Just Tow Man
Posted by Archer on September 7, 2012
The towing business can be full throttle at times while at other times you can’t buy a tow. Even when it’s slow bills need to be paid, trucks need fuel, and drivers need paychecks. What’s a tow boss to do during slow periods? Do you spend money and go in a direction you have no experience in like auto repair or the tire business? Or do you just concentrate on towing when there’s nothing to tow.
To fully understand the problem you need to know how a towing business makes and spends money. The two biggest expenses incurred on a regular basis are fuel and employee expenses.
Fuel: Most tow trucks run on diesel and since the price spike of 2008 where diesel hit an all-time high of over $4.70 per gallon we haven’t gotten a break. Certainly when you’re not towing you don’t spend as much on fuel but with prices this high it’s an expense that must be considered at all times with every job you do.
Employees: To keep qualified and experienced drivers you must pay them accordingly or they’re going to go drive a dump truck for someone else. This means that you can’t expect them to survive and stay with you during slow times if their only form of compensation is commission. There must be something else that kicks in when there’s no tow calls bringing in the money. Whether they are compensated hourly or with a base plus commission, to keep good people, you, the tow boss, must incur that expense even when no money’s coming in.
Many of the uninformed in our society assume that since a tow truck is used when emergencies arise and is considered an emergency vehicle in those situations that we are funded with public dollars like Fire and Law Enforcement. This is not the case. Towing companies are funded entirely by the dollars brought in from services provided to its customers not through tax payer funds.
This means when there is no need for these services towers must use this time to maintain equipment and train themselves. Although vitally important to any successful towing operation these exercises don’t bring in any income in the short term.
Should they then diversify and get into other markets so there’s always a constant flow of cash coming in? I’ve already mentioned a few ideas where a tow company could invest and possibly experience some success, tires and auto repair. Let’s look at the pros and cons of getting into these businesses.
Pro: A tire machine doesn’t cost that much and you’ve got all kinds of used tires you could sell.
Con: You must always have someone in the shop to change tires and deal with customers.
Pro: Once you pay your tire man your used tire sales are 100% profit.
Con: You must legally dispose of old tires.
Con: Some of your best customers are tire shops and they might look at the added competition as a negative and choose one of your competitors when they need a tow.
Auto Repair Business
Pro: The nature of the towing business is such that you see cars in need of repair services everyday making it a golden opportunity to start an auto repair business.
Con: You must always have licensed and qualified mechanics to do the work.
Con: You must invest thousands of dollars in equipment and tools.
Pro: Having a great supplemental income is a plus.
Con: Many of your regualr towing customers are auto repair shops, once they find out that there’s a new competitor in town and that it’s you they’ll rethink what company to call when their customers need a tow.
The problem you’re going to run into with either of these businesses is losing your existing customer base. Why would a repair shop call to have you tow their customer’s car in when they might have to worry that one of your drivers would steer that business toward your new auto repair services? The answer is: They wouldn’t want to take that chance. Instead the call would simply go to one of your competitors.
If you’re in the towing business be in the towing business. Embrace the fact that towing is what you do. Do everything you can to build your brand so that whenever anyone thinks about towing your name comes to mind. Times are tough now and business will come back, tighten that belt if you must and just tow.