Tow Truck Business Plan Template

Written by Dave Lavinsky
tow truck business plan template
Table of Contents
Table of Contents

Tow Truck Business Plan Template

If you want to start a tow truck business or expand your current tow truck business, you need a business plan.

The following Tow Truck business plan template gives you the key elements to include in a winning Tow Truck business plan.

You can download our Tow Truck business plan template (including a full, customizable financial model) to your computer here.
 

Tow Truck Business Plan Example

I. Executive Summary

Business Overview

[Company Name] is a passenger tow truck company located in [Location]. Our primary service is to help stranded travelers and commuters transport their vehicle to where it needs to go. We also offer limited roadside services, such as jumpstarts, tire changes, and lockouts. Any traveler or commuter in need of help can depend on us for high-quality services and excellent customer service.

Products Served

[Company Name] offers emergency tow services to residents and travelers commuting around the [Location] area. Our tow truck drivers can help customers transport their broken-down passenger vehicles to their homes, mechanics, or any other location they need to get to.

We also offer roadside services such as:

  • Gas delivery
  • Jumpstarts
  • Tire changes
  • Lockouts

Customer Focus

[Company Name] will serve residents living within 10 miles of [Location] as well as any travelers in the area needing a quick tow. The demographics of this area are as follows:

  • 82,347 residents
  • 76% vehicle owners
  • Average salary of $52,400
  • Median age of 37 years

Management Team

Management Team
[Company Name] is led by [Founder’s Name], who has worked as a tow truck driver for [X] years. He has a passion for helping stranded commuters and travelers with their vehicles and providing emergency roadside services. Recently, he decided to use his connections and experience to start a tow truck business of his own. Though he has never run his own business, [Founder’s Name] has worked in the industry long enough to gain an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry.

Success Factors

[Company Name] is uniquely qualified to succeed due to the following reasons:

  • The management team has a track record of success in the tow truck business.
  • [Founder’s Name] has developed a strong client base from his previous work as a tow truck driver. He also has connections with local mechanics and other important community leaders.
  • The tow truck business is a proven business and has succeeded in communities throughout the United States.

Financial Highlights

[Company Name] is currently seeking $500,000 to launch. Specifically, these funds will be used as follows:

  • Store design/build: $200,000
  • Vehicle purchase and maintenance: $200,000
  • Working capital: $100,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Top line projections over the next five years are as follows:

Financial SummaryFY 1FY 2FY 3FY 4FY 5
Revenue$560,401 $782,152 $1,069,331 $1,379,434 $1,699,644
Total Expenses$328,233 $391,429 $552,149 $696,577 $776,687
EBITDA$232,168 $390,722 $517,182 $682,858 $922,956
Depreciation$7,000 $7,000 $7,000 $7,000 $7,000
EBIT$225,168 $383,722 $510,182 $675,858 $915,956
Interest$6,016 $5,264 $4,512 $3,760 $3,008
Pre Tax Income$219,152 $378,458 $505,670 $672,098 $912,948
Income Tax Expense$76,703 $132,460 $176,985 $235,234 $319,532
Net Income$142,449 $245,998 $328,686 $436,864 $593,416
Net Profit Margin25%31%31%32%35%

 

II. Company Overview

Who is [Company Name]?

[Company Name] is a passenger tow truck company located in [Location]. Our primary service is to help stranded travelers and commuters transport their vehicle to where it needs to go. We also offer limited roadside services, such as jumpstarts, tire changes, and lockouts. Any traveler or commuter in need of help can depend on us for high-quality services and excellent customer service.

[Company Name] is led by [Founder’s Name], who has worked as a tow truck driver for [x] years. He has a passion for helping stranded commuters and travelers with their vehicles and providing emergency roadside services. However, he saw some flaws in his prior employers’ business models that kept him from fully helping his customers. Therefore, he decided to use his connections and experience to start a tow truck business of his own.

[Company Name]’s History

[Founder’s Name] incorporated [Company Name] on [date of incorporation] and found a potential commercial location soon after. The business is currently being run from [Founder’s Name]’s home, but once the lease on [Company Name]’s commercial location is finalized, all operations will be run from there.

Since incorporation, the company has achieved the following milestones:

  • Found a commercial location and signed a Letter of Intent to lease it
  • Developed the company’s name, logo, and website located at [website]
  • Found potential tow trucks to purchase
  • Began recruiting key employees with experience in the tow truck industry

[Company Name]’s Products/Services

[Company Name] offers emergency tow services to residents and travelers commuting around the [Location] area. Our tow truck drivers can help customers transport their broken-down passenger vehicles to their homes, mechanics, or any other location they need to get to.

We also offer roadside services such as:

  • Gas delivery
  • Jumpstarts
  • Tire changes
  • Lockouts

 

III. Industry Analysis

No matter how much technology improves, vehicles will never be perfect. Even the best models break down at some point. Therefore, as long as vehicles are prominent throughout society, there will be a need for tow truck services. Towing is an essential service, which means there will be a great demand for the industry for the foreseeable future.

The only challenge to the towing industry is the enormous changes made to modern vehicles (such as the transition to electric vehicles). However, no vehicle is indestructible. Tow truck drivers and mechanics may need to make changes to their services or skills, but they will not become irrelevant.

According to IBISWorld, the industry grew at a compound annual growth rate (CAGR) of 2.6% over the past five years. Furthermore, according to Market Watch, the CAGR for the industry is expected to be about 3.83% over the next five years. So even with all the major changes in the automotive industry, the tow truck industry is expected to thrive for the foreseeable future.

 

IV. Customer Analysis

Demographic Profile of Target Market

[Company Name] will serve the community residents of [Location] and its surrounding areas. Since most residents own at least one vehicle, we expect many individuals will require our services at some point. We will also serve any travelers visiting the area.

Customer Segmentation

[Company Name] will primarily target the following three customer segments:

  • Commuters: Our primary customer segment will be local residents who have to commute around town each day. Accidents and vehicle breakdowns are common, so we expect this to be our largest customer segment.
  • Travelers: We will also market ourselves to individuals traveling around or through [Location]. We will do our best to collaborate with insurance companies and rental companies to make the process as easy as possible for this customer segment.
  • Customers of local insurance companies: We will partner with local auto insurance agents and provide our services to their customers at a discounted rate. This will help us get steady clients if our other marketing channels are ineffective.

 

V. Competitive Analysis

Direct & Indirect Competitors

The following businesses are located within a 10-mile radius of [Company Name], thus providing either direct or indirect competition for customers:

Metro Towing LLC
Founded in 2009, Metro Towing has helped both individual and commercial customers with all their towing needs. They have a large fleet of tow trucks of all sizes that can help tow both small passenger vehicles and larger trucks and vans. They also provide limited roadside services, such as jumpstarts and tire changes.

Though Metro Towing does tow passenger vehicles, much of the company’s customer base consists of commercial drivers. Therefore, the company will not be a major competitor.

Jack’s Tow And Battery
Jack’s Tow And Battery offers tow truck and roadside assistance services for passenger vehicles throughout the [Location] area. It offers all the services a stranded driver may need, including a tow, jumpstarts, tire changes, and lockouts. For decades, Jack’s has been a go-to tow service for stranded drivers.

Though Jack’s Tow And Battery will continue to thrive, it has recently changed its business model, so it gets most of its business exclusively through its insurance partners. This means that we will not have significant competition from them.

24/7 Tow And Roadside Services
24/7 Tow And Roadside Services provides exactly that. Open 24/7, the company helps stranded passenger vehicles at all hours of the day. This company is convenient for drivers who struggle to get a tow or emergency roadside services in the middle of the night.

Though we can’t compete with their hours, [Company Name] is far more affordable than 24/7 Tow And Roadside. This means we will remain competitive with them during our daytime hours of operation.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include the following:

  • Customer-Focus: [Company Name]’s tow drivers provide the highest quality customer service focused on transparency, communication, and responsiveness throughout the process. Our goal is not just to help drivers’ immediate needs but to create long-lasting connections.
  • Management: [Founder’s Name] has been extremely successful working in the industry and will be able to use his previous experience to provide excellent customer experience. His unique qualifications will serve customers in a much more sophisticated manner than [Company Name]’s competitors.
  • Relationships: [Founder’s Name] knows many of the local leaders, business managers, and other important figures within the local auto and tow truck industries. He also already has an initial client base that he built during his time working for our competitors.

 

VI. Marketing Plan

You can download our Tow Truck business plan template (including a full, customizable financial model) to your computer here.

[Company Name] seeks to position itself as a high-quality, friendly, and convenient tow truck business. Clients can expect to receive the best tow services from skilled professionals as well as top-tier customer service.

The [Company Name] Brand

The [Company Name] brand will focus on the company’s unique value proposition:

  • Client-focused towing services, where the company’s interests are aligned with the customer.
  • Service is built on long-term relationships and personal attention.
  • Professional industrial experience in a small business setting.

Promotions Strategy

[Company Name] expects its target market to be individuals living within a 10-mile radius of its location. [Company Name]’s promotion strategy to reach these potential customers includes:

Referrals
[Company Name] understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer other individuals by providing discounts on future services for every new client produced. This strategy will increase in effectiveness over time.

Website/SEO
[Company Name] will invest in developing a professional website that displays all the services offered by the company. It will also invest in SEO so that the company’s website will appear at the top of search engine results.

Social Media
[Company Name] will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographic.

Billboards
[Company Name] will secure a billboard in the area that captures the attention of residents. The billboard will draw attention to the new business and its service offerings. It will be located by a major highway that is often a site of accidents and vehicle breakdowns.

Insurance Partnerships
[Company Name] will partner with local and national auto insurance companies to build a solid client base. Our services will be offered to these customers at a discounted rate or will be completely covered by their policy.

Word of Mouth Marketing
[Company Name] will encourage word-of-mouth marketing from loyal and satisfied clients. The company will use recommendations and word-of-mouth marketing to grow its customer base through the network of its existing customers.

Pricing Strategy

[Company Name] will price its services moderately so that customers can get the emergency services they need without breaking the bank.

 

VII. Operations Plan

Functional Roles

[Company Name] will need to fulfill the following functional roles to execute its business plan and ensure the company’s success:

Service Functions

  • Provide excellent customer service
  • Tow customers’ vehicles to their destinations
  • Provide requested roadside assistance services
  • Create invoices for services charged

Administrative Functions

  • Social media management
  • Website management
  • Bookkeeping
  • Marketing
  • Hiring and training staff
  • Maintain vehicles
  • Other general administrative functions

Milestones

The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:

DateMilestone
[Date 1]Finalize lease agreement
[Date 2]Design and build out [Company Name]
[Date 3]Hire and train initial staff
[Date 4]Kickoff of promotional campaign
[Date 5]Launch [Company Name]
[Date 6]Reach break-even

 

VIII. Management Team

Management Team Members

[Company Name] is led by [Founder’s Name], who has worked as a tow truck driver for [X] years. He has a passion for helping stranded commuters and travelers with their vehicles and providing emergency roadside services. Recently, he decided to use his connections and experience to start a tow truck business of his own. Though he has never run his own business, [Founder’s Name] has worked in the industry long enough to gain an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry.

Hiring Plan

[Founder’s Name] will serve as the Manager and President of the company. In order to launch the business, we need to hire the following personnel:

  • Tow Truck Drivers (3 to start)
  • Assistant Managers (1 to start)
  • Administrative Assistants (1 to start)

 

IX. Financial Plan

Revenue and Cost Drivers

[Company Name]’s revenues will come from the fees charged for the towing and roadside assistance services. Depending on the customer, the services will be charged directly to them or through their insurance plan.

The major costs for the company will be the vehicle costs, staff salaries, and rent. In the initial years, the company’s marketing spending will be high as it establishes itself in the market.

Capital Requirements and Use of Funds

[Company Name] is currently seeking $500,000 to launch. The capital will be used for funding location design and leasing, hiring initial employees, marketing expenses, and purchasing vehicles and equipment.

Specifically, these funds will be used as follows:

  • Store design/build: $200,000
  • Vehicle purchase and maintenance: $200,000
  • Working capital: $100,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Key Assumptions

The following table reflects the key revenue and cost assumptions made in the financial model:

Number of customers per day
FY 15
FY 215
FY 325
FY 432
FY 540
Annual Lease (per location)$40,000

 
5 Year Annual Income Statement

Year 1Year 2Year 3Year 4Year 5
Revenues
Product/Service A$151,200 $333,396 $367,569 $405,245 $446,783
Product/Service B$100,800 $222,264 $245,046 $270,163 $297,855
Total Revenues$252,000 $555,660 $612,615 $675,408 $744,638
Expenses & Costs
Cost of goods sold$57,960 $122,245 $122,523 $128,328 $134,035
Lease$60,000 $61,500 $63,038 $64,613 $66,229
Marketing$20,000 $25,000 $25,000 $25,000 $25,000
Salaries$133,890 $204,030 $224,943 $236,190 $248,000
Other Expenses$3,500 $4,000 $4,500 $5,000 $5,500
Total Expenses & Costs$271,850 $412,775 $435,504 $454,131 $473,263
EBITDA($19,850)$142,885 $177,112 $221,277 $271,374
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
EBIT($56,810)$105,925 $140,152 $184,317 $234,414
Interest$23,621 $20,668 $17,716 $14,763 $11,810
PRE-TAX INCOME($80,431)$85,257 $122,436 $169,554 $222,604
Net Operating Loss($80,431)($80,431)$0$0$0
Income Tax Expense$0$1,689 $42,853 $59,344 $77,911
NET INCOME($80,431)$83,568 $79,583 $110,210 $144,693
Net Profit Margin (%)-15.00%13.00%16.30%19.40%

 
5 Year Annual Balance Sheet

Year 1Year 2Year 3Year 4Year 5
ASSETS
Cash$16,710 $90,188 $158,957 $258,570 $392,389
Accounts receivable$0$0$0$0$0
Inventory$21,000 $23,153 $25,526 $28,142 $31,027
Total Current Assets$37,710 $113,340 $184,482 $286,712 $423,416
Fixed assets$246,450 $246,450 $246,450 $246,450 $246,450
Depreciation$36,960 $73,920 $110,880 $147,840 $184,800
Net fixed assets$209,490 $172,530 $135,570 $98,610 $61,650
TOTAL ASSETS$247,200 $285,870 $320,052 $385,322 $485,066
LIABILITIES & EQUITY
Debt$317,971 $272,546 $227,122 $181,698 $136,273
Accounts payable$9,660 $10,187 $10,210 $10,694 $11,170
Total Liabilities$327,631 $282,733 $237,332 $192,391 $147,443
Share Capital$0$0$0$0$0
Retained earnings($80,431)$3,137 $82,720 $192,930 $337,623
Total Equity($80,431)$3,137 $82,720 $192,930 $337,623
TOTAL LIABILITIES & EQUITY$247,200 $285,870 $320,052 $385,322 $485,066

 
5 Year Annual Cash Flow Statement

Year 1Year 2Year 3Year 4Year 5
CASH FLOW FROM OPERATIONS
Net Income (Loss)($80,431)$83,568 $79,583 $110,210 $144,693
Change in working capital($11,340)($1,625)($2,350)($2,133)($2,409)
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
Net Cash Flow from Operations($54,811)$118,902 $114,193 $145,037 $179,244
CASH FLOW FROM INVESTMENTS
Investment($246,450)$0$0$0$0
Net Cash Flow from Investments($246,450)$0$0$0$0
CASH FLOW FROM FINANCING
Cash from equity$0$0$0$0$0
Cash from debt$317,971 ($45,424)($45,424)($45,424)($45,424)
Net Cash Flow from Financing$317,971 ($45,424)($45,424)($45,424)($45,424)
SUMMARY
Net Cash Flow$16,710 $73,478 $68,769 $99,613 $133,819
Cash at Beginning of Period$0$16,710 $90,188 $158,957 $258,570
Cash at End of Period$16,710 $90,188 $158,957 $258,570 $392,389
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