How to Start a Roadside Assistance Business Without Tow Truck

Pinterest Facebook

A roadside assistance business provides services to motorists who experience unexpected issues with their vehicles while on the road.

These issues can include breakdowns, flat tires, dead batteries, running out of fuel, locked out of the vehicle, and other mechanical problems. The primary goal of a roadside assistance business is to provide timely and efficient help to stranded drivers, ensuring their safety and helping them get back on the road as quickly as possible.

Roadside assistance businesses often offer their services through subscription-based models, where drivers pay a regular fee to access the services. They also work with insurance companies, auto manufacturers, and organizations that offer roadside assistance as part of their membership packages.

Steps on How to Start a Roadside Assistance Business

Conduct Market Research

Conducting market research for a roadside assistance business is crucial to understanding the demand for your services, identifying potential customers, and gaining insights into the competitive landscape.

First, clearly outline what you want to achieve through your market research. Identify specific goals, such as understanding your target market, analyzing competitors, determining pricing strategies, and identifying potential challenges.

Define your ideal customer segments. Consider factors like demographics (age, gender, location), psychographics (lifestyle, preferences), and behavior (driving habits, usage patterns). Your target market might include individual drivers, families, commercial fleets, or specific geographic areas.

Research existing roadside assistance providers in your target market. Identify their strengths, weaknesses, services offered, pricing structures, and customer feedback. This analysis will help you identify gaps in the market that your business can fill.

Gather insights directly from potential customers. Create surveys or conduct interviews to understand their preferences, pain points, and expectations regarding roadside assistance services. Use online survey platforms or social media to reach a wider audience.

Lastly, compile the data you’ve gathered into a comprehensive business plan. This plan should outline your target market, competition analysis, pricing strategies, marketing approaches, and financial projections.

a. Who is the Target Market for Roadside Assistance Business?

Individual Drivers
Families with multiple vehicles
Businesses with a fleet of vehicles, such as delivery services, transportation companies, and rental car agencies
Travelers and Tourists
Elderly Drivers
Professional Drivers (Taxi drivers, rideshare drivers, and other professional drivers)
Membership organizations like auto clubs, insurance companies, and motor clubs.

b. Is Roadside Assistance Business a Profitable Business?

A roadside assistance business can be profitable, but its profitability depends on various factors, including the market, competition, service quality, pricing strategy, and operational efficiency.

c. Are There Existing Niches in the Industry?

No, there are no niche ideas when it comes to roadside assistance business.

d. Who are the Major Competitors?

AAA (American Automobile Association)
Allstate Roadside Services
Agero
Good Sam Roadside Assistance
National Motor Club
Geico Emergency Road Service
State Farm Roadside Assistance
OnStar (General Motors)
Urgently
Roadside Masters
Better World Club
Honk Technologies
National General Motor Club
Paragon Motor Club
Blink Roadside
Best Roadside Service
Cross Country Motor Club
AutoVantage
Coach-Net
United States Auto Club (USAC).

e. Are There County or State Regulations or Zoning Laws for Roadside Assistance Businesses?

Yes, there can be county or state regulations and zoning laws that affect the operation of a roadside assistance business in the United States.

Roadside assistance businesses that involve vehicle repair or storage might be subject to zoning restrictions. It’s important to ensure that your chosen location is zoned appropriately for your business activities.

If your roadside assistance business includes towing services, there are often strict regulations governing towing operations. These regulations can cover areas such as licensing, insurance, equipment standards, and proper procedures for towing and impounding vehicles.

Roadside assistance businesses often require specific insurance coverage to protect against liabilities that can arise during vehicle rescue, repair, or towing operations. If your business involves operating a repair shop or handling hazardous materials (such as vehicle fluids), you may need to comply with environmental regulations related to waste disposal and pollution control.

If you plan to hire employees for your business, you’ll need to adhere to federal and state employment laws, including wage and hour regulations, workplace safety standards, and more.

Some states have laws in place to protect consumers from predatory practices in the towing and roadside assistance industry. This can include regulations on pricing transparency, service quality, and customer rights. Some states require specific licensing for emergency services, which could include roadside assistance operations.

f. Is There a Franchise for Roadside Assistance Business?

Yes, there are franchise opportunities for roadside assistance businesses, and here are some of them:

AAMCO Transmissions and Total Car Care
Pop-A-Lock
Meineke Car Care Centers
Milex Complete Auto Care/Mr. Transmission
Glass Doctor
Tuffy Tire & Auto Service
RNR Tire Express
911 Restoration
Cottman Transmission and Total Auto Care
Jiffy Lube.

g. What Do You Need to Start a Roadside Assistance Business?

Business Plan
Legal Business Structure
Licenses and Permits
Insurance Coverage
Service Vehicles and Equipment
Trained Staff
Communication Systems
Pricing and Service Packages
Marketing and Branding
Operational Procedures.

Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable. Some of the catchy business name ideas suitable for a roadside assistance business are;

Creative Roadside Assistance Business Name ideas

Rowland Williams® Roadside Assistance Company, Inc.
Collins Overman® Roadside Assistance Company, Inc.
Emma Charles™ Roadside Assistance Company, LLC
Edin Doberman® Roadside Assistance Company, Inc.
McLee Amstar® Roadside Assistance Company, Inc.
Duke Edwin® Roadside Assistance Company, LLC
Bobby Gray® Roadside Assistance Company, Inc.
Levis Lewis© Roadside Assistance Company, Inc.
Merlyn McNeel® Roadside Assistance Company, LLC
Jeffery Kimberlin® Roadside Assistance Company, Inc.
Ethan Mason™ Roadside Assistance Company, LLC
Jayson Jay® Roadside Assistance Company, Inc.
Brian Oscar® Roadside Assistance Company, Inc.
Halley Kent® Roadside Assistance Company, Inc.
Road Master™ Roadside Assistance Company, Inc.
Lucky Bennard™ Roadside Assistance Company, Inc.
Swift Guys® Roadside Assistance Company, Inc.
Auto Team® Roadside Assistance Company, LLC
Busy Hands® Roadside Assistance Company, Inc.
Mike Mech™ Roadside Assistance Company, Inc.

Register Your Business

a. What Type of Business Structure is Best for Roadside Assistance Business?

The best type of business structure for a roadside assistance business depends on several factors, including the size of the business, the number of owners, and the level of personal liability exposure the owners are willing to accept.

However, we usually recommend a limited liability company (LLC) for roadside assistance business. An LLC is a popular choice for startup businesses because it offers personal liability protection for the owners while allowing them to be taxed as a pass-through entity.

This means that the profits and losses of the business are passed through to the owners’ personal tax returns, avoiding double taxation.

b. Steps to Form an LLC

Choose a Name for Your LLC.
File Articles of Organization.
Choose a registered agent.
Decide on member vs. manager management.
Create an LLC operating agreement.
Comply with other tax and regulatory requirements.
File annual reports.

c. What Type of License is Needed to Open a Roadside Assistance Business?

Business License
Towing License
Commercial Driver’s License (CDL)
Commercial Vehicle Registration
State Motor Carrier Permit
Hazardous Materials Endorsement
Auto Repair License
Occupational Safety and Health Administration (OSHA) Certification
First Aid and CPR Certification
Fire Department Permits.

d. What Type of Certification is Needed to Open a Roadside Assistance Business?

Towing Operator Certification
Automotive Technician Certification
Commercial Driver’s License (CDL)
First Aid and CPR Certification
Hazardous Materials Handling Certification
Emergency Medical Technician (EMT) Certification
Automotive Locksmith Certification
OSHA (Occupational Safety and Health Administration) Certification
Motor Carrier Safety Training Certification
Vehicle Recovery Operator Certification.

e. What Documents are Needed to Open a Roadside Assistance Business?

Business Plan
Business License
Certificate of Incorporation (if forming a corporation)
Articles of Organization (if forming an LLC)
EIN (Employer Identification Number)
Zoning Permit
Towing License
Commercial Vehicle Registration
Insurance Policies (Liability, Auto, Workers’ Compensation, etc.)
Service Contracts or Agreements
Employee Agreements or Contracts
Emergency Services Operating Procedures
First Aid and CPR Certifications
Equipment and Vehicle Maintenance Records
Marketing and Promotional Materials.

f. Do You Need a Trademark, Copyright, or Patent?

Whether you need a trademark, copyright, or patent for your roadside assistance business will depend on the specific intellectual property you want to protect.

If you want to protect your business name, logo, or other branding materials, you may want to consider registering a trademark with the US Patent and Trademark Office (USPTO). If you create original content for your roadside assistance business, such as marketing materials or software, you may want to consider registering a copyright with the US Copyright Office.

If your roadside assistance business invents a new technology or product, you may also want to consider applying for and obtaining a patent from the US Patent and Trademark Office.

Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Roadside Assistance Business?

When it comes to starting a roadside assistance business, the startup costs vary, and it could range from as low as $15,000 to over $150,00. Please note that the cost of purchasing your utility truck, equipment, and the salary of your employees are part of this cost.

b. What are the costs involved in Starting a Roadside Assistance Business

Business Registration Fees – $750.
Legal expenses for obtaining licenses and permits – $2,800.
Marketing, Branding, and Promotions – $2,000.
Business Consultant Fee – $2,500.
Insurance – $6,800.
Rent/Lease – $30,000
Operational Cost (salaries of employees, payments of bills et al) – $45,000
Store Equipment (cash register, security, ventilation, signage) – $2,350
Utility Trucks, Equipment, and Supplies – $65,000
Website: $1,200
Opening party: $5,000
Miscellaneous: $5,000

c. What Factors Determine the Cost of Opening a Roadside Assistance Business?

The size of the roadside assistance business
The choice of location
The required licenses and permits
The cost of hiring and paying a business consultant and attorney
The cost of branding, promotion, and marketing of the roadside assistance business
The cost of furnishing and equipping the roadside assistance office facility
The cost of the insurance policy covers
The cost of registering the business
Cost of recruiting and training your staff
The cost for the purchase and customizing of uniforms, shoes, and caps for your employees
The cost for the grand opening of the roadside assistance business.

d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

No, you do not need to build a new facility for your roadside assistance business because the business can be operated from a rented or leased office facility.

e. What are the Ongoing Expenses of a Roadside Assistance Business?

Employee salaries and benefits for drivers, dispatchers, mechanics, and administrative staff.
Costs for liability insurance, auto insurance, workers’ compensation insurance, and other necessary coverage.
Regular maintenance and repair of equipment
Fuel expenses for service vehicles
Renewal fees for business licenses, and any other required permits.
Costs for renting or leasing office space, garage facilities, or storage for vehicles and equipment.
Expenses for phone systems, radio equipment, dispatch software, and other communication tools.
Costs for maintaining supplies such as spare tires, batteries, fuel, and other necessary items.
Fees associated with towing and impounding vehicles.
Monthly expenses for utilities such as electricity, water, and internet for your office and facilities.
Business taxes, property taxes, and any other applicable taxes.
Costs for office supplies, accounting services, legal consultations, and other administrative needs.

f. What is the Average Salary of your Staff?

General Manager – $65,000 per year
Dispatcher – $45,000 per year
Accountant (Administrative Assistant) – $42,000 per year
Mechanics – $40,000 per year
Drivers – $38,000 per year

g. How Do You Get Funding to Start a Roadside Assistance Business?

Raising money from personal savings and sale of personal stocks and properties
Raising money from investors and business partners
Sell shares to interested investors
Applying for a loan from your bank/banks
Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
Source for soft loans from your family members and friends.

Write a Business Plan

a. Executive Summary

Road Master™ Roadside Assistance Company, Inc. is a pioneering provider of comprehensive and reliable roadside assistance services in the bustling city of Chicago, Illinois.

We are dedicated to ensuring the safety, convenience, and peace of mind of motorists navigating the urban streets and highways. Road Master™ Roadside Assistance Company, Inc. is poised to transform the roadside assistance landscape in Chicago.

With a strong focus on customer satisfaction, cutting-edge technology, and a dedicated team of professionals, we are well-positioned to become the go-to choice for drivers seeking reliable assistance on the roads of the Windy City.

b. Products and Service

Road Master™ offers a range of expert services designed to assist drivers in various emergency situations. Our offerings include 24/7 towing, tire changes, battery jump-starts, fuel delivery, lockout assistance, and minor mechanical repairs.

With our state-of-the-art fleet, skilled technicians, and advanced dispatch systems, we are equipped to handle any roadside challenge.

c. Mission Statement

“At Road Master™ Roadside Assistance Company, Inc., our mission is to redefine the roadside assistance experience by providing swift, reliable, and compassionate services to drivers navigating the vibrant streets of Chicago.

We are dedicated to ensuring the safety, convenience, and peace of mind of motorists, exceeding their expectations through professionalism, expertise, and a commitment to customer-centric values.”

Vision Statement:

Our vision at Road Master™ Roadside Assistance Company, Inc. is to be the unwavering ally of every driver in Chicago. We envision a future where breakdowns become minor inconveniences and where our name is synonymous with trust, promptness, and excellence.

d. Goals and Objectives

The goals and objectives of a roadside assistance business are to provide convenience, safety, and peace of mind to drivers who encounter unexpected vehicle issues while on the road.

e. Organizational Structure

General Manager
Dispatcher
Accountant (Administrative Assistant)
Mechanics
Drivers

Marketing Plan

a. SWOT Analysis

Strength:

Road Master™ excels in providing quick response times due to its strategically positioned service units throughout Chicago.
The company has a team of experienced and trained technicians capable of handling a wide range of roadside issues.
Road Master™ is committed to delivering exceptional customer service, building loyalty, and establishing strong customer relationships.
The use of cutting-edge dispatch systems and a user-friendly mobile app enhances communication and service delivery efficiency.
The company maintains a diverse fleet of service vehicles, each equipped with specialized tools and equipment.

Weakness:

As a relatively new entrant, Road Master™ may face challenges in establishing widespread brand recognition compared to more established competitors.
While well-positioned within Chicago, the company might face limitations in offering services to areas on the outskirts of the city.

Opportunities:

Road Master™ has the opportunity to gradually expand its service coverage beyond Chicago, tapping into nearby cities and suburbs.
Forming strategic partnerships with local businesses, car dealerships, and rental agencies can increase brand visibility and customer acquisition.
Continued integration of innovative technology can enhance customer engagement and service quality.

Threat:

The roadside assistance industry in Chicago is competitive, with established players and other new entrants vying for market share.
Economic downturns can impact consumer spending on non-essential services like roadside assistance.
Changes in local regulations and licensing requirements could affect operational procedures and costs.

b. How Do Roadside Assistance Businesses Make Money?

Roadside assistance companies often charge customers for each service provided. For example, if a customer calls for a jump-start or tire change, they are billed a one-time fee for that specific service. Beyond basic roadside assistance, companies can also make money by offering related services such as fuel delivery, battery replacements, lockout assistance, and more.

These additional services provide opportunities for upselling. Providing services at special events, such as fairs, festivals, or sporting events, can also generate extra revenue and raise brand visibility for roadside assistance companies.

c. Payment Options

Credit or Debit Card
Cash
Electronic Payment Systems such as PayPal or Venmo
Checks
Bank Transfers.

d. Sales & Advertising Strategies

Optimize your Google My Business listing to appear in local map searches and gain visibility on Google Maps.
Establish partnerships with local auto repair shops, car dealerships, insurance agencies, and rental car companies. Offer referral incentives to encourage them to recommend your services to their customers.
Partner with taxi companies, rideshare drivers, and commercial fleets to provide specialized services.
Encourage satisfied customers to leave positive reviews on platforms like Google, Yelp, and social media. Positive reviews build trust and credibility.
Display customer testimonials on your website to showcase real-life experiences and successful assistance stories.
Run advertising campaigns that highlight the importance of preparedness and safety while driving.
Run seasonal promotions that align with weather-related challenges (e.g., winter tire change specials).
Brand your service vehicles with eye-catching logos, contact information, and a clear message about the services you provide.
Distribute marketing collateral like brochures, flyers, and business cards at local events, auto shows, and community gatherings.

Financial Projection

a. How Much Should You Charge for Your Product/Service?

Basic Services (Tire Change, Jump-Start, Lockout): Average Range: $50 – $100 per service

Towing Services: Average Range: $75 – $150 for local towing (within 5-10 miles). Longer Distances: Additional charges may apply based on the distance being towed.

Fuel Delivery: Average Range: Cost of fuel plus a service fee, often around $50 – $75

Flatbed Towing: Average Range: $100 – $200 or more, depending on distance and type of vehicle being towed.

Battery Replacement (Jump-Start and Battery Installation): Average Range: $50 – $100

Vehicle Lockout Services: Average Range: $50 – $100

Specialized Services (Winching, Off-Road Recovery, Towing):

Prices can vary widely based on the complexity of the service and the equipment required. Expect prices to be higher than basic services.

Subscription Plans: Monthly Plans: $5 – $20+ per month, and Annual Plans: $50 – $200+ per year.

b. How Much Profit Do Roadside Assistance Business Owners Make a Year?

The profit that roadside assistance business owners can make in a year can vary significantly based on several factors, including the location, scale of operations, pricing strategy, customer base, competition, and operational efficiency. It’s important to note that profit margins can fluctuate and depend on both revenue and expenses.

c. What Factors Determine the Amount of Profit to Be Made?

The capacity of the roadside assistance business
The service offerings of the roadside assistance business
The location the roadside assistance business is covering
The management style of the roadside assistance business
The business approach of the roadside assistance business
The advertising and marketing strategies adopted by the roadside assistance business.
The number of years the roadside assistance business is in business

d. What is the Profit Margin of a Roadside Assistance Business?

The profit margin of a roadside assistance business can vary depending on various factors, including the rates charged, the volume of clients and work, and the expenses incurred. While it is challenging to provide an exact figure, a typical profit margin for a roadside assistance business can range from 10% to 40% or even higher in some cases.

e. What is the Sales Forecast?

Below is the sales forecast for a roadside assistance business. It is based on the location of the business and other factors as it relates to such startups in the United States.

First Fiscal Year (FY1): $320,000
Second Fiscal Year (FY2): $440,000
Third Fiscal Year (FY3): $550,000

Set Up your Shop/Office

a. How Do You Choose a Perfect Location for Roadside Assistance Business?

The demography of the location
The demand for roadside assistance services in the location
Accessibility of the location
The number of roadside assistance companies and auto repair shops in and around the location
The local laws and regulations in the community/state
Traffic, parking, and security et al

b. What State and City is Best to Open a Roadside Assistance Business?

Los Angeles, California
Houston, Texas
Phoenix, Arizona
Dallas, Texas
San Antonio, Texas
New York City, New York
Chicago, Illinois
Atlanta, Georgia
Las Vegas, Nevada
Philadelphia, Pennsylvania.

c. What Equipment is Needed to Operate a Roadside Assistance Business?

Tow Trucks
Flatbed Trucks
Jump-Start Kits
Tire Changing Tools
Lockout Tools
Fuel Delivery Equipment
Winching Equipment
Emergency Lighting
Communication Systems
First Aid Kits.

Hire Employees

If you are considering starting a roadside assistance business, then you should make plans to hire competent and qualified employees. Even though an individual can operate a roadside assistance business, it is usually advised that entrepreneurs should hire at least drivers, dispatchers, mechanics, and administrative staff.

Launch the Business Proper

Organizing an opening party for a new roadside assistance business no doubt is a fantastic idea, but it is important to note that you may decide not to organize a launch party especially if you are operating on a shoestring budget.

a. What Makes a Roadside Assistance Business Successful?

Being consistently reliable
Excellent customer service and thoroughness in your approach and job delivery
Efficient operations
Compliance with regulations
Hiring skilled and knowledgeable employees and providing ongoing training that will ensure you deliver high-quality services.

b. What Happens During a Typical Day at a Roadside Assistance Business?

A typical day at a roadside assistance business encompasses proactive planning and swift response. Dispatchers kick-start the day by assessing service schedules and equipment readiness.

Incoming customer calls prompt dispatchers to collect crucial details and assign suitable service vehicles. Equipped technicians rush to distressed vehicles with specialized tools.

Services like jump-starts, tire changes, lockout assistance, and towing are conducted professionally. Administrative tasks, including record-keeping and follow-ups, maintain operational flow. The day concludes with equipment maintenance, performance evaluation, and preparations for upcoming challenges.

c. What Skills and Experience Do You Need to Build a Roadside Assistance Business?

Familiarity with the roadside assistance industry, including service offerings, customer needs, industry trends, and regulations
A solid understanding of business operations, financial management, budgeting, and strategic planning
Proficiency in the technical aspects of roadside assistance services, such as vehicle mechanics, towing procedures, and emergency response protocols
Quick thinking and the ability to make sound decisions under pressure
Experience in marketing and sales strategies
Familiarity with automotive tools, equipment, and technology used in roadside assistance services
Understanding local and state regulations, permits, licenses, and safety standards related to towing and roadside assistance
Experience in maintaining strong customer relationships, managing feedback, and adapting services based on customer preferences
Experience in managing workflows, optimizing schedules, and ensuring smooth operations
Being skilled at handling emergency situations, both from a technical and communication standpoint
The ability to adapt to changing circumstances, weather conditions, and customer needs.