How to Start a Tow Truck Business: 9 Easy Steps to Follow

What is Tow Truck Business?

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There are a lot of businesses that can thrive, if you are capable enough and focused enough to take the next step then you just need a perfect plan, a blueprint of sorts to just figure out how to take your business ahead. If your dream is to jam on country music and have a successful tow truck business then we have just the article for you.

Here is a step-by-step guide for how to start your own business in the industry of tow truck transportation.

Is a tow truck business profitable?

A simple answer to that question is yes, the variables that one must consider are insurance premiums, the licensing investment, employee salary, repairs, and fuel. Other than that the profit margin depending on how well you know how to run your business is entirely dependent on you and your game plan.

How much does a towing company make?

As we have discussed earlier, the profit margin can be considered after you have calculated the investment that you have to do around licensing, employee salary, repairs, fuels, and other miscellaneous expenses. The rest of it depends on how well you are expanding your business and keeping it afloat.

Benefits of Starting a Towing Company

There are a couple of benefits of a towing company, they are always in use and they rarely will go out of use. One will always need a tow truck at some point in their life, they don’t know when and they don’t know why but they will.

Types of Towing Businesses

Tow Trucks businesses have clients at all these outlets-

  • Police departments
  • Municipal departments
  • Individuals
  • Motor clubs 
  • Repair clubs

9 Easy Steps on How to Start a tow truck Business

Step 1: Create tow truck Business Plan

A clear picture of how you want your business to look is the first step to anything. It helps you form the foundation for your business. A couple of questions you would want to answer before starting here-

  • What do you want to name your business?
  • What does your truck startup Cost?
    What are the ongoing costs for a truck startup?
  • Who and where is your target market?
  • How much will you charge your customers?

Every question is important, we are going to answer the first question and let you find the answer to the rest in our article. We have researched for you, so strap on and find the answers to every quarry so that you have a robust business plan.

What do you want to name your business?

Picking the correct name is very important for any business, it is also very difficult to do that without a process of hit and trial. You can always use company name generator websites on the internet, if you will be the only person owning the business then you should prefer operating under a business name rather than your name. Most importantly keep the following things in mind. 

  • The business record of your state
  • Federal Records
  • Sate trademark records
  • Social media usernames that match the same name that you have picked
  • Web domain availability- In case someone else has already taken the name that you have picked.

Step 2: Tow Truck Business Startup Cost 

The start-up cost is associated with the purchase of trucks, mainly because business owners usually buy the trucks that are on sale, the cost of which goes up to  $10,000 and $50,000. The next major expense is the basic licensing, which is in addition to the class B license. After which you would need permits from local municipalities and highway departments. Business owners are also advised to check with their state and local city to find out what specific permits they would need in the future and what it will cost them. The cost might go up to a few hundred dollars but there is a sense of permanence to it. You would also need insurance for that too you will need a hundred dollars at least.

Who is the target market?

Tow Trucks businesses have clients at multiple outlets, police departments, municipal departments, individuals, motor clubs, repair clubs, auto companies, and property owners.

How does a towing company make money?

A tow truck business makes money by charging customers for tows. A typical charge will include a flat fee for the tow, a mileage fee, and a storage fee.

How much can you charge customers?

Tow Truck businesses charge up to $129 per tow, this cost includes both fee and mileage charge. It is also a basic practice to charge an everyday storage fee and mileage. The average storage cost is usually $20.

How much profit can a towing company make?

The average profit margin comes out to be around  $30,000 and $40,000. The exact amount would be different depending on the geographical region you have your business in.

How can you make your business more profitable?

One of the ways to do it is to offer emergency roadside assistance. This will take care of emergencies that will include fuel deliveries, changing flat tires, offering jumpstarts, and other such services.

Step 3: Buy a Tow Truck

Most Business owners usually buy the trucks that are on sale, the cost of which goes up to $10,000 and $50,000. See what kind of truck you want, see how effectively you can cut costs without compromising on quality. 

Step 4: Buy Tow Truck Business License

The most common business structure types are-

  • sole proprietorship 
  • Partnership
  • Limited liability company (LLC) 
  • Corporation,

Establishing an LLC would be ideal because it will prevent you from being personally held accountable if your company is issued. You can start an LLC all by yourself and pay the menial state fee or hire a service provider that will do that for you.

Step 5: Buy Insurance

You have done your licenses, permits now all that your business needs are business insurance. Business insurance works for the financial well-being of your company and projects it in case of a loss.

There are several types of insurance policies that your business can choose from. If you are not sure of all the unseen risks your business may face you can just go for general liability insurance, it is the most common and the safest bet for a small business. Another policy that might be interesting is the worker’s compensation insurance. If you are going to hire employees then this type of insurance is considered quite ideal.

Step 6: Take Care of the Legalities

You will have to register for state taxes and federal taxes for your business. You will also need to apply for an EIN so that you can register for the said taxes. 

Small Business Taxes

Depending on whichever business structure you pick, you will have options for how your business will be taxed. For example, LLC is taxed as an S corporation (S corp)

Step 7: Open a Business Bank Account

Using a business baking account that is separate from your banking account is mandatory for the protection of your assets.

This separation makes sure that your assets such as your home, car, and other assets are not at risk in case your business is sued. This is also known as piercing your corporate veil. With this you must also learn how to build business credit and try to get a credit card as well as another financing under your business name,e instead of your own, this translates into better interest rates, a higher line of credit, and many more advantages.

Open a business bank account

  • It will separate your assets from your company assets in case of a risk.
  • It also makes accounting easier
  • Taxes are done easily through this.

Advantages of a business credit card

  • You can separate personal and business expenses
  • All your business expenses are in one place 
  • It also helps you build your company’s credit history,
  • A credit history helps you to raise money and investment later on.

Step 8: Build Your Brand

How to promote & market a towing company?

Tow truck companies should have an online presence so that people who are looking for these services can find these companies easily. You as a business owner shouldn’t ignore any social media website. There is always SEO which means search engine optimization if you want to increase the visibility of your company. A lot of companies also have contracts with automotive clubs, such as AAA. It is said that they often pay very little per tow. 

How to keep customers coming back?

You can work on being more proactive with your response since most people need the tow truck service in an emergency. Even when property owners want a car removed they would rather pay top money for someone who shows up the earliest. Providing the earliest response helps in making sure that the customers will be back.

Step 9: Promote Your tow truck Business

Like we discussed, every business should have an online portal for their customers to reach them. Your business shouldn’t ignore any of the media platforms. You should also take 

It is always smarter to invest in a marketing channel such as social media since that would guarantee search engine optimization (SEO) which makes sure that your services are visible to potential customers. You can also engage with these customers through social media. Platforms like Twitter and Facebook are encouraged. A lot of tow truck companies also provide services like repair shops, apartment complexes, and other such services across cities, it gives them a more stable income so see what you can do. There are a lot of companies out there that also provide contracts with other automobile clubs, for example, AAA. The problem however is that even though these clubs have a lot of business they pay quite less. 

Traditional Advertising

You can do door-to-door advertising or you can contact your local shops to let them have your post-its and posters, you can also try to provide some services to friends and family for free in the beginning. When you provide free services in the beginning it guarantees you more customers from the virtue of word of mouth. 

Advertising Online

Once you are done creating a name for your brand and you have decided what is the path it will take you need to create a website for your business.

You should not rely on social media apps or just any kind of free website vendor for your business. If you need people to think of your business as an authentic and viable service provider then you must have a good website. DO NOT delay in creating your website, there are so many reasons to have a website, here are a few.

  • Every legitimate business has an authentic website 
  • Social media pages on Linkedin, Facebook are not substitutes for a website.
  • There are online website vendors such as Godaddy that have made the entire process of making a website a very simple process.

Social media

If you want to go to town with your tow truck business services, you must surely give long and hard thought to your social media strategy. Instagram is all about aesthetics, so make sure you make a lot of reels that showcase your services in good lighting. whereas with Facebook, you need to engage in more groups, make sure you post a lot about your business. There is also an option of customer review on Facebook, it comes on the right side of your Facebook page when a new user is visiting the page. If your business has had a few of those, you can showcase that on the side and expect more engagement due to it. 

Tips for Growing Your Towing Business

  • Effective use of social media
  • Door to door service 
  • Throw in a free service option for your friends and family 
  • Make a good website and invest in SEO

Can anyone start a tow truck company?

The simple answer to this is, yes. You can read the article from the top to know-how.


Just like any business, the tow truck business is also quite a handful. Make sure you follow the steps exactly to do justice to your brand.