From the previous post, we’ve learned the different Traits of The Best Tow Truck Services. Apart from developing those traits, towing businesses also face the challenge of gaining profit in the midst of their expenses.
The values vary depending on the specifics of your business but this will help you provide a rough estimate on what a towing business spends on during it’s operation. This can also help you better prepare to handle your towing business.
Tow Truck
One of the first expenses you’ll spend on is your tow truck. You can buy a new one or purchase a used one. It is advisable to pay for a tow truck in cash rather than to mortgage one because your just starting and your unsure whether you’ll be earning enough to pay for your monthly mortgage. So whenever you can, pay for a tow truck in cash whether it’s brand new or used.
The great news is this is a one time purchase, unless your expanding and would need more trucks or if your current tow truck is damaged beyond repair. Careful selection and proper maintenance of your tow truck is very important. It can greatly help you minimize unwanted expenses on your tow truck.
Supplies and Equipment
Your tow truck isn’t the only thing you’d bring to pick up your client’s vehicle. You’d also need other equipment and tools to help you do it successfully. Here are a few things that you should definitely purchase for your towing business:
- GPS
- Strobe lights
- Traffic cones
- Tire service tools
- Lockout kit
- Portable air compressor
- Floodlights
- Booster Cables
- Jacks
- Fuel Tanks
Fuel
Fuel is a recurring monthly expense in a towing business. Most tow trucks run on a diesel engine because they are more cost effective. You can’t put an exact amount on your budget on fuel because your millage may vary from a month to another. Nevertheless, there are ways to reduce your fuel consumption.
Insurance
Insurance is very important and in the recent years we’ve seen insurance premiums rise significantly. This is because insurance for towing companies is also a high risk business. There are different types of insurance that you can get depending on your business needs. The following are some insurance coverage available:
- General Liability
- Workers Compensation
- Car on Hook
- Physical Damage
- Commercial Auto Liability
- Truck Liability
Repairs and Maintenance
Even if your tow trucks won’t require any repairs for the month, you should still set a budget for your monthly maintenance. Having regular maintenance and checkups on your vehicle prevents you from spending more on repairs.
There are also ways to lessen the expenses on this bracket because it highly depends on how you use your truck, what truck you drive, and how old your trucks is.
Marketing and Advertisement
This is a very important expense and you shouldn’t skip on it. Marketing will help you gain new customers who may become loyal to you if you satisfy their expectations. There are several ways to market your service and you should look into each of them.
Surely you can put a sign on your truck but that’s just a start. Nowadays, marketing is done through the internet. Most people in need of towing services can do a simple search online. A Facebook page, an Instagram account or your own dedicated website will all make your presence known in the world wide web.
Damages
Damages to a customer’s vehicle can happen even if you don’t mean it to happen. Setting a budget for it helps you be more prepared for the worse. Plus, if you don’t spend your budget for that month, you can add it to next month’s budget because you’ll never know when you’d have to pay a lot for damages.
Office Supplies and Expenses
Even if you run a one-man tow truck business, you’d still be spending on office supplies and tools to keep your business better organized. You’d also need to pay for your monthly utility bills, rent, phone, legal and accounting, cleaning supplies and many others.
