When vehicles break down and are left stranded and illegally packed in unconventional places, a tow truck business helps to transport these vehicles to repair shops, impound lots and other locations as directed. Some tow truck businesses also offer emergency roadside assistance.
The demand for this business is enormous and will keep growing. The demand for tow trucks are driven by the average age of the motor vehicle fleet, the rate of automobile accidents, and parking enforcement by private landowners and municipalities.
Police departments, individuals, motor clubs, repair shops, auto auction companies and property owners may all call a tow truck to move vehicles.
Estimated Startup Cost
Note that the startup costs associated with opening a tow truck business is enormous, especially since business owners must buy a tow truck. Tow trucks often sell for between $10,000 and $50,000. If your business can afford it, then the decision is up to you.
However, if your business has limited capital, then purchasing a brand-new truck can prove to be a risky decision. Choosing to acquire a tow truck through leasing is a popular option for most towing businesses. It is also necessary that you maintain your tow trucks properly. The better you take care of your trucks, the safer and durable the vehicle will be.
Profit Potential of a Tow Truck Business
According to reports, tow truck charges an average of $120 per tow, which may include both a flat fee and mileage charge. There is also a standard storage fee which is charged on a daily basis for vehicles stored on the company’s property. The average storage fee is in the tune of $20 per day.
Tow Truck Owners Salary
As of May 5, 2020, the average annual pay for a Tow Truck Owner in the united states is ,156 a year. According to experts, business owners in this industry see annual salaries as high as $228,000 and as low as $19,000. Notably, majority of Tow Truck Owner salaries currently range between $32,000 (25th percentile) to $150,000 (75th percentile) across the United States.
The average pay range for a Tow Truck Owner varies greatly (as much as $118,000), which suggests there may be many opportunities for advancement and increased pay based on skill level, location and years of experience.
Meanwhile, the exact profit a tow truck company makes rests on varying factors and tends to be different from one company to the next. These factors that determine profit include the number of employees, the scale of the business and whether the company offers 24/7 towing services or not. It also depends on whether they serve as a towing company for local service garages or whether they only wait for calls to come in.
But it is still pertinent to note that a lot of issues affect the amount of available work for tow truck companies. Note that weak economy reduces the need for hauling work, as people prefer to struggle and do the task by themselves. If consumers spend less money at stores, there will be fewer delivery trucks on the road, and this reduces the number of heavy towing jobs.
Hence, to deal with these losses, some towing companies make arrangements with banks, new car dealers and car loan companies to tow repossessed vehicles. Similarly, even a healthy economy can affect a towing business. If credit is available at meagre rates, more consumers will prefer to buy newer cars, which would less likely require towing services.
Howbeit, the fixed current cost of a towing business include any licensing fees that must be renewed and all insurance premiums. Depending on the size of the company, other expenses include employee salaries, truck depreciation and repair and fuel costs.
Business owners should check with their state and local city or county clerk office to find out what specific permits they need and how much they cost. They frequently are at least a few hundred dollars, and they can be much more.
To generate more profit, a tow towing business can diversify its offerings by offering emergency roadside assistance. By offering this service, you prime yourself to earn from services such as emergency fuel deliveries, providing jumpstart and similar services, changing flat tires among others.
Also note that leasing tow trucks can be another way for towing companies to increase their profits. Some leasing agreements make it possible for one to own the truck at the end of the lease once the purchase terms are met. Leasing can be a better choice than buying a new vehicle, if you are not so certain about the market.