing service industry. So answers would be more specific towards the question, “How to start a tow truck business?” and “requirements for a towing company” However, the answers provided will give you a general idea of how to start a towing company.

There would be many differences in other towing businesses compared to car towing, but all these differences are minimal in nature, and you will learn about them as you do more in-depth research on your specific model of towing business.

Top 5 Tips to Start a Successful Towing company

1. Initial Cost of Starting a Towing Business

Now let’s answer the question that is drilling a hole in your head, “How much does it cost to start a towing business?” If you are starting a towing company, you need at least $10,000 to $25,000 as an initial investment. This is just an approximated price. The cost will vary on various factors like location of the business (urban, rural), type of vehicle you are purchasing, your specific towing business model, etc.

To keep your towing business startup cost low, it’s always better to buy a used tow truck instead of a new one. A used truck costs quite less and is usually in good condition due to less overall usage. The money you save on purchasing the truck would be better used in your advertising budget.

2. License and Registration of Your Towing Company

Getting a tow truck driver’s license could be quite difficult as the regulations for this category are very strict. However, getting your towing truck business registered is an easier and quicker process. Most of the documentation requirements for a towing company is simple, so administrative procedures would not take a lot of time.

Each state has its own regulations So you must check with your state’s department of transportation to see what permits you’ll need to launch your tow truck business legally. Getting the required permits and licenses is very important to start a towing business. Starting a towing business without an appropriate business license would be an illegal action.

3. Liability Insurance for Your Tow Truck Business

Liability insurance is a must before starting a towing and recovery business as there is always a chance that you could make some mistake and damage your client’s vehicle, no matter how big or small the damage is, you end up being responsible for it. Such a liability insurance takes care of such cases and pays for such damages.

Common Tow Truck Insurance Coverages

Auto liability protects you if you are at fault in an accident.
Bodily injury liability covers the driver’s medical bills in case of on-work medical needs.
Property damage liability reimburses the property damaged while assisting your customer.
Collision coverage pays for repairs or replacing your truck in case of an accident.
Comprehensive coverage pays for any accidents other than collisions such as fire, vandalism, an animal strike, or falling objects.
On-hook coverage protects you financially by covering the client’s car while it’s hooked up to your tow truck.

4. How to Advertise Your Towing Company

Just starting a car towing business doesn’t get you the customers, people must know that your company exists and you offer better service than your competitors. Marketing is a must for any startup and for a business like yours, it’s more than necessary to reach to people.

Some old school advertising methods like getting your details in your local phone directory and having billboards or posters set on main roads and crossings will make it easier for people to get to you. Still, no other marketing is as efficient as internet marketing. When all the eyeballs are set on mobile and computer screens, it’s necessary to build your presence on such screens.

Majority of the people call repair and auto body shops whose service they have used before. So partnering with such shops will give you more branding and clients through word-of-mouth advertising.

5. Digitization of Your Towing Business

Rather than remembering the phone number people prefer to have an app for any service. So, developing an app for your towing business is a very promising idea. Having a handy app that your customers can use whenever they need your services is good for business.

People will always opt to open the app on their mobile rather than going on the internet to find any other towing service, so it would be better if the app on their phone is yours. You would need a team of excellent mobile app developers to build a high-end personalized app for your business.

It’s of utmost importance to select the right team with the right budget to work on the towing truck on-demand app development project. The cost of developing a mobile app can range from $5000 to $45,000 based on factors like how advanced features are you using, whether you have given the work to a company in your state or outsourced it, and many such points.

Still Confused on How to Start a Towing Business?

Starting a towing business is very cost-effective and less competitive, so with the proper input, you can build a good name and successful towing service company for yourself.

This article is on the general tips and advice for entrepreneurs who have just entered this field. If you need more information on the costing and advanced information on how to start a towing service company Contact Us.

How to Start a Towing Company – Step By Step Startup Guide for 2020