The Monthly Costs Associated With Running A Towing Business.
Written By Don Archer. Connect with him on Facebook
Now that you’ve read the post How to Get Started in The Towing Business and have a rough idea of the possibilities with regard to income, you need to continue your investigation into the towing business. To determine if this is a good fit for you, you’ll need to know what recurring expenses you’ll have on a monthly basis.
With every business, there are two sides to the profit equation; Income and Expenses. Obviously, you want to have more money coming in than going out, and you do that by either spending less, selling more, or both.
Before we go further, we’re going to establish certain assumptions:
All numbers here are hypothetical and are dependent upon your circumstances.
You’re an individual with no employees.
You operate one tow truck, wrecker, or carrier. It doesn’t matter.
You either operate out of your home or an existing business that has another source of revenue.
These expenses do not include any amounts for overhead, such as real estate mortgage, rent, electricity, trash, and other expenses that go along with an office, garage, or storage facility. If you run this business out of your home, you’ll need to check with the authorities to be sure you’re operating within the rules.
The average costs of running a one-truck operation will vary depending on your choices. You’ll obviously have a higher monthly mortgage and increased insurance payments if you finance a new truck. On the other hand, purchasing a used tow truck will cost less upfront, but it may eat you up in repair bills. The choice is up to you.
Recurring Monthly Costs For Running A Towing Business
Tow truck mortgage $1,288– ($80,000 truck financed for six years at 6%)
I’m not suggesting here that you mortgage a truck. In fact, it can be difficult to get financed since, if you’re just starting out, you won’t have a track history of income. What I do suggest is the best route for entry into the towing industry is to pay for a truck with cash. I understand that this can be difficult due to the fact that a decent used tow truck can run anywhere from $25,000 to $45,000. Unfortunately, this is the reality we live in. This is one BIG barrier to entry into this business. However, those who do have the ability to discipline themselves and sock away money for a lofty goal such as this will have given themselves a huge advantage. Not only will they be unburdened by a monthly payment, but the process of saving and focusing on a goal will provide them with the fortitude they need in the years to come as they grow their towing business.
Fuel $1,282- (220 calls @ 20 miles each & 13mpg with $3.79 gal/ diesel)
Most tow trucks have diesel engines. The reason for this is two-fold. Diesel engines operate at a much higher compression than gas engines which provides both cost savings with regards to mileage, as well as added power for getting the job done. One of the caveats with operating a diesel truck is repairs are usually more expensive, especially on newer models.
Insurance $600- (high deductible)
The monthly insurance premium for tow truck operators just starting out is one of the other BIG barriers to entry. In recent months, one of the largest insurance companies in the towing industry, Progressive, after pulling out of the market, has re-entered in various areas. This move has increased insurance premiums substantially.
The types of insurance you’ll need are
- General Liability
- On-Hook
- Cargo
- And, if you have a storage facility, you’ll need Garage-Keepers coverage as well.
Also, depending upon the entities you work for, insurance companies, motor clubs, law enforcement, and the like, you may be required to obtain an umbrella policy upwards of $1,000,000 or more.
Repair Bills $500- (Repairs and maintenance will vary depending on many factors)
Depending on the age of your truck, the type of truck and bed you buy, how well it’s maintained, and how you use it, your repairs and maintenance will vary. I would suggest not buying anything that’s seven years or older, that’s because, for the most part, these trucks will have racked up the mileage, and even though it might look good and sound good, there may still have been neglect that’s too far gone to remedy. Maintaining your truck is one of the simplest ways to avoid or put off costly repairs. Checking the oil and other fluids daily, changing the oil per the manufacturer’s suggestions, and lubricating all moving parts on both the chassis and bed increase the life and usefulness of your tow truck. Another factor that can decrease the frequency of repair is not using your truck and bed outside the manufacturer’s suggestions. Both your Cab & Chassis, as well as your bed, have specific capacities and load limits that must be adhered to avoid damage and keep everyone safe.
Marketing $1500- (Variable but expect to invest this minimum)
Marketing your towing business is a must. Unfortunately, this is the most overlooked part of growing a towing business. Rather than thinking of customer acquisition as something that should be addressed head-on with a decided budget, most tow company owners use a “Field of Dreams” approach, thinking all they have to do is put a sign on their truck, and the calls will start rolling in. And when the calls don’t start coming in as quickly as expected, they land square in the lap of the motor clubs and their unreasonable customers. But now they are desperate.
Why do you think motor club rates are so low? Because there are not enough service providers who understand exactly how to properly work with the motor clubs and insurance companies. They’re setting rates too low and harming themselves.
A smart towing business owner understands that marketing their business is just as important as putting fuel in their trucks, maybe even more so. Because without customers, what need is fuel or trucks, for that matter.
Gone are the days of the Yellow Pages. Today, there’s a new sheriff in town, and that’s Google. There are basically four ways in which a motorist finds the services of a towing company, and you’ll want to exploit all 4. Motor clubs, Law Enforcement, Referrals, and Google. Not everybody has a motor club, not everyone will think to call a friend or repair shop for a referral, and not everyone will call 911 and ask for help, but everyone has a smartphone and the ability to search for the services of a towing company. Unfortunately, there are charlatans in every trade, and it’s difficult to know who to trust. If you are looking for marketing for your towing business, contact The Tow Academy. We have a proven process of increasing online visibility, so your business gets found more often.
Phone $100-
Damages $300-
Unfortunately, there will be times when damages occur. Depending on your attention to detail, damages to a customer’s vehicle may not happen for an extended period. We suggest that you budget a minimum of $300 dollars per month for each tow truck operator you employ. This number may sound high to you, and it is, in fact, an over-exaggeration of the problem, but when damages do occur, if you’ve put this amount of money into a separate account, it will hurt a lot less.
Also, if you work motor vehicle accidents, you may encounter situations that are barely tenable. On some recoveries, unintentional damages may occur during the course of providing a necessary remedy to the situation. For example, an accident where two vehicles are merged or locked together. They can’t be towed together that way, so sometimes you have to break a few eggs to make an omelet. Unfortunately, some motorists do not understand the limitations that exist in these instances. And they may complain to their insurance company that you did more damage than was necessary or that you were neglectful in your work. That is why it is always best to carry a damage waiver and, if at all possible, have the customer sign it before commencing the work.
Of course, under certain circumstances, it is not reasonable or required for you to get a signed waiver. For example, in the middle of a busy 4-lane highway where clearing the road quickly can mean the difference between life and death.
And know this, even if you do get a signed damage waiver before you begin the work, it may not cover you in all instances. So, document the recovery with photos before you touch the car.
Uniform $75-
Miscellaneous $50– Ticket Book and Office Supplies
This list doesn’t include any expenses you’ll pay annually, such as Licenses, taxes, subscriptions, and dues. And you’ll make other discretionary spending choices when it comes to training and upgrading equipment throughout the year. This is a good place to start so that you understand how much money you’ll be required to bring in monthly to make it.
Hi , my name is Demetrius Pierce “Big Dee” I had a towing in 90’s and early 00 loss it due to divorce and I was thinking of starting up again but was wondering is the money still there like it was years ago…Some of my friends that are still in it say no because of insurance and how the price of trucks have gone up , so I was wondering can you still make above living verses staying working a job at 40,000 yearly..
Big Dee, Of course you can still make money in the towing business, if you’re smart. That means steering clear of dependency on motor clubs, staying away from working in cities where the rotation is controlled by 3rd-party dispatching companies, and being found where good, cash paying customers are looking for your services. Go ahead, Get in the game.
Just started a towing company in Florida .. two used trucks … just wondering if it is worth it to buy used truck or brand new trucks ? New trucks you most likely have no repairs needed and used they most likely will break down here and there . Also we are in motor clubs, is it even worth it to stay in them ? What else should we look into ?
I need help
Keith,
I can help you if you let me know what you need help with specifically. Other than that, I would suggest that you read every article on our website, as well as all of the comments. That will give you an insight into what’s really going on in the towing industry. Also, check out our YouTube Channel. Also, you can purchase books on the Shop page of our site. If after going through all of those resources you’re not completely satisfied, you can check out our consulting services. Once, you’re ready to start, we then can help you with our Customer Acquisition Services.
I hope that helps. Let me know, and Good Luck
Keith:
Where are you in FL
I
Am interested as well…
Perhaps I can assist you financially or partner up somehow It’s for
My Son who needs to change careers.
Thanks
Larry
Im a repossession agent with 3 years experience. Id like start start my own repossession company. Im unsure wether i should start a towing business first to bring in revenue.
Hi Don, I am willing to start a small towing company in Edmonton Canada. But I am not sure how goes the business here, is the money good here. as I head here is no motor clubs or dispatching companies like US. The market seems good I guess! But I wondring if you have any hook up here or any informations how the business goes?
Hi Adam, I think you are in a great position to start towing in Canada. The pay will be better than using the motor clubs. Some do pay reasonable rates, but if the register owner is willing to pay. You will get much better rate per mile. Best of luck.
Hi Frankie I read your comment in 2023 , I am thinking the same as like you . I am living in Calgary AB .So ,Did you start your towing business? How is it going so far ? Is that profitable ? Give me your advice please . Thanks
Hi DON G i am willing to start a truck towing company in Johannesburg SOUTH AFRICA. my problem is that i don’t have clear information about this kind of business i already have few trucks. as i am not sure how the business goes here can you please help me with information of what to do if things are like this.
Good evening Don.
I am starting up my own roadside assistance business here in Arizona. I was planning on using my personal vehicle and having the logos for the company put on it with lights. I was also going to start the business utilizing the motor clubs for jumps, gas, lock outs and what not. Is this a good approach to get started or should I try to find an old good used wrecker to start?
I am currently in the towing industry as a driver so I know a lot about the field. Just think it’s time to branch out on my own. Thanks
Kevin,
Thanks for commenting. I appreciate the question and understand your desire to get into the industry as inexpensively as possible, but there are many things to consider before jumping in this way. Check out the last comment on this post, it should shed a little light on the challenges of choosing this route.
Thanks again.
Hello Don
My name is Dawn and me and my Husband are wanting to start a towing business in GA but I’m kind of wondering if it would be worth it because I’m looking at cost and I’m kind of confused I’m just needing some help with some guidance can you help me please is there a class I can take to find out more or anyting I’d appreciate it thank you.
i statred with a truck and trailer . had a 97 f150 and a 18ft trailer that was 10 years old now i have a new trailer and 2001 chevy 2500 i live in georgia. I make about 4500 a month or more start off small
Hey Don I love the info. I live in Indianapolis thinking of starting a tow truck company and I would be the only driver. Family time is important to me and I was wondering if there’s a way to run A non 24/7 company and still make enough to provide for my family? Not trying to get rich just make a decent living being my own boss. I’d appreciate a response thanks
Antoine, I work with several non 24/7 companies, and yes they do make enough money to make a living. There are limitations of course. Motorists need the services of towing companies regardless of the time of day or night. Which means, you’ll be hard-pressed to get any work from law enforcement. There are many things to consider before jumping in though. Here are just a few. First; many of your customers will come from referrals, which means you’ll need to take the TIME to develop relationships with local repair shops and other business owners. Second; a towing business is not something you can do as a part-time gig. You’ll have to put all of your ENERGY into it. This TIME + ENERGY means you must either have another passive source of income, or you must have enough money in the bank to withstand, at minimum 12 months of not reaching your break-even point. So save your money until you have enough money to buy a truck outright. Try to stay out of debt. Cut your lifestyle as much as possible. Anything worth having is worth sacrificing for. So ask yourself do you really want it. Also, the sooner you get your head wrapped around the concept that the quality of your marketing is just as essential to your business as the quality of the fuel you put in your truck, the quicker you’ll move forward. Customers only need you when the need you. And if you are limiting your availability you must take advantage of marketing to get the calls you want during the times that you are open.
Hope that helps.
What’s up Don? Quick question, how do I get contracted with Autoreturn in San Francisco?
Thanks
Tony, Why would you want to be contracted with AutoReturn?
I’m told that’s a lucrative contact to have? Is that not true?
Well I guess that depends upon what your idea of lucrative is. From what I’ve been told from reliable sources, it’s not very good pay, compared to what state police calls pay. Unless you are accustomed to accepting the scraps that being contracted with motor clubs provides. Tony, seriously…read this post AutoReturn accused me of making false claims about their company, and then attempted to use the leverage of being an advertiser with American Towman Magazine to get me to stop telling the truth. They threatened to sue me for calling them parasites.
Hi Don.my name is Eva I’m live in p.a but trying to start up
A towing & roadside in Georgia with a driver and and do you think its worth it he get 60% and I 40%
Eva,
Thank you for the question, but there are too many variables to consider before giving you advice on compensating your drivers for their time. What type of towing services are you providing? Motor club calls, cash calls, accident recovery, repossessions, impound towing? It makes a difference because the profit and expenses will vary and you may not have enough left over to pay for fuel, insurance, a storage lot, maintenance, repairs, and saving for your next truck. What we did and what I see many towing companies doing, is paid an hourly wage for 50 hours every week. Then we provided a 30% commission for after-hours work. However you compensate them for their time, you must ensure that you;
Keep track of all of their hours worked.
Ensure that every compensable hour of pay they receive is at or above minimum wage.
The trap that some tow company owners fall into is that, in certain instances, a 30% commission may not amount to the same amount a driver would have been paid for overtime work. For example, 30% of a $50 tow is only $15 dollars. But, if the driver’s hourly wage is $14 dollars and they’ve already worked 40 hours for the week, then their overtime rate is $21 dollars. And, if a disgruntled employee chooses to talk to an attorney about this, you could be facing a suit from the Board of Labor, and be forced to pay back wages plus penalties. It’s happened before.
Thank You again, and good luck.
Hi is Chicago, Illinois a good for the towing business? I am a fema
Good evening. I am interested in starting up a tow business. I am not looking to make a living from it. I am just looking to do it as a side business and possibly hire a part-time employee to handle it when I am not around. My father passed two years ago and left me an auto mechanic shop. The facility is paid off and is in good standing. I would like to open up a tow business. The part-time employee would be a family member who does odd and end work but also needs something more consistent. What do you think and what is your advice, sir. Thank you for your time.
Hi my husband wants to start his towing/hauling business, we don’t know where to start.. can you guide us ?
Cindy, Starting a towing business is a huge undertaking. If you would like one-on-one coaching contact me and we’ll discuss it to see if we’re a good fit. Otherwise you can start here.
First off thanks for all the info
I have been working in a towing company/tire shop. I don’t make much there and want to go out on my own.
Any advice on what banks or program’s I can look in to? I am looking to start small at first, any advice on what truck would fit me in a smaller town? Thanks again from Clarksburg, WV.
William
Since we all love our trucks, let’s start with the truck question. I always suggest that, for the most part, new tow company owners should start out with a flatbed tow truck, commonly referred to as a carrier, or rollback. Preferably used, and paid for with cash. A Hino, Freightliner, International 4300, Ford F650, Chevy 5500, or something along those lines with at minimum, a 21-foot bed with removable rails.
Now for the tough stuff – banking/programs. With zero revenues, and no experience in the towing industry you’ll be hard-pressed to find anyone, outside of family, who will be willing to take a chance on you and loan you money to start a towing business. Your best bet is to save up and invest your money on your idea. Saving your own money will help you in more ways than one.
Saving your money will help you stick in there when times are tough because your expenses will be less. Saving your money will allow to you appreciate the sacrifice, and the investment of time and energy you’ve made to get you where you are. But most importantly, saving your money will help you to begin to develop the discipline necessary for operating any business. Spending borrowed money, as most bankers know, is easy. Why? The money wasn’t earned and is therefore not appreciated. That’s why that type of money is few and far between.
Good luck, I hope that helps
Hello Don it is a pleasure to be able to communicate with you,and i am too excited ,and cant wait to my books come.My name is Shadell owner of Dellicate Towing Service.Start up business new to the game however i am taking notes lbvs.I have a 2015 dodge ram 4500 self loader i will be doing local tows break downs,lockouts,flats,gas,pulling out the ditch,and etc.I also want to do repossession as well which is why i am reaching out to you.How can i go about getting repossession contracts?i hope that you have great information and guidance for me as i know you will.I look forward to hearing back from you and so eager to see your response.Thank you for your time and consideration it is much appreciated.
Hello Don,
I am trying to learn as much as possible to create a business plan to start our own towing business. We live in Polson Montana and its a very rural area so travel and time is more than in a city. We have two competitors one with an outstanding name and one with a so-so name. My boyfriend has the experience of driving tow trucks and has been a mechanic for 20 years…I have the experience of office work, advertisement, accounting, and sales. My question is do you believe it would be lucrative to start in this area?
Crystal,
I’ll do my best to answer your question.
You are asking if I think opening a towing business in Polson Montana will be a lucrative venture. Lucrative merely means profitable. So, if you simply want to make a profit, all you need to do is find out if you can provide enough of your services to outrun what it costs to provide them. If you can, then yes, you’re obviously going to making a profit.
But if you want me to tell you if opening a towing business in Polson is worth your time, well the answer to that depends. Among the many things you must consider before leaping into this is the value you place on your time, the demand for towing services in your area, and what’s called opportunity cost. What other opportunities exist in your area, and would choosing one of them constitute a higher, better use of your time?
There are various reasons for wanting to start a towing business; one is profit, another is service to the community. But, since you asked about profitability, I’ll give you an idea of how I would go about evaluating whether or not to open a towing company in Polson, Montana.
To begin, the city of Polson has a population of roughly 4700, is located in Lake County, which has a population of 29,000, and Lake County is vast, it encompasses 1654 square miles. Your area is very sparsely populated meaning there may be fewer people who need your service.
The county my towing company was in is 1/4th the square miles of your county, and with a population that is more than 2 1/2 times your county. If that were all the information I had, I would be inclined to look elsewhere.
That being said, a simple Google search of “Tourism Lake County MT,” yielded this result.
In 2017, Montana’s Tribal Economic Development Commission received legislative funding to develop the “Indian County Tourism Region.” The office is currently seeking to hire a Tribal Tourism Officer to promote “authentic and culturally appropriate tourism in Montana.” The state’s department of commerce reports that 12.5 million out of state visitors contributed $3.3 billion to Montana’s economy in 2017.
If tourism is a huge part of the economy, or you are aware of a powerful industry’s interest in expanding in your area, say; Big Oil, then starting a towing business there might be a good fit.
Hope that helps.
Hi don I currently have 2 semis on the road n also work for local semi wrecker company as a driver I’m looking at going all in on starting my own wrecker company as well as keeping the semi trucks rolling ive got some capital on hand i live in central Indiana area I’m wondering if it would be a wise decision since i have the trucks or would it be a bad idea I’m profitable in the trucks n have been i have a habit of getting my hands into anything n everything to make a profit but yet stay true to my drivers would this be a good route to venture into
Kevin,
Thanks for the comment.
Sounds like you have your hands full. For me to be of service and provide you with valuable recommendations I would need to know more about your situation and what your goals are. Obviously, an open forum like this is no place to discuss financial matters, which come into play when making business decisions. So, if you would like to schedule an appointment to discuss possibly engaging in an ongoing discussion you can email me at don@thetowacademy.com
Hey Don its a pleasure to be able to speak with you ,and by the way i cant wait to receive your books i just recently ordered :).My name is Shadell i am in the process of he start up for Dellicate Towing service .I have a question How do i go about getting auto repossession contracts ?I have a 2015 dodge ram 4500 self loader my plans is to tow locally for brake downs<lock outs,flats,city contracts,etc however i am struggling with going about repossession contracts can you give me some information on that ?thank you for your time and consideration.
Hi Don, My Name is Dana and my husband wants to start a towing business but its just him by his self for rite now…I was thinking maybe he needs to work with a towing service first to see how everything works first… once he get everything down pack slowly branch off to doing his own business… am I telling him the rite thing to do?
Dana,
Clearly, having experience in an industry that you are looking to start a business in is a smart way to go. It sounds like you have a good head on your shoulders and are providing him with the right advice. Who knows, he might get involved as an employee and then learn that the towing business is not for him. This could save him thousands of dollars as well as a more valuable resource, time.
Hello Don I’m Craig from Memphis Tennessee and I’m trying to decide if I should roll the dice and start a towing business. I’ve talk to several tow truck drivers and they all say that even though there are dozens of tow companies in Memphis that it’s still not enough but I was told by a few others that you can not get on the rotation list with the city county and state police unless you have more than one truck ,is this true ? I will be buying a used truck at a decent price and I don’t have much over head plus I’ll be driving my self and on top of that my kids are grown and I’ll be available 24/7 . What would you suggest ? I’m debating between a tow truck or a otr semi truck which I would hire a driver but either business would be in my gf name and I’d just be the brains and muscle of the operation so it wouldn’t interfere with my social security .
There’s just some things you don’t put on Blast online ! Lol. Especially when talking (Conspiracy) about Lying to the Government. Why would you consider LOOSING EVERYTHING by “Trying To skirt Loosing a Few Dollars ????, Compared to “Doing Business on the “Up and Up” !! And maybe making TONS of Better money ?? Being a “Silent Partner” really only works on the Movies or Mob !!..
Hello Don, my name is Neil. I am 31 yrs old from Birmingham, Alabama. Growing up here is very different from many other cities. I have a lot of knowledge on operating heavy equipment, trucks, and also mechanically inclined. I want to start my own, one truck, buisness. I have always been told for the most part you will never make any real money working for someone else. I have mid range credit,zero children, and plenty of time. I’m thinking of selling my rental home for a good downpayment on a new truck for the warranties of course. Here’s the thing it’s just my wife and I, we feel like we have one shot at this. Due to my job at a large communications company I do not have time for for both, so it’s all or nothing. This city/state is growing unbelievably fast, every new buisness seems to thrive. I have the ambition and drive to be successful. I do not want to fail as it is just us. I’m not really sure what answer I’m looking for from you but any insight at all is better than nothing. Oh and what about Uber freight heard anything positive or negative, it’s really just now taken off here, uber that is. Kinda gives you an idea how ” behind” we are. Thank you for reading this maybe I’ll get some good info.
Hi I want to start a tow truck business. I do have a felony. Is that going to be a problem for me to get a license for the business.
Hello I’m mil and interested in starting my own towing company how do I get started.
Hello, I tried contacting you by email. Is there another form of contact information where I can reach you?
Thanks!
Yolonda,
I’m sorry but there’s no record of an email from you. You can reach me at don@thetowacademy.com
Hey Don, I am wanting to start a weekend wrecker service in Arkansas… I once owned a junk yard, so I already own out-right a rollback, I don’t plan on storing any vehicles…I have a 6 figure income, but want to do something on the side because i truly enjoy it. My goal is just to do around town pickups and drops. Does that sound feasible?
Hey Don, I just want to thank you for putting this together. Moving into 2019 I’m trying to get better with my books which is something I have to work extra hard at to get in a good spot. This is a good start for me. Thanks
Tommy, You are welcome. I’m glad to hear that you received value from the article.
The new year is a good time to make some positive changes in your business and life.
And, although you do need to watch your expenses, don’t forget that part of growing any business is customer acquisition. And, when it comes to acquiring customers, for towing businesses, it’s especially important.
Of course, you want a core group of customers who will use your services time and again, but, the average towing customer only uses our services once every 3 to 5 years. This means that you must always be on the lookout for new customers. Your business must be WHERE new customers are looking when they need help.
And, they are looking online. This means you must invest in your online presence and build your brand for the future.
When investing in their online presence, most tow company owners don’t understand what’s required. I mean, they kind of get it, but because there is so much noise out there they’re still confused. That’s why The Tow Academy exists, it’s why we’re here.
There are plenty of marketing companies who will promise results, take your money, and leave you wanting.
The problem is that, once you’ve been burnt, you might tend to label all marketing companies as bad.
Here’s why this is a mistake.
There are two types of thinking tow company owners can engage in, scarcity thinking and abundance thinking. Scarcity thinking, run amuck, leaves you fearful and looking for cheap, short-term results. Abundance thinking, when it comes to marketing your towing business, means accepting that becoming number one on Google’s first page takes both time and money.
When you seek out short-term, cheap “solutions,” you get what you pay for. Which means you pay more in the long run.
You can greatly decrease the time and money you expend if you get help.
Tow truck operators are professionals who know how to safely and efficiently tow and recover vehicles. And, if you’ve been towing for any time now, most likely, you’ve had to clean up someone else’s mess. You know, a couple of guys with a car stuck in the mud. You’ve been called to help after they’ve attempted to extract the vehicle with the use of a tow-rope or chain, and another car. And, after expending much effort and time, while damaging the second vehicle and shedding a little blood, both vehicles have become stuck.
If you’re trying to get your business on Google’s front page but you don’t have the tools or know-how to do so, you’re like those two guys fumbling around in the mud.
Hi, this is James Wogoman of James and Sons Towing recovery at Cassville Missouri. I have a question, I’m new to the towing business and the Sheriff in Barry County Missouri is trying to force me to release a woman’s vehicle that we towed. The county had me impound it and I have had it for 45 days. They’re trying to get me to release it without pay. Can they legally force me to release it without pay? I charge $45 a day for storage plus a $50 hook-up fee and another $75 flatbed fee. The county is threatening to take me off the rotation because I will not release this vehicle. Do I have any legal actions against the county?
James,
Since I am unaware of the circumstances surrounding the tow, I cannot provide you with a direct answer. It sounds like you were directed by law enforcement to perform towing services, for which you should be compensated. But as I mentioned, I don’t have all the details. For example; If you are on rotation with the county, and part of the requirements to be eligible for rotation state that you must release a vehicle without compensation, in special circumstances, then you must follow the rules. I’m not saying I agree with that kind of stuff, but it happens.
Going forward, you must consider how your actions surrounding this vehicle will harm your relationship with law enforcement. Will it be worth it? If you dig your heels in, and insist on every last dime, but destroy your relationships with, not only the county but possibly city and state law enforcement, you might look back later and wish you had made some concessions.
Here is the Missouri ABV Manual If a Sheriff’s Deputy had you tow the vehicle you should have received a form 4569.
Hello, Don, this is Jerome we talk about I want to start a towing business like two years ago and you told me to get some experience in towing and get some money saved up. Just want to give you an update on my progress. I finally got a part-time job is towing on the weekend but wasn’t able to save up on the money yet.
Jerome,
Nice to hear from you. It’s good to hear that you’re moving closer to your goal. Keep learning and save up as much money as you can. Good Luck
Hey Don,
I’m a mechanic that worked for the dealership for 8 years. I was always the guy who would work on anything and did side work for people. I eventually built up to much side work and I was let go from the dealership for it. I am in a quite unique position. My friend owns a used car lot called Harris Cars here in matthews, NC. I work on all his cars and part of the deal is I can do my side work. It’s great. I do not want to open my own shop. There are so many in town. I have saved up a nice bit of cash and I’m looking to purchase a nice used truck to start small while still doing my other thing. I know lots of the shop owners and lots of advisors at dealers…. what do you think about my situation?
Max,
Thanks for reaching out. It’s good to hear that you have saved up a nice chunk of cash to purchase a tow truck. I wish you luck. Unfortunately, I don’t have enough information to speak intelligently about your situation. Building a business takes time and attention to the right details. It’s good to have connections, but having the ability to cultivate those connections into long-lasting, mutually beneficial and fruitful relationships is what’s going to help you grow your business. Even with healthy relationships intact, one should not neglect the need to constantly work on the acquisition of new customers. I hope that helps.
Hello Don.
This is a very interesting forum. Im a 52 year “young’ guy originally from Sweden. I moved to the US and Colorado 8 years ago with my family of 5. Then 4 years later my wife was tired of the snow and we ended up in Jupiter FL. When I lived Sweden I started a tow business 1991 from scratch. I still have the business today with a partner and 4 employees.We have all the insurance companies and a close relationship with the police. In fact it took me 3 yers back then to get my competition out of the way. But that was when I was younger lol. We are here in the US on a investment visa and need to maintain at least 2-3 employees. But to be able to get a green card & citizenship we need minimum of 10 employees. My wife is running a Dog grooming biz and there we have 7 workers so we are currently missing about 3 to meet our goal. My son 21 is a green card holder thru marriage and he could work for me. What I am thinking about is the possibility to start a 2 man operation. I prefer to work daytime after spending all the years in the snow and darkness in Sweden and put my son on the night shift. Or just start out with a day time operation. Palm beach and Jupiter is a pretty busy area. What do you think my chances are to “buy google” and start up and try get a good relation ship with repair shops etc. I don’t want to grow faster then I can keep good guys working for me. What do you think my chances are to stay out of AAA and similar and just target private customers? In Sweden we have a towing flat rate within 15 miles. Do you think that could be a good idea to make the price point clear as I targeting private customers. I was thinking of $125 flat rate included 15 miles then a extra milage fee after that. I have a very fortunate position to be able to pay the trucks cash but for sure I don’t want to mess up the market towing cheap.
Mats,
Thanks for the questions? “What do you think my chances are to “buy Google” and startup and try to get a good relationship with repair shops etc. “What do you think my chances are to stay out of AAA and similar and just target private customers?”
I believe what you are asking is this: “What are the chances of having a highly profitable towing business that is not dependent on motor clubs?” The answer: With my guidance and experience, and a commitment to the process on the part of the tow company owner, having a highly profitable towing business that is not dependent on motor clubs for revenue is 100% achievable.
Thanks again
This article is spot on and I only wish I would have read it sooner as I just recently started up my towing business. As the article suggests, definitely don’t under estimate your marketing costs. Everything listed is important and without marketing you may have all of these expenses without your phone ringing. This is something I am learning the hard way but quickly adapting to. Google is your friend nowadays and I am having some decent success with Google Ads. Thank you for writing + sharing. Best wishes.
Hi Don. im 25 ive been towing for 2 years with a class a cdl for 4/5 years. im looking to switch into owing my own truck in the state of Maryland. i have an investor. i was wondering what data or links i can find to help show the best kind of accounts or clubs to tow for , as well as insurance coverage and charge rates.
Hello Don ,
I’m very interested on getting to the towing truck business in Reno NV , what will the best to start , I have some questions . Do I need a special licensee ?
Can I star with one am driver my self is that good or should I hire a driver ? What do you recommend me .
Thanks
Roy Gutierrez.
Reno NV
This is really good advice and it breaks it down quite well. Even I was not aware how much money I was spending on my own towing business. The best way to find ways to cut cost and to charge the customers appropriately. Thanks for the heads up for me and so many other drivers out there.
As someone who is interested in the towing business, I was unaware of the four types of insurance that are needed in order to properly start up a tow company. The insurance that surprised me the most was the fourth bullet, that being Garage-Keepers coverage in order to keep the towed vehicles in your possession accounted for. I was unaware of the high costs needed to start a proper towing business, but I will be sure to start saving money for the future in order to pursue such an avenue.
Nicely done Don! Stumbled upon this page and as I was looking down through it, I had to admit, I was surprised with how close your advice shadows my actual business plan and it’s growth.
I started Sixth Street Towing in Dec 2015 with an $8,000 loan from some friends to buy a truck and a budget for 3 calls a day. That 1 year loan was paid off two months early and since then I’ve built a custom 48 IH Wrecker added a partner and have a fleet of 4 units. We’re up 60% over last year and projecting another similar year ahead.
They all told me there were too many tow trucks in the area already…and there were to be honest. I’d worked for three of them and knew what they were missing. Real client service. Hassle free, worry free, highway to front door service. At a price point that was profitable for me and a savings for them.
I slaved for some motor clubs for the cashflow and exposure, but cancelled the contracts with all but the best one as soon as we had our foundation set, 1 the first year, two the following year. Car Dealers aren’t worth my time, but locally owned shops are Golden. Not for the money they pay you….for the client referrals. People trust a mechanic in a way they rarely trust a towman.
But you and I can make it all sound so easy, when the biggest hurdle most of these folks will have to overcome is their own long term motivational issues. You are ON….. 24/7…, 365….. truck breaks? you lose lose income and pay bills at the same time. To run your own wrecker/towing service means you have 5 – 40 hour per week jobs. Dispatcher, Driver, Public Relations, Bookkeeper, Maintenance Tech, (There’s a few more we could name, but not trying to scare them too bad).
If you are that special person who truly LOVES the work and looks forward to getting the callout, then yes! by all means! wtf you waiting for? there’s tons of money to be made. If that isn’t you, stay where you are…better off without the bankruptcy.
Michael, Thanks, I have to say your comment is nicely done. Very inspirational, to say the least.
And, he’s right folks. Owning a towing business is not the easiest way to make money, but, if you are willing to put in the work you’ll have varied sources of income. And that beats working a 9:00 to 5:00 job anytime. I think it was the philosopher Big Daddy Kane, who said: “A job ain’t nothing but work.” But, a job is much more than work, it’s very risky.
When you are solely dependent on one source of revenue for your subsistence (and really that’s all most people do in a job, subsist) then that job is the only thing standing between you and the mean streets. Whereas, if you are a business owner who takes responsibility for himself, and understands that the only true way to thrive is to have multiple streams of income, i.e. numerous and various customer types, then you’re much better off.
And, to your point about competition and customer service. I believe that you get more of what you concentrate on. So, if you are constantly looking over your shoulder worrying about what the other guys are doing, you tend to do what the other guys are doing, and get what they’re getting. Water seeks its own level. But, if you are more concerned with providing outstanding customer service, and going above and beyond when you can, you’re going to do that more often. And, therefore receive more referrals and call-backs…because your customers sense that you truly care. (But, we’ll keep that our little secret.)
Thanks again, I’m glad to hear you’re doing well. Keep up the good work.
If you get stranded in a heavy duty vehicle such as a semi-truck, you might worry that you will have a hard time finding a towing company that is up for the job. K3 Towing, Recovery and Transport, Inc is equipped to handle towing jobs of all sorts and sizes. We are available all day every day to make sure that your heavy duty vehicle is taken care of. One of the services that we offer for heavy duty towing is a 60 ton rotator truck. This truck allows us to handle even the toughest and biggest towing jobs with ease.
Hey K3, Thanks again for the shameless self-plug. Just so’s you know, most of the folks who come to this site aren’t looking for towing services, they’re looking for information that can help them grow their businesses. I’m just saying…if you offered commentary on the subject-matter on our site it might be better received. Thanks and good luck.
Hi don, I want to leave my warehouse job and start a towing business. I’m tired of a ceiling being placed on my money. I live in Atlanta Ga. I just want to know what bottom-line dollar amount I would need to start a tow service and leave my job. I have drive and discipline, I want this!
James, The article above provides a very detailed range of the costs involved in starting a towing business. Because I don’t know your specific circumstances, simply pulling a number out of the air would not serve you. But, in an upcoming book, to be released early next year, I devote an entire chapter to everything that goes into the decision-making process when starting a business. Including, location, type of business, customers served, demographics, and the amount of money required to conduct business.
To paraphrase some of what’s in the book, you’ll need between 6 to 12 months’ worth of both household living expenses and business expenses, which will include: insurance & marketing. If you have a spouse whose income pays the household bills then you won’t need as much money. A paid-for (flatbed) tow truck, cost: between $30,000 and $60,000. And, experience in the type of towing you aim to provide.
If you jump on my mailing list, I’ll notify you when the book becomes available.
Thanks
Would you buy a 2019 Peterbilt 337 with a side hook for $106,000 or 2020 freightliner M2 with extended cab for $105,000. Both brand new. I’m a starter and like the extended cab, but then I hear so much about the peterbilt.
Please help
Thank you
Zaz
Zaz,
Thanks for the comment.
The answer to your question is, it depends. If I were considering buying one of these trucks over the other, I would buy the extended cab truck over the one with the side-puller. Why? Because I have a full fleet of wreckers to perform recoveries. While side-pullers do work, I would rather send a much more maneuverable dual-winch wrecker to the scene of a recovery. That’s my take, but if you’re simply a single truck operator, then you might be better by served purchasing the Pete with the side-puller. As far as the extended cab goes, I like them for hauling families when necessary. But, drive it first to see how well it responds to maneuvering in tight spaces, such as parking lots. Our extended cabs were always Internationals and the turn radius was horrible.
I started a towing company in New York, I have two used trucks. I was just wondering if it is worth it to buy a used truck or brand new trucks? New trucks, you most likely have no repairs needed and used they most likely will break down here and there. Also, we are in motor clubs, is it even worth it to stay in them? What else should we look into?
Nikki,
You have it on used versus new trucks. You’re going to pay, either way. I suggest that, if you can afford it, go new. Of course, if the bulk of your work is from motor clubs, you’ll not be able to sustain the practice of trading in every couple of years. As far as motor clubs go, I suggest that you USE them to get more quality reviews, develop relationships with repair shops, and transform motor club customers into cash-paying repeat customers.
And, for the question of what else you should look into, I suggest that you invest in your website and your other online profiles. A quick scan of your site shows that you have some first page results for a few keywords, but you have three locations and your online presence isn’t optimized to ensure your business shows up in related searches in all three locations.
Let me know if you would like help with that.
Thanks
Thanks for this information.
Hello Don,
How are towing businesses doing financially during the current COVID-19 pandemic? I’m thinking about starting a towing business and would appreciate your feedback. Thank you.
Mark,
Towing Services are essential businesses, so they’re all staying open. But, as you can imagine, if folks aren’t going to work or out to eat, demand for services is way down. The tow company owners that we work with have seen their sales volumes drop by between 30% to 40%. And, we’ve received a large number of form fills and phone calls inquiring about our marketing services. Much more than ever before. It’s unfortunate, but the guys who remained dependent on motor clubs and their low-paying calls are really hurting right now. If you’re going to get into this industry, be sure you concentrate on your marketing. We specialize in helping tow company owners get more cash-paying customers, cheaper, even in an economy that’s been blasted by this virus. Thanks and good luck.
Decades in the industry make towing companies a formidable force for drivers of freedom. From swift navigation to roadside assistance, tire changes, and more, we have the right solutions for any auto problem. This means less time on the curb and a quicker recovery for your car.
Hello!
Can you carry separate insurance on separate vehicle (tow trucks)?
Mike,
Yes, you can insure some of your trucks with one insurance carrier, and other trucks with another carrier. But, insuring all of your trucks with the same carrier usually results in cost savings due to the volume. I suggest that you contact an insurance agent that specializes in towing companies. Weiss Insurance in St. Louis, MO. Ask for Cindy Horn. 636-787-7777.
Thanks
K3 Towing, Recovery and Transport, Inc. is located in Amarillo, TX and services customers in the Panhandle area and Tri-State area as well as nationwide. We are a family owned and operated business, with years experience in the towing business and a family of truckers our self, you can depend on us to treat you with the same quality of service that we would offer the members of our own family. K3 Towing, Recovery and Transport, Inc. is specialized and licensed in heavy duty towing and recovery.
Thank You?
I like that you stressed that it would be smart to consider doing a lot of marketing for your towing company. I know that I would want to be able to find a good tow truck website easily. Also, it would be nice to be able to find reviews for them easily. That would make doing research on them when I am trying to do that after a crash or flat tire.
Really interesting post. keep it up/
How interesting that you talk about the costs associated with running a one-truck operation. My husband and I are actually thinking of starting a business within the next few months where we will need towing services. We will think about if we want to do it ourselves or hire a reputable towing company!
I thought you made an interesting point when you explained that maintaining a truck is the best way to avoid costly repairs. It seems like having monthly inspections performed by an expert would be the best form of preventative maintenance. You could probably work with a mobile repair service if you don’t have the time to take your truck to a repair shop.
When starting a towing business, it’s important to familiarize yourself with essential aspects such as insurance, licenses, and proper vehicle maintenance.
Hi Don. I really liked how you have broken down the expenses component. Is there way you can give us expense ratios in relation to sale/ revenue ?
I want some advice from you Is the towing business profitable in 2023? currently, I’m working with someone as a driver, now I’m trying to open my own company
my opinion is you should contact the Don G Archer, he will give the right information about your question
Great article! Really helpful tips for anyone looking to venture into the towing business.
I really like the blog site you created, and I admire it! It was absolutely amazing!
Great article! I really like the articles you write and I also often read them with my family. Thank you very much.
You clearly know your stuff! This was very well-written.
Good article, I really like the article you wrote. I’ve just created a few articles and can you teach me how to make my articles as popular as yours?
I love the actionable steps you provided.