How to Start a Towing Business

Towing is the process of coupling one object to another, so that one can be pulled along behind the other. The towing source (lead object) is usually a truck or other motorized land vehicle, but anything from waterborne vessels to tractors to animals to people can tow cargo. The coupling may consist of a chain, rope, bar, integrated platform, or some other means of keeping the two objects together while in motion.

A common use of the term is for moving a disabled or seized vehicle via a tow truck or "wrecker." However, any kind of secondary object, including cargo carriers hooked in a tractor-trailer combination, or carriers (trailers) hooked to small- or medium-duty vehicles via trailer-hitch, may be said to be an instance of towing. Many countries or industries have standards for carriers, lighting, and coupling for trucks and cars, to ensure safety and interoperability of towing equipment.

If you are looking for a good business venture that you can invest on, you might want to take a look at the money earning potentials of engaging in the tow business industry. Aside from the fact that there is less competition in the tow truck business, entrepreneurs that are engaged in auto towing businesses are more often assured of stable profits owing to the small number of towing companies that exist.

Depending on the needs of your community, a towing company can be a profitable business venture. Towing companies remove abandoned or illegally parked vehicles, transport stranded vehicles and remove vehicles involved in auto accidents. Towing companies typically have a variety of customers such as small-business owners, car dealerships, local government agencies and apartment management companies. Starting a towing company may require only one tow truck. As your business expands, so can your fleet of trucks.

If you want to start a towing business, the following information can prove to be helpful:

Things Needed

Business plan
Business insurance
Surety bond
Tow truck license
Tow truck and towing equipment
Lot to stow vehicles

Start up cost and requirements

You will need a license to operate a towing company. Remember however that you need to be patient in securing a towing truck business license because obtaining a towing license can prove to be difficult. This is because towing licenses are strictly regulated. People who are planning to invest in a tow truck business must also have at least $10,000 for a towing business start up capital. The starting capital for a towing company however can vary depending on your location and the type of operation you intend to have. In urbanized areas for example, you might need around $200,000 if you are going to purchase a tow truck and a towing license.

Operating a Towing Company

Starting a towing company will not guarantee you that people will automatically call for your towing services business services when they need help in towing vehicles. You must do something so people will know about your auto towing business company. It is therefore best if you can have a good marketing strategy so people will remember your towing business should they need the services of a towing company. You can post ads in local newspapers so people can read and know about you. It is also a good idea to contact companies that might need towing businesses to service them when they need to tow illegally parked cars in their vicinity. Towing business operators are also advised to come up with easy to remember names and phone numbers so people can easily recall their company when vehicle towing services are needed.
A towing business is a good business opportunity given the small number of competitors in the industry. If you intend to invest in a vehicle towing business, make sure that you have the necessary capital needed as start up cost for your vehicle towing business. It will also help if you have an effective marketing strategy so people can easily contact your towing business when they need auto towing providers.
It is always better to focus on a small part of your niche as the market has grown very big and it will be tough to compete with others when you are just starting and don’t have a specialized service. When I say specialized service then I mean either you concentrate on starting heavy duty tow trucks business, boat towing service, bike towing, etc. It is always advised to buy used tow trucks to start the business rather than going for new one. If you buy the used ones then you save on your budget and can use the extra money on advertising your towing business because end result depends on the number of hours you keep your tow trucks busy.

Towing Business Instruction:

Create a business plan to outline each phase of business development for a towing company. Write a business description, including the types of towing services you want to provide customers, in the first section. Types of towing services include emergency towing, dealership towing and commercial retail towing. List startup costs, equipment costs, labor costs, insurance costs and towing license costs in the second section. In the third section, create a marketing plan that includes ways to attract potential customers. Describe the roles and duties of management and employees in the fourth section.
Apply for a towing license by contacting your local towing and recovery board or department of motor vehicles. Register your business with the secretary of state's office and the county clerk's office that oversees the county where you plan to operate the towing company. Apply to the Internal Revenue Service for an employer identification number (EIN) by visiting IRS.gov. Use this number when filing all state and federal tax return documents.
Purchase business insurance, such as general liability, property, auto and workers' compensation insurance, from a licensed insurance provider. General liability and property insurance help pay for costs associated with lawsuits, damage to towing equipment or a legal settlement. You may also need to purchase a surety bond to help cover additional costs associated with a lawsuit or settlement. Surety bonds are also used to keep business owners honest when providing services to customers.
Purchase towing vehicles and equipment from local truck and auto supply stores or online. Visit used auto parts stores or junkyards to purchase items at a low cost. Purchase computer software to maintain accurate towing records, bookkeeping and invoicing.
Lease or purchase a parking lot or land to park vehicles after towing. Contact a commercial real estate agent to find a location that is large enough to park a variety of vehicles.
Market your services to businesses in your community. Attend business-networking functions and auto trade shows or visit local businesses in person. Types of businesses to contact include car dealerships, apartment management companies, small-business owners and local government agencies.

Tip

To protect business assets, purchase enough business insurance to adequately cover the costs of legal fees.

Warning

Obtaining a towing license may be difficult depending on the number of businesses applying. Many areas limit the number of licenses granted, to prevent too many towing businesses in one area. If you cannot obtain a towing license, you may be able to purchase an existing license from another towing company.

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Friday, December 5, 2014