How to Start a Tow Truck Business in 2024

The towing industry has been growing steadily for the past ten years, and the growth is set to keep going. For instance, the industry was predicted to make over $7.7 billion by 2024. This means that the trend presents a perfect opportunity for starting your own towing company now.

To get a successful tow truck business going, first decide what kind of towing you want to do, get the right gear, and officially register your company. After that, focus on building your customer base with smart marketing and planning tools that boost efficiency and cut costs.

Skip ahead to the part that interests you most:

• Starting a Tow Truck Business in 8 Simple Steps
• Why Route Optimization Boosts Profitability for Towing Businesses
• eLogii: A Top Tool for Tow Truck Dispatchers
• FAQ on How to Start a Tow Truck Business

Starting a Tow Truck Business in 8 Simple Steps

To start a successful towing company, you need to decide what your business will be. Then, find your customers and create a plan to run things smoothly and make more money.

1. Find Your Target Market

The towing industry covers a wide range of services, just like the different types of cars you’ll be towing.

First, decide what kind of towing business you want to start. You can offer a range of towing services or focus on a specific niche, like towing classic cars. Popular categories of towing services encompass heavy-duty towing, specialty towing, long-distance towing, and local towing.

• General towing services. These are the most common and usually involve local tows around town. This business has a broad customer base needing regular tows, like when someone's car breaks down and needs to be taken to a repair shop.
• Heavy-duty towing services. Also known as big rig towing, this involves towing vehicles that weigh more than 17,000 pounds, like tractors or farm equipment.
• Specialty towing services. This is for unique and special vehicles, like classic or exotic cars. These customers need extra care and attention, and specialty towing might include covered tows and roadside help, allowing for higher fees.
• Long-distance towing services. Any tow over 100 miles is long-distance. This could be for people moving across the country or those who need their race cars transported from track to track.

You’ll also need to decide if you’ll do consensual tows, non-consensual tows, or both.

Consensual tows are requested by the customer, like when a classic car owner needs their car transported to a show. If you focus on consensual tows, your customers will mainly be individual car owners who pay out of pocket, through insurance, or with help from an agency like AAA.

Non-consensual tows happen when the vehicle owner doesn't agree to the tow. For example. it is like when a car with too many tickets gets towed to an impound lot. Doing non-consensual tows means you can bid for contracts with apartment complexes, office buildings, and even local government contracts.

2. Check Local Towing Rules and Requirements

Towing rules and requirements change from state to state. The type of services you offer can also affect how you run your business. For example, non-consensual towers in New York must follow specific guidelines, such as only towing abandoned vehicles over 10 years old from private property to a dismantler.

Get in touch with your local DMV, department of transportation, or towing board to find out the rules you need to know for your business.

3. Make a Business Plan

Create a plan to guide your business. Start by setting your business goals. Then, list the steps needed to reach those goals, with deadlines for each step. For example, if you want to increase the number of tows, plan actions like hiring more staff, improving training for tow truck operators, using better routing software for dispatching, and boosting your marketing efforts.

4. Get a Startup Loan (If Needed)

If you already have all the cash you need to start your towing business, you're in great shape to begin without outside help. If not, you can seek financial support from investors or get a business loan.

First, list your startup costs and add up the expenses. These costs include employee salaries, equipment like trucks, property for parking towed cars, insurance, licensing, and anything else needed to start your business. Once you know how much money you need, open a business bank account and look for funding.

Taking out a loan is a common way to get the money and keep full ownership of your business, but you'll have monthly payments to repay the loan. Getting investors means you won't have to repay the startup money, but you may have to share ownership with the investors.

5. Register Your Business

Choose a name for your business first. Then, register it with the appropriate agency. If your business is an LLC or corporation, you’ll need to register with your state government to get a tax code. This may involve registering with the local business bureau or agency, depending on your state. For other business structures, you might need to trademark your business name or file forms with the IRS. Check with your local Small Business Administration office for specific requirements.

6. Get the Right Licenses and Permits

While requirements vary by state, almost all states need tow truck drivers to pass a certification and get a commercial driver’s license. You might also need specific permits for your tow trucks and a towing company business license. Check with your state’s department of transportation to find out which licenses and permits your towing company needs.

7. Buy Equipment and Tools

No matter what kind of towing services you offer, you’ll need some standard tools. These include hooks, chains, jump starters, towing and recovery straps, ratchets, and lights. You’ll also need a truck that can handle the tows you plan to do.

Depending on your services, you might need specialized tools. For example, towing exotic cars may need a covered flatbed truck and special straps to prevent damage. Towing cars long distances would need a big rig truck with a trailer that can carry many vehicles.

8. Plan Your Marketing Strategy

Look at your business goals and set marketing goals that will help you achieve them. Your marketing goals should include boosting brand awareness and attracting new customers.

To reach those goals, try marketing tactics like building a social media presence, creating a Google business account, or wrapping your tow trucks with your branding. You can also research online by checking out industry resources like The Tow Academy or marketing sites like Social Media Today for creative ideas to drive your business.

Why Route Optimization Boosts Profitability for Towing Businesses

To turn a profit, you need to complete enough tows to cover all your business expenses. The more tows you handle, the higher your profits.

The best way to increase tow volume is through route optimization. Route optimization means finding the most efficient routes, considering factors like pickup and drop-off locations, towing capacity, travel times, driver schedules, and more. It also cuts fuel costs by reducing total mileage.

Route optimization is challenging due to the many factors involved, especially when managing a fleet of trucks. Manual route planning becomes impractical with many vehicles. Using route optimization software solves this issue by automating the process for you.

eLogii: A Top Tool for Tow Truck Dispatchers

eLogii enhances route optimization, provides real-time tracking for better operational visibility, and enhances customer satisfaction through proactive notifications. These features enhance efficiency, increasing the number of tows completed and maximizing profitability.

Enjoy The Visibility Your Planning Team Needs

Stay updated with real-time location updates from eLogii's driver/agent app or your own. This ensures accurate monitoring of your fleet at all times. You can effortlessly manage any scale, ensuring your team stays efficient with smooth operations on crucial screens without freezing or slowdowns.

Provide Live Tracking and ETA

Stay informed with second-by-second visibility into ETAs, reflecting real-time on-the-road conditions. You have the option to display ETA down to the minute or in time bands based on customer preferences. This reduces downtime for businesses aiming to deliver their products to customers as quickly as possible.

Optimize Route Efficiency

Enhancing route efficiency allows you to increase tow capacity without expanding your fleet or adding more drivers. eLogii achieves this by simplifying your routing procedures and automatically generating optimized routes. Simply input your truck and driver information, along with destination details, into the platform.

Driver Mobile App

The eLogii Driver App is available for download on Android and iOS from their respective app stores. Drivers receive turn-by-turn directions directly on the app from eLogii. If a new tow is added to their route, the app updates automatically to guide the driver to the new destination.

FAQ on How to Start a Tow Truck Business