A tow truck business is a business that helps in towing broken-down vehicles on the highway or any other location. With this type of business, you will need to polish your driving skills, learn the billing administration in the industry, register the business, join the appropriate union, and then promote your services.

Statistics have it that in terms of revenue, the automobile towing market size in the US is $11.3 billion and it is expected to experience a growth of 2.9% in 2022. The yearly growth of this industry has been 5.5% from 2017 to 2022.

Steps on How to Start a Tow Truck Business in Florida

  1. Conduct Market Research

If you are starting a tow truck company in Florida, you would need market research to be able to maximize profits from the business. The first step in the market research process for your tow truck business is to develop market- research questions in line with your business goal and objectives.

You should source information that will help you maximize your business, get information that will help you understand what your potential market will be looking out for from a tow truck business, and also help you operate your business with less stress.

a. Who is the Target Market for the Tow Truck Company?

The business model a tow truck business follows will determine its target market. A towing business that offers roadside assistance will target drivers, auto repair shops, car dealership shops, and insurance companies within its service area.

b. Is Tow Truck Company a Profitable Business in Florida?

Yes, the tow truck company is a profitable business. Data shows that as of Jul 27, 2022, the average annual pay for a tow truck owner in Dallas is $87,211 a year. Starting an automotive towing business can be a terrific and profitable business venture, providing a license can be obtained or purchased at a reasonable price.

c. Are There Existing Niches in the Industry?

No, there are no existing niches when it comes to the tow truck business.

d. Who are the Major Competitors?
  • Stepp’s Towing Service, Inc.
  • Sunstate Wrecker Services
  • Orlando Towing Company
  • Deltona Tow Truck Company
  • A Superior Towing Company
  • Allen’s Towing Service
  • Johnson’s Wrecker Service, Inc.
  • American Towing & Transport LLC
  • Talon Towing and Transport
  • South Beach Tow Truck Company
  • Adam Towing & Recovery
  • MX Towing Service|Tow Truck Company
  • Car Store Towing & Transport
  • JT’s Towing & Wrecker Service
  • Oviedo Road and Wrecker Service
  • Monster Towing & Road Service
  • BG Towing | Tow Truck Service
  • Elvis Towing & Transport
  • Upman’s Towing Service
  • Bryant’s Towing 24-Hour Service.
e. Are There County or State Regulations or Zoning Laws for Tow Truck Company?

Yes, there are county or state regulations or zoning laws for tow truck companies, and players in this industry are expected to work with the regulations governing similar businesses in the county where their business is domiciled. Towing companies are required to contact the local police agency any time they remove a vehicle from a parking area (within 30 minutes of the tow).

These trucks are also required to stop at motor carrier safety and weight inspection stations when signs direct them to do so.

f. Is There a Franchise for Tow Truck Company?

Yes, there are franchise opportunities for tow truck companies, and they include;

  • Speedy Towing
  • Motorcycle Towing Professionals
  • Sea Tow.
g. What Do You Need to Start a Tow Truck Company?
  • Get a Commercial Driver’s License
  • Apply for Your Federal DOT and Motor Carrier Authority Number
  • Complete Your Unified Carrier Registration (UCR)
  • Get an International Registration Plan (IRP) Tag
  • Understand Heavy Use Tax Regulations
  • Obtain an International Fuel Tax Agreement (IFTA) Decal.
  • File a BOC-3 Form
  • Get A Standard Carrier Alpha Code (SCAC)
  • Tow Trucks
  • Operational Capital (For Ongoing Expenses)
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.

Some of the catchy business name ideas suitable for a tow truck business are;

Creative Tow Truck Business Name ideas

  • Thomas Tunes© Tow Truck Company, Inc.
  • Cross Country® Tow Truck Company, LLC
  • Ganda Guys© Tow Truck Company, Inc.
  • Tow Solutions® Tow Truck Company, Inc.
  • Tow King™ Tow Truck Company, Inc.
  • Grit and Move™ Tow Truck Company, LLC.
  • Gecko Team© Tow Truck Company, LLC
  • Tandy T® Tow Truck Company, Inc.
  • Silas Titus© Tow Truck Company, Inc.
  • Chamberlian Mack© Tow Truck Company, Inc.
  • Safe Hands® Tow Truck Company, LLC
  • State Base® Tow Truck Company, LLC
  • Tally Top™ Tow Truck Company, LLC
  • Rapid Movers© Tow Truck Company, Inc.
  • Justin Ben® Tow Truck Company, Inc.
  • Amos Banks™ Tow Truck Company, Inc.
  • Goodie Guys™ Tow Truck Company, Inc.
  • Back and Forth© Tow Truck Company, Inc.
  • Joel Jamez® Tow Truck Company, LLC
  • Benny Blanco™ Tow Truck Company, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for a Tow Truck Company in Florida?

There are several options when it comes to the business structure of a tow truck company, but the one most players in this line of business consider is an LLC. It is considered because providers want to protect themselves from lawsuits.

b. Steps to Form an LLC
  • Choose a name for your LLC.
  • File articles of organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Tow Truck Company in Florida?
  • General Business License
  • Commercial Driver’s License.
  • Federal DOT and Motor Carrier Authority Numbers.
  • Unified Carrier Registration (UCR)
  • International Registration Plan (IRP) Tag.
  • International Fuel Tax Agreement (IFTA) Decal.
  • File a BOC-3 Form
  • Standard Carrier Alpha Code (SCAC)
  • Operational State Facility Inspections for your parking
d. What Type of Certification is Needed to Start a Tow Truck Company in Florida?

You don’t need any certifications to start a tow truck company.

e. What Documents are Needed to Open a Tow Truck Company in Florida?
  • DBA
  • EIN
  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit and Building Approval (For your parking)
  • Certificate of Incorporation
  • Commercial Driver’s License (CDL) (at least a Class B CDL)
  • IRP Plates
  • Business License
  • Business Plan
  • Operating Agreement for LLCs
  • Insurance Policy
  • Contract Document
  • Company Bylaws
  • Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a tow truck company, there may not be a need to file for intellectual property protection or trademark. The nature of the business makes it possible for you to run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Tow Truck Company in Florida?

The startup cost of a tow truck company is not fixed, but generally, a tow truck company will cost from $150,000 to over a million dollars to start and that can go higher depending on your business goals and objectives.

b. What are the Costs Involved in Starting a Tow Truck Company in Florida?
  • The total fee for registering a business in the United States of America – $750.
  • Legal expenses of obtaining licenses and permits as well as the accounting services – $1,200.
  • Insurance (general liability, workers’ compensation, and property casualty) coverage at a total premium – $12,400.
  • The cost of leasing a facility (long-term lease agreement) – $105,600.
  • The cost of facility remodeling and installations – $20,000.
  • The cost of the purchase of tow trucks: $250,000
  • Other start-up expenses including stationery – $500
  • Phone and utility deposits will cost – ($2,500)
  • The operational cost of the first 3 months (salaries of employees, payments of bills et al) – $50,00
c. What Factors Determine the Cost of Opening a Tow Truck Company in Florida?
  • The size of the tow truck company (number of tow trucks you want to start the business with)
  • The choice of location
  • The required licenses and permits
  • The cost of branding, promotion, and marketing for the tow truck company
  • The cost of furnishing and equipping the tow truck facility
  • The cost of the insurance policy covers
  • The cost of registering the business
  • Cost of recruiting and training your staff
  • The cost of the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

It is not compulsory to build a new facility for your tow truck company, but if you have the required finance, it will be nice to build a parking facility and administrative office. The building or reconstruction of a facility will help you come up with a facility that will fit into your business goals and vision.

e. What are the Ongoing Expenses of a Tow Truck Company?
  • Gas and lubricants
  • Salaries of employees
  • Trucks maintenance
  • Insurance
f. What is the Average Salary of your Staff?
  • Chief Operating Officer (Owner) – $68,000 Per Year
  • Admin and HR Manager – $48,000 Per Year
  • Transport and Logistics Manager $48,000 Per Year
  • Accountant $38,000 Per Year
  • Tow Truck Drivers – $36,800 Per Year
g. How Do You Get Funding to Start a Tow Truck Company in Florida
  • Raising money from personal savings
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Tow King™ Tow Truck Company, Inc. is a licensed tow truck company that will be based in Orlando, Florida. We will provide essential services by moving broken down, improperly parked, impounded, or indisposed motor vehicles away from the road so as to avoid obstruction of traffic.

Our services and operations will center around highways in Jacksonville, Miami, Tampa, St. Petersburg, Hialeah, Port St. Lucie, Tallahassee, Cape Coral, and Fort Lauderdale areas.

Tow King™ Tow Truck Company, Inc. has been able to secure all relevant licenses and permits to operate throughout the United States and Canada. We will ensure that we abide by the rules and regulations guiding the trucking industry and we will only hire experienced and qualified drivers with valid commercial driver’s licenses.

b  Services
  • Emergency road repair services
  • Motor vehicle towing services
  • Tow truck services
  • Wrecking services for motor vehicles
  • Passenger car towing services
  • Light duty truck towing services
  • Roadside assistance services.
c. Mission Statement

Our mission at Tow King™ Tow Truck Company, Inc. is to provide professional towing services while utilizing trained employees, state-of-the-art information systems, and a well-maintained fleet to ensure your vehicles reach their destinations in a safe and timely manner.

Vision Statement

Our vision is to become one of the best choices for individuals and organizations when it comes to the demand for towing services in Texas.

d. Goals and Objectives

The goals and objectives of a tow truck company are to move vehicles from one location to another as required by the government or the owner of the vehicle.

e. Organizational Structure
  • Chief Operating Officer (Owner)
  • Admin and HR Manager
  • Transport and Logistics Manager
  • Accountant
  • Tow Truck Drivers

Marketing Plan

a. SWOT Analysis
Strength:
  • Excellent operational history
  • Attention to detail.
  • Accurate estimates with no hidden costs.
  • Experience and trained professionals.
  • Excellent customer testimonials.
  • Reliable and efficient tow trucks and service.
Weakness:
  • Not enough clientele to run at full capacity immediately
  • We will need a loan to build our facility and to purchase tow trucks and equipment
  • The owner is currently running the business solo
  • Lack of economies of scale.
Opportunities:
  • Build upon existing clientele
  • Online market, services, new technology, and the opening of new markets.
Threat:
  • Loans diminish profitability until they are paid off
  • The first year will be financially tight while we gain customers and pay off loans
  • Competition in the area could increase
  • Management of employees requires time, money, and efforts
  • The transport department could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses.
b. How Do Tow Truck Companies Make Money?

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

c. Payment Options
  • Payment via bank transfer
  • Payment with cash
  • Payment via credit cards/Point of Sale Machines (POS)
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
d. Sales and Advertising Strategies
  • Introduce your tow truck company by sending introductory letters alongside our brochure to corporate organizations, automobile dealers, merchants and warehouse operators, and key stakeholders in your city.
  • Print out fliers and business cards and drop them in offices, libraries, public facilities, train stations et al.
  • Use friends and family to spread the word about your business
  • Post information about your company and the services you offer on bulletin boards in places like seaports, industrial hubs, and local coffee shops
  • Place a classified advertisement in the newspaper, or local publication about your company and the services you offer
  • Leverage on referral networks such as agencies that will attract clients who would need your services
  • Engage in a direct marketing approach
  • Encourage the use of word-of-mouth marketing from students.

Financial Projection

a. How Much Should You Charge for your Service?

The average cost to hire a tow truck service is $75 to $125. Most towing companies have a minimum charge of $50 for the first 5 to 10 miles, then $2 to $4 per mile after.

b. How Much Profit Do Tow truck company Owners Make a Year?

The report shows that as of Jul 27, 2022, the average annual pay for a Tow Truck Owner is $87,211 a year. Please note that it would cost anywhere from $500 to $25,000 or more to tow away an 18-wheeler.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the tow truck company (number and sizes of tow trucks owned)
  • The location the tow truck company is covering
  • The management style of the tow truck company
  • The business approach of the tow truck company
  • The number of years the tow truck company is in business
d. What is the Profit Margin of a Tow Truck Company?

The profit margin of a tow truck company is not fixed. It could range from 25 percent to 65 percent depending on the distance of the goods to be transported.

e. What is the Sales Forecast?

Below is the sales forecast for a tow truck company. It is based on the location of the business and other factors as it relates to such startups in Florida;

  • First Fiscal Year: $420,000
  • Second Fiscal Year: $580,000
  • Third Fiscal Year: $620,000
  1. Set Up your Shop/Office

a. How Do You Choose a Perfect Location for a Tow Truck Company in Florida?
  • The demography of the location especially as it relates to the breakdown of vehicles
  • The demand for towing services in the location
  • Accessibility of location
  • The number of tow truck companies and owner-operated tow truck businesses in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What City is Best to Open a Tow Truck Company in Florida?
  • Jacksonville
  • Miami
  • Tampa
  • Orlando
  • Petersburg
  • Hialeah
  • Port St. Lucie
  • Tallahassee
  • Cape Coral
  • Fort Lauderdale.
c. What Equipment is Needed to Operate a Tow Truck Company?

The basic equipment you need to tow a travel trailer is an adequate tow vehicle, the correct hitch, pin and clip, wiring harness, and brake controller. Accessories such as a hitch, programmer, gauges for your engine, and after-cooler also help.

  1. Hire Employees

When hiring employees for a tow truck company, you should plan to hire a competent chief executive officer (you can occupy this position), admin and HR manager, transport and logistics manager, accountant, and tow truck drivers.

  1. Launch the Business Proper

No tow truck company opens its business without first organizing an opening party to officially launch the business. You can do a soft opening if you are operating on a low budget or you can go for a grand opening party. With the proper launching of the business, you will officially inform people in your city that your tow truck company is open for business.

a. What Makes a Tow Truck Company Successful?
  • Choose a good location and reliable tow trucks to launch the business
  • Hire competent, hardworking, and trustworthy staff
  • Encourage the use of word of mouth to promote your business
  • Leverage all available online and offline platforms to promote your business
b. What Happens During a Typical Day at a Tow Truck Company?
  • Inspecting and warming the tow trucks upon resumption
  • Cleaning the tow trucks and topping waters and other fluids that are needed to keep the truck functional and in good shape
  • Ensuring that all towing hooks and accessories are in order
  • Open the phone line to customers
  • Once the service is requested, negotiate the fee
  • Go to the location to tow the vehicle
  • Return back to base.
c. What Skills and Experience Do You Need to Build a Tow Truck Company?
  • Good driving skills
  • Customer services skills
  • Interpersonal skill
  • Business management skills
  • Bargaining skill
  • Work experience in the transport and logistics industry
  • Experience in managing people
  • Experience in business administration
  • Experience in handling logistics and transportation software.