When you start any new business you’ve got to figure out how much it’s going to cost you before you start making any money. This step in starting your business is so important yet most business owners fail to do it. I’m talking taking many hours and writing out spreadsheet after spreadsheet and figuring out on a monthly basis down to the penny how much money you’ll be spending. There are so many small expenses including cell phone bills, insurance, gas, and so much more that you have to account for. Most business owners don’t have enough cash in the bank to buy a tow truck outright and will have to finance that purchase. You’re going to figure out exactly how much money you’ll be spending each month on financing your tow truck because this is going to be one of those figures that can either make or break your business. I’ve seen people go into this business thinking they were going to be spending about $500 per month on their tow truck payments only to end up paying 3x as much. If you had to spend an extra $1,000 per month on expenses that you weren’t accounting for, do you think you would be able to stay in business very long? Ya, I don’t think so either.
So once you know how much money you’re going to be spending on your business every month in fixed costs, you’re going to need to figure out how much money you’re going to spend on advertising and marketing. This is going to have one of the biggest impact on the success or failure of your business. People think that just because they have a fancy tow truck and a place to store cars, they’re automatically going to kill it. Unfortunately, this couldn’t be farther from the truth. Unless you have some major accounts with some big commercial properties that is going to feed your pipeline of customers, you’re going to have to know how to market yourself and build a brand that people will trust, recognize, and call. It’s interesting because while many people search on the internet for tow truck services when they need them, research shows that the companies that have spent money on branding themselves get almost more searches than people simply looking for towing. What does this mean exactly? Well, if your car broke down on the side of the road and you didn’t know the name of a towing company, you would probably type in “towing + city” into the search engine that you use. If you knew the name of a towing company, you would search for the name of that towing company into the search engine directly to get their phone number. When there’s a towing company that has brand recognition they are going to generate a lot more searches than just people searching for the more generic terms.
I hope these basic insights into starting a towing business start you off on the right track. If you take these basic ideas and principles and do the work, I promise you will be a lot better off in the long run. So to re-cap, basically figure out all of the fixed and variable costs associated with starting your business and don’t forget to include some type of marketing and advertising plan in those costs.