A tow truck business can bring great profits, but only after consistent, hard work.
Starting a tow truck business can deliver terrific profits; however, the first hurdle of obtaining an auto-towing license is notoriously frustrating because this procedure is heavily regulated. You can circumvent this hurdle if you opt to forego providing tow services to the public. Of course, however, that is dismissing a very large market before even commencing operations. With the right planning, starting a tow truck business can provide a stable and lucrative future.
Instructions
1. Seek a business mentor who will not eventually become a competitor. Learn drive a tow truck and gain experience in the day-to-day operation of a tow truck business.
2. Contact the licensing agency to determine which license is required to become a professional tow truck driver. If you intend to serve the public, apply for an auto towing license.
3. Write a business plan that describes your company mission, target market and analysis of financing, regional competition and marketing. Devote considerable effort and meticulously formulate this plan, because it will be your most persuasive tool to obtain investment.
4. Secure investment. Approach banks and business angels with your business plan. According to Entrepreneur.com, the typical tow truck business requires $10,000 to $50,000 in starting costs. Unless you have that kind of cash readily available, you will need to secure investment.
5. Shop around for the best insurance policy. The best policy isn't necessarily the cheapest, but shopping around will save money in the long run. You will need to cover your equipment, accidental injuries to yourself or employees and any damages to client vehicles. It is always best to pay your policy annually, because you will usually incur fees or interest when paying monthly or quarterly.
6. Register your tow truck business with the IRS, and obtain an employee identification number (EIN). You have four options to apply for an EIN: phone, online, fax or mail.
7. Promote your tow truck business. Advertise in local newspapers, the Yellow Pages, with car dealerships and online. Create a sleek website that outlines your services, complete with price list. Register with Google Maps. This is free and greatly improves your search engine ranking.
