How to Start a Towing & Recovery Business

by Lucy Bowles; Updated September 26, 2017

A towing and recovery business serves the general public, businesses and municipalities to remove unwanted vehicles from a property. A large or small towing and recovery business can become profitable. You must have the experience, skills and knowledge of the industry and equipment to be successful. In addition, you must have the dedication to follow your business plan and promote your towing and recovery services.

Step 1

Draft a business plan for your towing and recovery company. Include a list of all your expenses, start-up costs, assets, permits, licenses and insurance needed to starting your business.

Step 2

Purchase a towing truck and equipment. Buy other supplies such as traffic cones, floodlights and strobe lights. Find a location to house your trucks, supplies and towing equipment. Consider leasing storage units for all the vehicles you recover. Hire employees to manage the towing lot. Establish your hours of operation for the business.

Step 3

Secure the proper insurance for your towing and recovery business. You need insurance to cover worker's compensation, traffic accidents and property damage (if cars are damaged during the tow).

Step 4

Register your business with your state. Incorporate your towing business with your secretary of state. Apply for all business licenses and permits as required by your state's Small Business Administration. If you hire staff, apply for an employer identification number (EIN) from the IRS.

Step 5

Obtain a driver's and towing license from your local DMV. You must show proof of insurance before you can receive a license. Record all paperwork you submit to the city.

Step 6

Advertise your towing and recovery business in your area. Design fliers and business cards to hand out to local business owners and community members. Establish relationships with owners of auto body shops that may need a towing company for their customers. Consider towing unwanted vehicles from people's homes and abandoned cars in parking lots at a discounted price.

Step 7

Promote your services at the local police station. Try to get on their list for companies that tow and recover vehicles form traffic accidents. Purchase a new or used police scanner to listen to police traffic and accident reports. Buy a scanner at an electronics store or Internet auction. Check your state laws regarding their use. It may be illegal to use some types of scanners in your area or you may be required to obtain a special license.

Step 8

Carry a work cell phone. Advertise that you can be reached day or night by your customers. This extra service may help distinguish your towing business from the competition in the region. Show your cell phone number if your newspaper, television or radio advertisements so that the general public can reach you at any time.

Step 9

Find an impound yard where you can dispose of abandoned vehicles.

Tips

  • Join professional associations such as the Towing and Recovery Association of America for networking and business resources.

Warnings

  • Business laws are different in each state. Consult with an attorney when starting your own business.

About the Author

Lucy Bowles is an avid freelance writer from Indianapolis. She has written for various websites since 2009. As a certified paralegal Bowles has worked in the areas of business, intellectual property and entertainment law. She has a bachelor's degree in history and a minor in legal studies from Indiana University.