Now that you have a rough idea of the possibilities with regard to income you need to continue your investigation into the towing business. To determine if this is a good fit for you, you’ll need to know what recurring expenses you’ll have on a monthly basis.
With every business there are two sides to the profit equation; Income and Expenses. Obviously you want to have more money coming in than going out and you do that by either spending less or selling more or both.
Before we go further we’re going to establish certain assumptions:
- All numbers here are hypothetical and are dependent upon your circumstances.
- You’re an individual with no employees.
- You operate one tow truck, wrecker or carrier it doesn’t matter.
- You either operate out of your home or an existing business that has another source of revenue.
These expenses do not include any amounts for overhead such as real estate mortgage, rents, electricity, trash, and other expenses that go along with an office, garage or storage facility. If you run this business out of your home you’ll need to check with the authorities to be sure you’re operating within the rules.
The average costs of running a one-truck operation will vary dependent upon your choices. You’ll obviously have higher monthly mortgage and increased insurance payments if you finance a new truck. On the other hand, purchasing a used tow truck will cost less up front but it may eat you up in repair bills. The choice is up to you.
Recurring Monthly expenses for a towing business can include:
|Tow truck mortgage||$1,288||($80,000 truck financed for 6 years at 6%)|
|Fuel||$1,282||(220 calls @ 20 miles each & 13mpg with $3.79 gal/ diesel)|
|Repair Bills||$500||Variable depending upon many factors (age of truck/ upkeep)|
|Advertising||$500||Variable but expect to spend at least|
|Miscellaneous||$50||Ticket Book and Office Supplies|
This list doesn’t include any expenses you’ll pay annually such as Licenses, taxes, subscriptions, and dues and you’ll make other discretionary spending choices when it comes to training and upgrading equipment throughout the year.