The exact cost for starting a roadside assistance business will fall within $50,000 – $500,000. Your primary expenses will be the down payment on a tow truck and tools.
Establishing a roadside assistance company can be a lucrative business venture; however, it necessitates a substantial amount of capital. Roadside assistance is an $11 billion industry and still growing. If you’re good with cars, then you should consider investing in a roadside assistance business because you will be offering services that help people in trouble.
The roadside assistance industry in the US has witnessed massive growth in the past few years, and with the growing number of cars on the roads, the need for these services is projected to rise. The exact costs to start a roadside assistance company in the US will fall within $50,000 to $500,000, and this will depend on numerous factors.
Keep in mind that with a well-detailed business plan and strategy, a roadside assistance company can achieve profitability within the first year of operation. It’s very necessary to evaluate the market landscape, target demographic, and competition prior to starting a roadside assistance company.
Factors That Determine the Cost of Opening a Roadside Assistance Business
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Leasing or purchasing property to store vehicles and equipment
Keep in mind that the exact cost of leasing or buying a property will depend on factors like location, size, and condition of the property. According to industry reports, the average cost of leasing a commercial property for a roadside assistance company will fall between $2,000 and $10,000 per month, and this will depend on the location, size, and amenities of the property.
Aside from the expenses that come with leasing or purchasing a property, also take into account other expenses like property taxes, insurance, maintenance, repairs, and utilities.
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Purchase of towing vehicles and equipment
Note that the cost of purchasing towing vehicles and equipment will depend on factors like brand, model, and age of the vehicles, coupled with the types and quality of equipment required.
Aside from the tow trucks, you will also need to invest resources to obtain other vital equipment needed for a roadside assistance company. They will most often include tire-changing machines, battery jump starters, lockout tools, and other specialized tools.
The cost of this equipment tends to be massive, ranging from $5,000 to $15,000 for a basic set of tools, with more extensive equipment pushing the cost even higher. Nonetheless, an example of costs for purchasing equipment include;
- New tow truck: $75,000
- Used tow truck: $30,000
- Tire changing machine: $5,000
- Battery jump starter: $1,500
- Lockout tool kit: $500
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Regulatory and license fees
When creating a budget to start this business, it is essential you consider the cost of obtaining the necessary license for your business. Keep in mind that these fees will vary by state and will have a huge impact on the overall cost of launching the company. Ideally, the costs for regulatory and license fees will be around $100-$5,000.
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Establishment of a call center with the Necessary Technology
Putting up a call center with the appropriate technology is a very important aspect of a roadside assistance company. It makes it possible for customers to get access to quick and convenient services. The expenses associated with establishing a call center will vary depending on the technology and equipment used.
Nevertheless, it is recommended you budget around $5,000 to $20,000, depending on the scale of the company. The primary technologies for a call center include computers, telephony systems, software for call routing, caller identification and tracking, as well as customer relationship management software.
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Employee salaries and benefits
This is another valid factor that will determine how much you invest to start this business. Note that the exact costs of employee salaries and benefits will depend on things like the company’s size, location, and the services it provides. The roadside assistance industry is labor-intensive and will most definitely need skilled technicians and experienced call center staff to offer high-quality services to customers.
- Roadside technicians: The average salary for a roadside technician in the US is around $15-$20 per hour
- Call center staff: The average salary for a call center representative in the US is around $12-$15 per hour
- Training and certification: vary depending on the provider and the duration of the training.
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Marketing and advertising expenses
Marketing and advertising expenses are another thing you have to budget for since it is very important to draw in and retain customers for a roadside assistance company. As per industry reports, the average annual marketing budget for small businesses in the US tends to fall between $5,000 to $10,000.
Nevertheless, the exact amount you spend will vary and will most often depend on variables such as the size and location of the company, coupled with the marketing channels you choose to leverage.
- Purchase and installation of GPS tracking technology for vehicles
In this line of business, it is very necessary to invest in GPS tracking technology. The exact amount to purchase and install GPS tracking technology will indeed vary depending on the size of the fleet and the scope of the services provided.
According to experts, the exact cost of acquiring and installing GPS tracking technology for a single vehicle will fall between $300 and $500. This encompasses the equipment’s cost, installation, and just about every other necessary software or subscription fee. Aside from that, also take into consideration ongoing expenses like software updates, maintenance, and repair costs.
8. Insurance policies for liability and property damage
In this line of business, it is vital to safeguard your business from potential damage or liabilities that could occur as a result of the services you provide to customers. Some of the most common insurance policies for roadside assistance companies include;
- Liability insurance: It can cost anywhere from $500 to $2,000 per year.
- Property damage insurance: It typically costs around $1,000 to $3,000 per year.
Nevertheless, keep in mind that the exact cost will depend on things like the location of your business, the number of employees you have, and the types of services you offer. Aside from these insurance policies, you might as well have to consider other forms of insurance such as worker’s compensation insurance or commercial auto insurance.
Conclusion
Starting a roadside assistance company in the US will cost a whole lot; however, with the appropriate financial and strategic planning, it is possible to operate a profitable and rewarding business venture.
Note that the figures quoted above are estimated costs as they usually depend on several factors such as location, size of the operation, and number of services offered. Owing to that, it is recommended you carry out well-detailed research prior to starting a roadside assistance company.