How Much Does It Cost to Start a Towing Business?

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Automobiles break down, accidents also happen, and people are usually left stranded by the roadside. Also, some people park their vehicles illegally on the road, breaking law enforcement traffic rules. Usually, these automobiles are transported to repair shops or any other location they are directed to, using tow trucks. It is an essential service to your community because some towing businesses offer emergency roadside aid. It is a business venture that cannot go on extinction because if there are automobiles on the road, people will need this service.

Owning a towing business is not cheap, nor an easy nut to crack. Therefore, you cannot dabble into this type of business without proper planning and budgeting. And, you must have adequate information on the cost required in starting and running a towing business. A towing business is a terrific but profitable business venture, and it is better to be well informed, so you will not be caught off-guard. Typically, it requires some specialized knowledge and skill.  Also, having experience in the transportation industry will help you in this industry. 

Starting a towing business cost ranges from $150,000 to $2,000,000. This video contains information on how you need to start a towing business and information on the starting cost and running cost you need to know, to have a profitable towing business. 

How Do I Start a Towing Business?

Starting a towing business requires efficient operations and effective marketing. The step-by-step process involved in starting a towing business are:

  • Write out your business plan: one of the most important steps required in starting a business is writing out a comprehensive business plan. This helps to increase your odds of having a successful and profitable business. Also, most banks would require that you have a business plan when seeking loans or any form of funding. 
  • Select the type of towing business to open: There are several types of services offered in a towing business. Study your options first and take your time to consider what type of towing business you want to operate. The different types of towing business include Bike towing services, heavy-duty towing services, boat towing services, etc.
  • Find out the initial and running cost required in a towing business: a towing business usually requires a reasonable amount of investment. The initial and running cost will be explained further in this video. 
  • Seek funding: Financing a towing business is quite expensive, due to the expensive cost of trucks and properties. Study and choose the best type of financing option you can get for your business.
  • Form a business entity, name your towing business, register your business, and obtain federal and state tax ID numbers, licenses and permits and insurance: You are to legally organize your business to operate, and you are to choose from the 4 primary business entities. Also, find a relevant and attractive name for your towing business. Then you are to properly register your business to obtain the necessary state tax ID numbers, licenses, permits and insurance.
  • Choose your preferred location: you will need a significant amount of space for storage and parking.
  • Open a business bank account and set up an accounting system: Every business requires a business account and an accounting system to run effectively and to monitor the business progress and growth.

How much does it cost to start a towing business?

How Much Does It Cost to Start a Towing Business?

The cost of starting a towing business usually varies based on your location, the type of towing vehicle you will purchase and the type of towing business you choose to do. The following are the cost you will need to budget and plan for:

  1. The cost of acquiring towing trucks: This is the most important equipment to purchase in a towing business. A new tow truck costs between $50,000 to $100,000 or more.
  1. Fuel cost: This cost varies based on the type of fuel your towing vehicle uses. This includes gas or petrol, the mileage you travel, and the prices of fuel at the time. You should budget about 30% of your overall budget for fuel.
  1. Cost of license: There are different regulations for licensing in states and countries. A towing license would cost about $200,000 in an urban area. But the process of purchasing a towing license is quick and easy. 
  1. Insurance cost: You need different types of insurance for your towing business. It helps protect your business from unforeseeable disasters. The factors that determine the cost of insurance for your towing business include your location, rate of accidents, tow radius, and loss history. Find out how much each insurance cost in your state/country to know how much to budget for insurance.
  1. Overhead costs: This cost includes your mortgage, power bill, and other miscellaneous costs. It ranges between $5,000 to $7,000.
  1. Garage and/or storage yard rent or purchase cost: you need to rent or purchase a garage or storage yard for your towing business. This cost varies based on your location, the size of the storage yard, and if you choose to purchase or lease a storage yard.
  1. Accounting cost: You need to hire an accountant to efficiently track your expenses and manage your finances well. This will cost about $2,000 to $5,000.
  1. Drivers uniforms: For uniformity and brand awareness. This should cost between $50 to $100 depending on the number of drivers you have.
  1. Hiring and paying salaries and wages: You need to hire and pay your drivers and on time too. This should be a part of your running cost.
  1. Maintenance and repair cost: This is also a running cost, and you need to have a monthly budget for it. This cost usually varies from month to month depending on the level of maintenance or repair that is needed.
  1. Marketing and advertising: To keep the customers coming, you need to invest in marketing and advertising and create awareness about your business. There are various platforms and media for marketing and advertising. You just need to find the one that best suits you.

Need help starting your towing business? Contact our business planning and funding experts at for a free consultation.

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