Do you want to start a car hauling company? If YES, here is a complete guide to starting a car hauling business with NO money and no experience plus a sample car hauling business plan template. The car hauling/car towing business is indeed a profitable business because we most times need to tow our cars when they break down on the road, or tow a non – functional car from an accident site to an auto mechanic garage.
If you are looking for a business to start as an entrepreneur and you have an interest in the automobile industry, then you should consider starting your own car hauling business. Although you don’t need a college degree to establish a car hauling business, but you would need some form of informal training, you may have to work as an apprentice to someone who owns a car hauling business. It makes it easier for you to learn how to manage your own car hauling services business when you get started.
Depending on the scale you want to start, the startup capital for this type of business can be considered to be moderate. As a matter of fact, you can start your own car hauling services business as a one man show and then grow it big within a short period of time by re-investing your profits back into the business in order to purchase more towing vans, hire towing van drivers and setup an administrative office structure.
Before launching this type of business, it will pay you carry out your market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your car hauling business, it will not take you long before you break even and start smiling to the bank.
So, if you want to start your own car hauling services business, all you need do is to read this article and you will be well equipped.
17 Steps to Starting a Car Hauling Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The automobile towing industry generally tows light or heavy motor vehicles over short and long distances. Car hauling service companies may also provide incidental services such as storage and emergency road repair services. As a matter of fact, car hauling services companies can be found in all parts of the world as long as there are automobiles there.
If you are a close watcher of the Automobile Towing industry, you will agree that the industry is tagging along. As individuals returned to work and disposable income started to rise, more consumers felt comfortable driving on their own as opposed to carpooling or taking public transportation.
It is a known fact that when more cars are on the road, the chances of an accident or need for roadside assistance rises, hence increasing the demand for car hauling services. Going forward, the revenue generated in the industry will continue to increase positively.
The Automobile Towing Industry is indeed a large industry and pretty much active in all the countries of the world. Statistics has it that in the united states of America alone, there are about 38,376 registered and licensed large and small scale automobile towing service companies scattered all across the United States responsible for directly employing about 86,829 people and the industry rakes in a whooping sum of $6 billion annually.
The industry is projected to grow at 2.5 percent annual growth within 2011 and 2016. It is important to state no company has a lion share of the available market in the industry. A recent report released by IBISWorld shows that industry establishments are generally located in regions with relatively high population and vehicle concentration, notably the Southeast and West regions. The report also shows that the Southeast region is home to the largest concentration of population relative to any other region in the nation.
This region lacks the public transportation infrastructure of the Mid-Atlantic and New England regions. Therefore, industry operators located here take advantage of a large proportion of the population using automotive vehicles as a primary means of transportation. This region accounts for about 24.3 percent of industry establishments.
Lastly, the automobile towing industry is pretty much open for aspiring entrepreneurs to launch their business in the industry. One good thing about the automobile towing business is that the business can be opened in any part of the United States with just one towing van and if proper market survey and feasibility studies are conducted, then you can be rest assured of the profitability of the business.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who patronize car hauling services cut across all genders; male and female above 18 years with the financial means and who own automobiles hence the demographic composition of a car hauling/towing business is all encompassing. In essence, your target market can’t be restricted to just a group of people, but all those who own automobiles.
So, if you are thinking of opening your own car hauling business then you should make your target demographics all encompassing. It should include car owners, auto repair, maintenance and servicing garages, transport companies and haulage companies in and outside the neighborhood where your car hauling business will be located.
3. Decide Which Niche to Concentrate On
It is important to state that there is no known niche area when it comes to the car hauling business. Every player in this line of business usually tows light or heavy motor vehicles over short and long distances. Car hauling services companies may also provide incidental services, such as storage and emergency road repair services.
The Level of Competition in the Industry
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you have reliable and effective towing vans and drivers and you know how to attract and reach out to your target market.
But over and above, there are several car hauling companies scattered all around the United States. So, if you choose to start your own car hauling/towing services business in the United States, you will definitely meet stiff competitions from them. Besides, there are larger car hauling/towing services brands that determine the trends in the industry and you should be ready to compete with them for customers.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their business and the results they have achieved over the years.
These are some of the leading car hauling/towing service companies in the United States of America and in the globe;
- American Towing Co
- Harmon’s Automotive & Towing Service
- Southwest Auto Towing LLC
- Timbes Tire Auto Accessories & Wrecker Service
- Bull City Radiator Service
- AAA Ridgecrest Towing & Auto
- Southside Wrecker Service
- Jim’s Auto Body Shop
- Auto House Towing & Recovery
- Defalco’s Automotive & Towing
- Leonard’s Auto Service
- Hunter’s Towing & Recovery
- Joe’s Towing and Auto Repair
- Jake’s Towing and Used Auto Parts
- Hill Brothers Auto Body & Towing
- Northside Service & Towing
- Superior Towing & Transport
- Iron Horse Towing and Repair
- Bo Dean’s Towing
- Hodge’s Towing and Repairs
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
The car hauling/towing services business is not a Green business; as a matter of fact, you will come across several car hauling/towing services companies when you are in need of their services. So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of the amount required to rent a garage and the amount needed to purchase towing vans, tool box, fueling and maintenance, acquiring the required licenses and also the running cost of the business.
Over and above, if you are considering starting a car hauling business, your concern should not be limited to the cost of renting a garage and the amount needed to purchase equipment, but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are looking towards starting a car hauling business, you would have to start from the very scratch because you can hardly get a franchise of car hauling business to buy. It is a business that is open to all and sundry and with just a towing van anyone can launch the business even as a one man show.
Besides starting a car hauling business from the scratch is less stressful when compared to other small scale businesses which usually require detailed groundwork before launching the business. With a car hauling business, you should just try as much as possible to secure a garage that is close to a major road or mechanic village and then leverage on every marketing tool within your disposal especially the internet to market your car hauling/towing services company.
Please note that most of the big and successful car hauling companies around started from the scratch and they were able to build a solid business brand.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own car hauling business today, one of the major challenge you are likely going to face is the presence of well – established car hauling companies and auto garages within your business location that also engage in towing services. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in bad shape, history has it that businesses such as car hauling/towing services companies and the likes usually struggle to maintain their old customers or even welcome new customers.
So also, unfavorable government policies can also hamper the growth of your car hauling / towing services. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Generally, you have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for your car hauling company. If your intention is to grow the business and have loads of towing vans covering major cities all across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your car hauling / towing services business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your car hauling / towing services business with the ability to sell franchise and position your towing vans all across major cities in the United States of America, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own car hauling / towing services business, here are some catchy names that you can choose from;
- Vitus Lewis Car Towing & Auto Spare Parts Store, Inc.
- Bourn Mort Car Towing and Car Accessories Store, LLC
- Classique Car Hauling and Car Accessories Store, Inc.
- All Nation Car Towing and Car Accessories Store
- Mark Fernand Car Towing and Auto Repair Garage, Inc.
- Tripod Car Towing and Auto Spare Parts Store, Inc.
- The Kings Car Hauling and Car Accessories Stores, Inc.
- George Paulson Car Towing and Auto Repair Garage, LLC
- Ken Garland Car Towing and Car Accessories Stores, Inc.
- Gaggling Jamel Car Towing Services, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your car hauling / towing services business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own car hauling/towing services business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Comprehensive Motor Vehicle Insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own car hauling/towing services business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
11. Get the Necessary Professional Certification
Aside from the results you produce as it relates to providing professional towing services, professional certification is one of the main reasons why some car hauling/towing services companies stands out. If you want to make an impact in the automobile towing services industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your own car hauling/towing services company;
- Commercial Driver’s License (CDL)
- F&I Regulation Certification – Auto Industry Certifications
- ASE Certified Technicians
Please note that you can successfully run a car hauling/towing services company in the United States and in most countries of the world without necessarily acquiring professional certifications and business license as long as you have adequate driver’s license, experience cum background in the automobile towing services industry.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentations in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own car hauling business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Commercial Vehicle Operator’s Registration
- Appropriate driver’s license for drivers (Commercial driver’s license (CDL)
- Assistant’s license for assistants
- Proof of ownership, proper identification and vehicle license
- Fire certificate
- Non – disclosure Agreement
- Copy of license for the service support (garage) facility and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
13. Raise the Needed Startup Capital
Starting a car hauling/towing services business can be cost effective especially if you choose to start on a small scale with just one towing van. Securing a standard and well – positioned garage facility and the amount needed to purchase towing vans, tool boxes, fueling and maintenance, acquiring the required licenses are part of what will consume a large chunk of your start – up capital, but if you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale car hauling / towing services business.
No doubt when it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your car hauling business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
14. Choose a Suitable Location for your Business
The location you chose to open your car hauling/towing services business is key to the success of the business; hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people who own automobiles and with the required purchasing power.
If you make the mistake of renting or leasing a facility for your car hauling company in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business and perhaps giving direction to potential customers.
These are some of the key factors that you should consider before choosing a location for your car hauling business;
- The demography of the location
- The demand for car hauling/towing services in the location
- The number of automobile owners and the purchasing power of the residents of the location
- Accessibility of the location
- The number of car hauling/towing services companies in the location
- The local laws and regulations in the community/state
- Traffic, parking and security
15. Hire Employees for your Technical and Manpower Needs
On the average, there are no special technologies or equipment needed to run this type of business except for towing vans, tool box, Point of Sales (POS) Machines, shelves and software applications. So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other and all these can be gotten as fairly used.
As regards leasing or outright purchase of a garage facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property.
When it comes to hiring employees for a standard car hauling/towing services business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Auto Mechanics, Sales and Marketing Officer/Sales Girls and Sales Boys, Accounting Clerk and Towing Van Drivers. These are some of the key employees that you can work with. On the average, you will need a minimum of 3 to 6 key staff members to run a small – scale but standard car hauling/towing services business.
The Service Delivery Process of the Business
When it comes to a car hauling business, there are no hard and fast rules on how they carry out their services. This is because the business process is simple and straightforward.
Basically, a car hauling/towing services company displays their numbers on key locations especially on the highway so that people (drivers) who need their services within the location can easily reach out to them. Once a client calls them to come help tow a vehicle, they access the distance the vehicle will be towed to and then bill the client. So also, if they are to carry out basic auto repair services, the auto parts that needs to be replaced will be carried along and once the job is concluded, they will get paid.
It is important to state that a car hauling/towing services company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated car hauling business process is not cast on stone.
16. Write a Marketing Plan Packed with ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a car hauling business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands determining the market direction for the automobile towing services industry.
As a matter of fact, your marketing strategy should center on reliability, swiftness, safety, pricing, secured payment platform, and above all excellent customer service. You should ensure that whenever your customers hire your services, they will get excellent service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
These are some of the marketing ideas and strategies that you can adopt for your car hauling / towing services business;
- Introduce your car hauling/towing services company by sending introductory letters alongside your brochure to car owners, auto repair, maintenance and servicing garages, transport and haulage companies and other key stake holders throughout the city where your car hauling company is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know who to call when they need the services of a car hauling/towing services company within your location
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in road shows in targeted communities from time to time to promote your car hauling/towing services company
- Join local car hauling/towing services associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If your intention of starting a car hauling business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by owning fleets of towing vans and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a profitable business.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your car hauling/towing services company;
- Place adverts on both print (newspapers and health magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your billboards on strategic locations all around highways and major roads in your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your car hauling/towing services company
- Distribute your fliers and handbills in target areas
- Contact car owners, auto repair, maintenance and servicing garages, transport companies and haulage companies and other key stake holders throughout the city where your car hauling / towing services company is located informing them about your business and the services you offer
- List your car hauling/towing services company in local directories/yellow pages
- Advertise your car hauling/towing services company in your official website and employ strategies that will help you pull traffic to the site
- Position your Flexi Banners at strategic positions in the location where your car hauling / towing services garage is located
- Ensure that all your staff members wear your branded shirts and all your towing vehicles and trucks/vans are well branded with your company logo