“How to Start a Towing Business?”
Comment Page 4

@javier chavez, if you want to open a business to the general public, the process is simple yet time consuming, but not impossible for anyone with some time and money to accomplish.  first, you want to contact the local transportation safety agency within your county.  they usually have a website you public info ready for anyone to read.  the application fee is approx. $500 and up depending on your State.  The process will take a few months since they have to check your entity status, your licenses and insurance are appropriate, all verbage has to match application, etc. They also perform a background check on owners with fingerprint card and the last thing would be them inspecting your facility is correctly zoned for the business and last the inspection on the tow truck.  By the way the tow truck will be leased to your new business, not you.  The new business will have you as a guarantor on the lease agreement.  So make sure that your personal fico (credit) score as at a minum of 650 and the business has fresh paydex (credit) score. Texas has a lot of demand when it comes to towing no matter where you are located in that gorgeous State full of rain and humidity and heat... its beautiful to make money and a great living. 

Tip of the day for you Mr. Chavez is to get as much hands on experience working together with another small company then do your homework and branch off independently. 

I would be happy to chat or talk via email or tel.  God Speed.

@Martha and @Auntie., Heavy Duty Towing is where the big money is if you know what I mean but also where the highest level of liability/risk is. Why, the rigs weight a ton! that was a joke.

But all jokes aside, look into an arm extension that you can apply to almost any 5th wheel on almost any sleeper.  This arm extension can lift the front end but not the trailer/load.  The arm is about $7k and can get you going.  Do yourself a favor if you can afford it get yourself a real wrecker.  Used is fine as long as its taken care of.  I would set aside a solid $100k for the wrecker alone.  Organizing the business and obtaining the proper licensing, training, etc is another story.

Tip of the day, you can also make a good living providing roadside assistance to these same trucks.  Remember, the tow is just taking them to a destination where the truck gets fixed so why not have a mobile tech available for tire changes, fuel, jump starts etc.

You may also lease a wrecker instead of buying one for 100k... To chat more, see my contact info below.  Best! LT

@ron, ft lauderdale - do you have experience in towing or owning a business? one good place to start learning about setting up any business is the Small Business Administration, all States have their own Chapter and their programs are directed toward small businesses.  They have the SCORE program and Microenterprise Initiatives for folks that could use free support with challenges getting started. tip of the day - keep the truck cool in that florida heat, make sure you obtain a newer model with the cooling system and a/c working beautifully. 

@Nathan in phx az, Phoenix is one of the hottest market according not only to the obvious temperatures but maricopa county has grown much in the last decade.  from north east sun city to down below mesa, queen creek.  the distance between these two areas are a population of ma$$ amount$.  The best way for risks reasons is not always going to be your cheapest, this industry deserves much respect to its customers vehicles so advising you to buy a 1985 model wrecker because its the cheapest, will never come out of my advise.  However I can tell you that the 1985 model that will cost a solid $3k (without going into the condition, miles etc) this is a good start for leasing a new one with the appropriate credit that leasing companies are looking for and your business paydex must be clean*.  Typically when leasing on a trac-lease the $500 doc fee will go to the dealer and the first monthly lease payment to the financial institution that bought your paper.  if you would like our contact info is below for more about leasing tow trucks.  Tip of the day:  Set up the business first for risks factors, work on your credit and as long as you work privately the TSA will stay away with no issues unless you work publicly without the appropriate licensing then you will be fined (or the business if you had set one up). 

Working privately means under contracts and publicly means your advertising online for cash calls.  For this you need a permit from your local TSA office, the fee is usually in the hundreds and not to exceed $1k.  The process time frame depending on you will be atleast 3-6 months.  Our contact info is below for further discussion.  Stay cool drink lots of water and carry some for your clients in that summer average heat of over 100f,  LT

@Amanda, Pinellas County Fl. usually the secretary of state handles this licensing go to http://www.dos.state.fl.us/

or the taxation dept. which you should locate using your local directory under the white section for govt. services and office etc. godspeed, LT

@alla, LA the "City of Angels". Wow a lot of work there!!! California has so much to offer us in the tow industry, the best place to begin for you may not be the same for another.  Depending on your experience as a business person or handling tow trucks or cars or related experience its best to understand these four things first:

1. How much experience do i have and or need and where to obtain it
2. how much capital do i have and what is needed to start or get my foot in the door at its lowest risk and costs
3. a realistic time line with goals, can you stay focused to become successful
4. what is success to me? or what do i want out of this business.
5. tip of the day: go with your gut feeling when it comes to business. keep your path clear and remain focused.

@Danbo, Good cheap used trucks are a dime a dozen in our industry unless it has been driven for a minimal amount of miles and the user used it properly and it has gone back to the bank and become bank owned product which would be resold at half price.  This same unit I am speaking of would have to be a 2008 not older is my point of view for the obvious reasons such as, dependability, credibility, extended coverage plans available, etc.

Now one of the first things I always look at when consulting a start up is coverage area and its geographical climate, city street developments, hwys, national parks, large masses of water for rec purposes, etc.  So I can tell you anyone with a wrecker no matter where in NY will do just fine.  Getting approved always is a question people ask and so my question to you is would you work privately or publicly?  Either way all tow trucks are regulated by your TSA chapter in your State. 

Tip of the day for you @Danbo: Because you spoke about doing numbers, here are some number to help you get from Gross to Net.  On your balance sheet at the top would go the revenues prospectively then under this would be your overhead expenses then under that your mos. fixed then gross (just a vague description used as a guideline)  The fuel  (under overhead expenses) on the truck if running steady will be about $1000-$2000 alone, and your emergency funds in case a truck goes down plus routine maintenance should also be considered and you can come up with this one which will be different every year anyway.  The insurance will be about $500 average on old trucks and about $1000 on newer trucks, I will not go into what policy you require, we are just speaking figures.

For more communication our contact info is below, Godspeed!

@ken, If you have time, sit down with a free SBA SCORE business counselor, they are great data banks.. and free!

If you have experience this is a great place to start, if you don't remember this is a very risky business which is why my advise is to get some training, experience before you get the business going on your own.  The truck is the last thing the TSA is going to look at through the process of obtaining your #'s so do not think truck until your ready for it.

Tip of the day for @ken

The best experience is hands on so get out there and seek training, with newer vehicles coming out every year now with the latest technology, you must be ready for almost anything from mopeds/motorcycles/trailers/fleet vehicles/exotics/classics/rv's and more.

Our contact info is below, thanks for your interest in our $52 billion a year (Nationally) per year producing industry.  Remember transportation is the backbone of the US economy, from goods to livestock, its transported across our States daily.

@jjhulett, Dear ATL Ga you beautiful State, yes there is much towing to be done here.

For grants you would like to consider calling your local microenterprise initiative, most are charities.  Or try accionusa.org for a small business loan.

back to grants, they are so hard to come by this day and age because these are funds you do not have to pay back, so usually the grant process takes months or years before any monies are ever see.  Even legit 501(c)3's are having to struggle now more than ever because their funds must come from the public.  but not to discourage you because the motivation is correct.  so lets speak about how you would have an advantage over others seeking the same grant as you.

1.  minority owned or woman owned small disadvantaged businesses that are located in a area that the SBA considers as an area of need for more businesses... this will help over others.
2.  business plan well thought out and written and presented, this will set you apart for the gran or loan
3.  knowledge about your business and industry, show passion!, this will set you apart

Personally i would not get in to a debt that is minimal and if you are not in position to take a large amount to make something serious happen, then stay away from debts.  this is a personal thought.

For more communication our contact info is below.  tip of the day for @jjhulett : Every business does things differently because all businesses are staffed by people and all people do things differently.  When speaking of competition, you have none because no one else is you.  You do things your way, uniquely.

@@beta, Florida is beautiful, and so a great place to tow is always fun for the driver who likes the territory.  Any tow business must start like any other business and that is to set up the structure first.  This typically is filing paperwork and paying appropriate fees to governing depts. like the Secretary of State handles new LLC's and Corporations, including charities. (For more info reg charities for to IRS.gov)  Business licenses are dealt with the County. Set some investment funds aside, do some research and communicate with a great guidance counselor that has towing industry knowledge and experience. Once the business is organized with proper licenses, GL ins. then be prepared to obtain some work.  Find the work before the truck so once you get the wrecker its not sitting vs. making revenue. For more communication my data is below,

@D.J., I am not sure about part time work within our industry.  If you mean you want to work your own hours as owner operator well then that is different. We have no part time hours in our industry.  We supply a demand that does not know when they will need us so we are available 24 hrs 7 days. I do know owner operators that work when they feel like though.  These breed of towers are open to the general public and only do a very limited amount of advertising, most is done online for free using Google or Craigslist.  To be open to the general public you or your company still need to be permitted to run consent towing.  Part of this requirement makes sure that you have a tow truck that will pass inspection and this is after your background check is completed and passed and all necessary State mandated insurances and licenses are in order.

So to work part time legally you would first need to implement a full time plan because it can take a few months up to a year before you pass all regulations. If you plan to work privately, the contracts will request your available 24 hrs a day. Tip of the day... set up your business so someone else is working for you, this way you can take care of managing the business part time with admin. help p/t and f/t driver$. For further communication i am available via email.

@reza, Yes very much so, but unless you have been in this business and know how to organize it properly, it can be a nightmare. What you should be asking yourself is, What are the risks and how can I minimize those risks. If you can answer these two questions you can walk in to this industry without asking or wondering how profitable this all is but instead when do we get towing! Tip of the day : Position your business for little or no claims because FYI your insurance carrier would be appreciative and so will the longevity of the business. For more info my data is below,

@shandi Yes getting started is usually the first challenge but meet this all and future challenges face first, that is. start getting the documents and fees together, the first one will be filing paperwork with the SOS of Calif.  Once you do this you should have the EIN and Co name, tel and address. Open up as a private source so you do not start thinking about the expense of a yard.  My info is below for more info.

@blake, it takes a solid $5k to start in this business as a small business, this will organize and structure a business / including branding and setting up accounts for work as long as you have good credit and you can either lease a tow truck or service truck.

tip: first eliminate the 3 acre lot and office and start from home, set up a computer, fax mach, landline, and get a smart phone cellular... and lap top if possible but not mandatory.  then set up the llc with the state directly to save on funds, after link the ein3 from the irs.gov site and purchase the correct commercial insurance policy on the business and fleet vehicle(s).  This type of policy is called a garage keepers policy.  Then get the accounts and go to work for them.  At the same time, open the business to the general public and remember to create a brand out of your company/product to market online, yes do your due diligence and contact a graphic designer that will make a personalized logo for the business....

The economy is bad for many, so by putting your business together through these rough times will show great leadership! Do it!

@Anton, Please give us an update of where you are at with your towing business, our readers are excited to hear from you!

@jjhulett, @rachid, Would you Give us an update of where you are at with your tow business and some tips to the readers? Thanks, LT

@Bmora, AAA is a very old company been around for decades with many members you are right - However - we are in a time when people act more independent and seek other channels vs. only AAA

Examples of other sources/players are: AARP for older markets, cell phone companies are also providing roadside assistance coverage and its included in your bill at an additional $3 a month I believe and they are more and more popular with everyone and their mama using cell phones.

Mr. Mora - tip of the day, go check out other small service providers and see how they obtain their business.  This day and age all you really need is online marketing like ranking your site on Google, Yahoo etc.  Try the Google Maps option "IF" you are a real business.

Be blessed!

1. you can start with one wrecker and grow as you cannot take all the work or be on the road more than 16 hrs. daily
2. the type of insurance we obtain in our industry is a GKLL policy and depending on who you are working for (general public/private sectors) the limits may be different but as a standard a 300k csl is essential up to 1mil csl if you are open to the gen. public
3. charges for tow change depending who you are towing for, but if you call the local towing companies in your area and ask them what they charge (on hook and per mile) then you will get a better feeling for your local markets // if you work under contract with a insurance company then your rates are contracted and so you know ahead of time what to bill to them after the service(s) is/are completed.
4. you should not be in the truck more than 16 hrs daily as owner operator, plus you can tow anywhere privately but for the general public you will not be able to tow until you are certified by the County.
5. Tip of the day - look to consult with a veteran of the game and this will make the best of time spent on getting started, its the best investment you may make.
6. Florida is a great place to do business!  Best,

@D.J., I am sorry to hear you are not being valued for your work like you want - yet.  However most do not think ahead and get the truck first before the work. To be able to create real wealth you will have to put together a real repo company. This will take organizing the appropriate entity to minimize risk and establish a foundation for growth (more business). Then the insurances on the fleet and business which can be combined into one payment & and permits from the TSA.

If you have the lot then the TSA will provide you with a application packet and will make sure the lot and trucks along with business is all proper. Then go back to those under the table accounts and tell them you are raising your fees.  Then go to local banks, pawn shops etc and sell your business.  Also set up some private accounts with insurance companies for daily a-b tows and accident scene managements etc.  With three trucks and some paid for this should be a great start. If need be contract out a tow business consultant than knows how to get you there faster... Do it, time is everything.  Invest in your business so you can be there full time.

@ronald, NJ is steady towing... there are local chapters of the SBA called Micro-enterprise Initiatives that may provide your new start up with a small loan, however... first things first -

You are right when you mention the organization of the business either as an llc or corporation. Grants are limited and more scarce now due to the economy.  They are typically granted to not for profits not to a for profit business which you will have. On another note the insurance is a commercial policy usually referred to as a garage keepers limited liability or GKLL.  The limits on this policy depend on who- and how you will use the trucks.  There are many different fields to tap into with  a tow truck.  From private contracted towing from a to b or accident scene management to secondary towing to salvaging cars which is more common now due to the economy.

Tip of the day - seek to consult with a pro that will get your there faster.  It is worth the investment.

@Sergio, Private towing does not require a special permit but you should still look for the State/County licenses - however towing for the general public does mandate a special permit.  Every jurisdiction is a bit different. Where in Colorado, Denver?

@Javier Garcia, Mr. Garcia, When entering the heavy and super heavy duty transport there is "tons" of money to be made, however obviously the bills are higher such as the insurance, fuel, type of truck needed is not going to be cheap. 

Getting on board with insurance companies is done by soliciting an application packet to them.  There are several that may keep you busy enough to park the rig at home and run a home based operation with no issues.  It may be useful to set up a second address as your business location, such as a virtual office.  Brand the business with a website, logo etc. And go to work.

If you intend on working with the Police and other local municipalities suchj as Hwy Patrol, Govt. and others, then you are required to have yard space and enough trucks to cover any services they may require from you without any doubts your company can handle it.  For exanple an accident that involves more than one truck, etc.  Also the trucks have to be newer 2009 and above. or no more than 2-3 yrs. old.

For more data our contact info is below, thanks for writing.

Godspeed!, LT

@Stan, Hi Stan - i am familiar with Las Vegas towing companies, what are your ?s about getting into this industry... anything specific?

If the vehicle you went to go pick up was impounded and you are wondering about the fees?...

-All impound yards in Las vegas are overseen by a local governing agency.  They have a list of the approved yards in Clark County which each one of those companies must present an application with a fee to be considered as a tow facility.  Part of this application request a tariff sheet, and this sheet must be presented in a fashion that the State of NV will only permit.  Once approved the rates cannot change and they must be presented to the client or customer when picking up the vehicle.  The rates are not close to cheap in my opinion.

Hope this helps a bit, there is a lot more to our industry.  Its is one of the funnest money making businesses out there, in my opinion.

LT (currently located out of Henderson)

@Joe, Yes, working privately you are under contract which enables the contract to govern the way you do business/ depending on State law.  You will still have to register the unit and insure it properly, etc.

You will not be able to store vehicles and if you live in a HOA community then you may want to move but if you live outskirts of town or in a unincorporated part of the City then you may get to have more liberty.

Whatever the case, please be clean with any oils, gas, etc.  You always want to run a respectable business.

Keep in mind the start up cost will run you about $6500+ to enter properly and set up a well structured business.

LT

@Chris, Please keep sharing your experience and knowledge of the laws and governing agencies running the tow industry in Canada.  We have minimal solid data from your market so please assist us.

Send me a direct email so we may seek your advise when needed, this is not mandatory just a simple & friendly request.

LT