Should you Start a Towing Business?
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- Опубликовано: 8 сен 2024
- #businessideas #towing In this Business Idea Breakdown, I review a Tow Truck Business or Towing Company. I gave this business an 8.3 out of 10 due to the numerous factors below. Anything over 8, is a business I would start.
Ability to Scale: Yes, this business can be scaled but not easily. Every time you scale, your fixed expenses increase. You will need to buy another truck, hire an employee, pay more insurance, and have additional maintenance costs.
Is it profitable? Yes, the average tow cost is $75 - $125 a tow. Using an average of $100 and an average of 7 tows a day, you daily revenue would be $700 a day.
- To buy a nice used truck, the cost would be around $60,000.
- The average profit margin for a towing company is 70%. This means your daily profit would be around $490 a day.
- It would take ($60K / $490) around 122 days to pay for your truck.
- If you finance the truck with 25% down ($15,000 down), your monthly payment would be around $850.
- With your down payment ($15,000) and 2 monthly payments (2 X $850), it would take around 34 days to turn a profit.
- After that, your monthly cashflow for 20 days of work (5 days a week) would be $9,800 - $850 (loan) = $8,951 a month.
- This would be around $100K-$110K a year in profit!
How easy is it to start? The biggest barriers of entry is capital for the down payment, ability to get tows, learning how to operate the truck, and being a good driver.
Does it require a lot of time to run? Yes, this would be a full time job with pretty unknown hours. Most towing companies operate 24-7. Meaning, you will likely be on call for random hours throughout the day.
What are the challenges: Burn out, since you are working weird hours and dealing with traffic, burn out will likely occur. Scaling this business will also come with some additional head aches of hiring, and finding the right truck.
Is the business sellable? Yes, this business can be sold depending on the following factors.
- You can always sell the trucks and equipment for its current value.
- You can potentially sell the business for a multiple of the net income (profit) if the business itself has value. What is value? It is it's ability to bring in business based on its contracts, website, and relationships. If you are just using a towing broker to generate your tows, then there isn't much value outside of your equipment. Anyone could operate it from scratch.
- You need to create value in your business or you will never be able to sell it.
In conclusion, if you are making under $100K a year, I would highly consider starting this business.
Insurance is cost prohibited. Not a lot of companies want to insure tow trucks anymore, anyway. Requiring large down payments and being quick to drop you causes a lot of headaches and anxiety. With the Insurance exception, I can agree with your video point of view. I have towed for several outfits up and down the eastern seaboard since 1996.
Yeah depending on your state, the insurance can suck!
I'm in the process of trying to start up a towing business right now
Nice! Great business to start! You can do it!
How’s it going? I want to start this but I’m not sure how difficult it’s going to be.
It flopped. I'm driving a semi truck now hauling flatbed. I want to do something where I'm home more. This is hard on family life
@@1116Redneck why did it flop? Not profitable or too hard?
You can start a towing businesses with a current pick up truck and trailer. If you have 5k you can find an actual tow truck for that price. Can easily get insurance for 4 to 15 grand per year depending on what path you choose for your business.
Dang! That is a small start up cost! Where do find a truck for $5K?
Man stop lying show and prove
@@banksboy6806 how am I lying?
@@nate_indiana_jones finding a tow truck for 5k that’s how … car transporter ain’t the same as a tow truck I h haven’t found any tow truck for 5k that will get you started in towing like I said show and prove
@@banksboy6806 $5K would be your down payment, not a truck. A tow truck or any truck for $5K barely runs lol
Taking advice from someone that clearly has never been in the business is probably not a good idea. If you want to get into Towing, get a job working for a Towing company. Then you can get a feel if the job is right for you because this isn't just a job, its a lifestyle. Ask anyone that has been doing it for any amount of time.
Thanks for the input. I agree and would encourage anyone to start a business if they want to. I try to post helpful content on different industries, obviously some information might be wrong, but in the aggregate I’m sharing businesses that people can start that they may have never heard of.
sounds like truckin , i truck and its my whole damn life until i can figure a way out
Excellent wisdom. I tell people all the time. "Take your eyes off money and focus on what you have to do to get it." The internet has a lot people messed up out here
The thing you neglected to talk about just like everyone else is you need a shop/yard to take to wrecked cars back too that is a big expense.
Correct, hard to include everything possible in a 10 minute video
Didnt mention the insurance. About 1k a month.
My bad, on my other towing video I did.
WAY TO WING IT
Thanks🫡
Insurance is expensive big factor
Yeah depending on where you are, it can be super expensive.
Man where you was at a couple months ago
I’m here now! Hustling and improving everyday.
This guy 😂
🫡🫡
Huh lol
What can I help you with?
This guy is clueless af lma😢
How so?
whats the Profit per tow a company makes? Like Average service fee minus Average cost per tow. how much profit per tow do these companies make??
70% seems way too high....
I would say Gross Profit would be around 30% profit per trip.
so 30$...thats not a lot...i think about running google call only ads for towing companies and the cost per phone call ranges from 15-35 $...so i dont know if that makes sense. what u think@@nate_indiana_jones
Depends on purchased equipment, location and business acumen to start.