Expanding your tow truck business takes a considerable investment but if you set yourself up just right it is likely to pay off. Plus, there are ways you can expand your wrecker business on any budget.
The wrecker industry is a necessary component of modern society and even during an economic downturn is known to still remain profitable, after all cars always need to be towed. In fact, during an economic downturn even more cars requiring towing for repo-related reasons.
You make detailed outlines of your business long before you file the appropriate paperwork with the State and make the difficult decisions between a limited liability company and a corporation. You also must obtain insurance as well as any special permitting required in your State. By the time you’ve got all these components completed you likely have one or more tow trucks ready to go to work. As we all know the larger your fleet the bigger your bank account and business grows, as you are able to make more money in any given hour. So naturally as your tow truck business shows signs of success you dream of getting more trucks and expanding your business.
The million dollar question remains: How can you expand your tow truck business on a budget, and perhaps a rather tight budget at that? A new tow truck isn’t cheap but there are options for expansion no matter how much money you have budgeted to spend.
1. Finance A New Tow Truck
If you are more than sure there is enough work available to require another tow truck in your fleet the return on investment is fairly reliable. For this reason it’s very common for businesses to finance a new tow truck in order to expand their business.
Going to a lender is not always necessary. If you have a good track record of at least 3-years in the tow truck industry most dealers will give you a good deal on financing because you are a safe bet. Even if you just have 2-years of driving experience and a credit score in the mid-600’s you can get financing for a new tow truck pretty easily.
If you do not have the experience recommended to get a loan for a tow truck many dealers will not finance you. Those that will usually ask for a 10-20% down payment up front to secure the loan. There are also tow-truck financing companies that will likely finance you but at potentially increased rates. The important thing is finding the company with the best rates and straightforward deals. Make sure and read over the contract, including the fine print, check online reviews, and get quotes from several lenders before making any final decisions.
2. Lease A New Tow Truck
Leasing a tow truck is another way to expand your fleet even if you are limited on cash in regards to a hefty down payment. Many wrecker companies rely on leased fleets of tow trucks to do business. This reduces your upfront costs and in some cases is the most cost effective option. Some leases are set up so that you pay more at the end if you want to buy out the truck, while others are set up so that you pay as little as $1 at the end of the lease if you want to buy out the truck. In the end, most of these deals are pretty similar, but you still need to look over the details before signing any dotted lines.
It’s difficult for a young startup company to lease a tow truck because the numbers show the biggest risk for a company is within the first 12 months of doing business. If you have decent credit and some cash to put down you may have better luck financing a tow truck as opposed to leasing. (Reference)
3. Add Lil Hercules To Your Fleet
Our special one-of-a-kind product called the Lil Hercules turns any capable truck into a full-service tow truck without the high cost associated with an entirely new truck. In fact, the Lil Hercules is a mere fraction of the cost but can still get the job done. Plus, you’re not buying a hunk of junk; we back this product 100% and offer a lifetime warranty on all pins and bushings. The bronze oil-lite bushings located at all critical Pivot Points are set up the same as they are on a large wrecker.
When applied to your vehicle the Lil Hercules has a lifting capacity of 4,000 pounds and a towing capacity of 8,000 pounds. Made with the strongest, extensively reinforced tubes on the market, the Lil Hercules guarantees to complete all of your towing needs without a hitch.
Detroit Wrecker can help you save money on all of your tow truck needs with affordable parts, repairs, customizations and fair financing options.