Starting a roadside assistance business is a rewarding venture that blends mechanical skill and problem-solving with business savvy. The industry is worth billions, with steady demand from daily commuters, commercial drivers, and families on road trips.
This guide will take you through the practical steps of validating your business concept, securing funding, acquiring equipment, and obtaining the necessary permits to help you launch a successful roadside assistance business in the U.S.
Step 1: Plan your business and validate your idea
Market and competitor research
First, define your service area, perhaps a 25-mile radius. Use Google Maps to identify all existing roadside assistance providers within that zone. Note their services, hours, and customer reviews to spot gaps in the market.
You can also access business databases like Data Axle, often free through your local library, for a complete list of competitors. A frequent oversight is to ignore indirect competition, so also look at auto repair shops that offer their own towing.
Estimate your startup costs
Your initial investment requires careful budgeting. A reliable used tow truck can range from $30,000 to $65,000. Basic tools, including jacks, lockout kits, and diagnostic scanners, will add another $5,000 to $10,000.
Insurance is a significant part of the budget. Expect an initial down payment of $3,000 to $8,000 for your first policy. Finally, set aside $500 to $2,000 for business registration and permits, bringing the initial outlay to between $38,500 and $85,000.
Here are 3 immediate steps to take:
- Map out all competitors within your target 25-mile service area and analyze their online reviews.
- Use your local library’s resources to access a business database like Data Axle for detailed competitor information.
- Create a startup budget spreadsheet that itemizes the costs for a truck, tools, insurance, and licensing.
Step 2: Establish your legal and licensing framework
Choose your business structure
Most roadside assistance businesses operate as a Limited Liability Company (LLC). This structure protects your personal assets if the business is sued. Profits pass through to your personal taxes, which simplifies paperwork compared to a corporation. Expect to pay between $50 and $500 to file.
Secure licenses and permits
Once your LLC is registered, get a free Employer Identification Number (EIN) from the IRS. If you plan to tow across state lines, you will also need a USDOT number from the Federal Motor Carrier Safety Administration (FMCSA). State requirements vary, but most mandate a specific towing license.
Do not forget local rules. Your city or county likely requires a general business license and may have its own towing permits. A frequent misstep is to ignore these local requirements, which can result in fines. Check with your city clerk’s office for a full list.
Here are 4 immediate steps to take:
- File for your LLC with your state's Secretary of State office.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Research your state’s specific towing and recovery license requirements.
- Contact your city and county clerk’s offices about local business permits.
Step 3: Secure your insurance and manage risk
With your legal structure in place, the next focus is insurance. This area can present financial hurdles, but proper coverage protects your entire investment from day one. You will need several specific policies to operate legally and safely.
Key insurance policies and costs
Your primary policy is Commercial Auto Liability, with most states and brokers requiring at least $750,000 to $1 million in coverage. You must also add an On-Hook Towing endorsement. A frequent mistake is to assume a standard auto policy covers customer vehicles, but it does not.
In addition, you should secure General Liability insurance for at least $1 million to cover non-auto incidents. Depending on your services, you might also consider Garagekeepers Liability if you store vehicles. Annual premiums for a complete package typically range from $8,000 to $20,000.
You might want to get quotes from providers that know this industry, such as Progressive Commercial, Liberty Mutual, or BIZinsure. A general agent may not understand the unique risks or state filing requirements for tow operators, which can lead to coverage gaps.
Here are 4 immediate steps to take:
- Request quotes for a $1 million Commercial Auto policy that includes an On-Hook Towing endorsement.
- Contact specialized insurers like Progressive Commercial or Liberty Mutual to compare rates.
- Ask an agent about Garagekeepers Liability if you plan to store customer vehicles.
- Confirm your state’s minimum insurance requirements for tow operators with your insurance agent.
Step 4: Set up your location and buy equipment
Find a base of operations
You need a secure place to park your truck. A 1,000 to 2,000 square foot fenced lot in an area zoned for commercial or industrial use is a good start. Many new owners make the mistake of parking their tow truck at home, which can violate local ordinances and lead to fines.
When you look for a space, you might want to propose a one or two-year gross lease. This arrangement bundles taxes and maintenance into your rent, which makes your monthly expenses predictable. It is a good way to manage cash flow when you are just starting out.
Acquire your truck and gear
A flatbed, or rollback, truck offers the most flexibility for different types of calls. You can find reliable used models on sites like Commercial Truck Trader. With the truck secured, the next step is to outfit it for service.
Beyond the truck itself, you will need specific gear. A quality lockout kit costs between $100 and $300. A heavy-duty jump-start pack runs from $200 to $500. Also, budget for a floor jack, stands, and basic mechanic's tools, which can add another $800 to $1,600.
A frequent oversight is forgetting the cost of rigging. The chains, straps, and safety equipment needed to operate safely can add another $1,000 to $2,000 to your initial truck investment. Factor this into your budget from the start.
Here are 4 immediate steps to take:
- Check your local planning department’s zoning map for approved commercial vehicle storage areas.
- Browse Commercial Truck Trader for used flatbed tow trucks within your budget.
- Ask potential landlords about their willingness to sign a 1-2 year gross lease.
- Create a shopping list for your gear, from a lockout kit to rigging chains, and price it out at an auto parts supplier.
Step 5: Set up your payment and billing systems
Accept payments on the go
Most roadside jobs require payment upon completion. You need a reliable way to accept credit, debit, and digital wallet payments on-site. Many new owners get stuck with solutions that have high fees or require clunky card readers, which can slow you down.
Look for a payment solution with transparent, low rates and no extra hardware. For roadside assistance businesses that need to accept payments on-site, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done.
At just 1.99% per transaction with no hidden costs, it is a strong offer. Other providers often charge between 2.5% and 3.5% plus monthly fees. JIM is particularly useful for quick, secure transactions on the side of the road, and your money is available instantly.
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done. There is no wait for bank transfers.
Here are 3 immediate steps to take:
- Decide on your payment policy, such as payment on completion for all standard services.
- Download the JIM app to see how it works for on-the-go payments.
- Compare JIM's 1.99% rate to other payment solutions to calculate your potential savings.
Step 6: Fund your business and manage finances
Secure your startup capital
Most new owners use a mix of personal savings and loans. For outside funding, an SBA 7(a) loan is a solid option. Lenders often look for a 10-20% down payment and a credit score above 680 for loans in the $50,000 to $150,000 range.
Another route is equipment financing. This can be easier to secure since the truck acts as collateral. Depending on your credit and the truck’s age, interest rates typically fall between 5% and 20%. This option gets you on the road faster with less upfront cash.
Plan your working capital
You will need cash on hand to cover the first six months before revenue becomes consistent. Budget for fuel, insurance, marketing, and your own salary. This usually requires between $30,000 and $50,000 in working capital.
Many new owners forget to pay themselves. You should include a modest salary in your working capital from day one. This prevents personal financial stress while you build your client base and establish a steady cash flow.
Here are 4 immediate steps to take:
- Check your credit score to see if you meet the 680+ threshold for an SBA loan.
- Contact your bank to inquire about the application process for an SBA 7(a) loan.
- Research lenders that specialize in commercial equipment financing online.
- Create a detailed six-month operating budget to calculate your exact working capital needs.
Step 7: Hire your team and set up operations
Hire your first operator
Your first hire will likely be a Tow Truck Operator. This person handles towing, jump-starts, and lockouts, but also serves as the face of your business on the road. Look for someone with strong mechanical and customer service skills.
An experienced operator typically earns between $45,000 and $65,000 annually. You might offer a base salary plus a small commission per call. This structure rewards efficiency and can improve response times.
Many new owners overlook the value of formal training. Certifications from organizations like WreckMaster or the Towing and Recovery Association of America (TRAA) build credibility and can sometimes lower your insurance premiums.
Set up your dispatch system
To manage incoming calls and route your driver, you need dispatch software. Programs like Towbook or Beacon are industry standards. They help you track job status, handle invoicing, and monitor your vehicle's location for around $50 to $100 per month.
As a general benchmark, a single truck with one full-time operator can generate between $120,000 and $180,000 in annual revenue. This figure helps you forecast income and decide when it is time to expand your fleet and team.
Here are 4 immediate steps to take:
- Draft a job description for a Tow Truck Operator, including your proposed pay structure.
- Research WreckMaster and TRAA certification programs for your future hires.
- Request demos from dispatch software providers like Towbook or Beacon.
- Identify a third-party service to conduct Motor Vehicle Record (MVR) and background checks.
Step 8: Market your business and get customers
Join motor club networks
A good first move is to apply to motor clubs like AAA, Agero, and Allstate Roadside. These networks provide a steady stream of jobs by dispatching calls to you. This is a reliable way to generate initial revenue and fill gaps in your schedule.
You should know that their payment rates are often lower, around $50 to $75 per call. Payments can also take 30 to 60 days. A frequent misstep for new owners is to rely only on these networks, which can create cash flow problems early on.
Develop your direct customer base
Your most profitable jobs will come from direct calls. Set up a Google Business Profile right away. Fill it out completely with your service area, hours, and photos of your truck. Encourage every customer to leave a review, as this is your strongest marketing asset.
Also, build relationships with local auto repair shops, body shops, and hotels. Drop off business cards and introduce yourself. A single referral partnership can send dozens of high-margin jobs your way each month. Your branded truck is a mobile billboard, so keep it clean.
Here are 4 immediate steps to take:
- Apply to at least two motor club networks, like AAA and Agero.
- Create and fully optimize your Google Business Profile with photos and service details.
- Order 500 business cards with your company name, phone number, and services.
- Identify and visit five local auto repair shops to build referral partnerships.
Step 9: Create your service menu and pricing
Your pricing strategy directly impacts your cash flow. Most roadside businesses use a mix of flat-rate fees for standard services and per-mile charges for towing. You might want to set flat rates between $75 and $125 for common jobs like jump-starts, tire changes, and lockouts.
Set your towing rates
For towing, a common model is a hook-up fee of $100 to $175, plus a per-mile charge of $4 to $7. Some owners make the mistake of only charging for loaded miles. Always factor fuel for the round trip, or you will lose money on calls far from your base.
Your most profitable work will come from direct customer calls, where you should aim for a 40-60% profit margin. Motor club jobs pay less, but they provide consistent volume. It is a good idea to balance both to maintain a steady income stream while you build your brand.
Research your local market
To see what your market will bear, call five local competitors and ask for a quote on a 10-mile tow. This gives you real-world data. Do not just copy their prices, as you do not know their cost structure. Use their rates as a benchmark to position your own.
Here are 4 immediate steps to take:
- Call five local competitors to get quotes for a 10-mile tow and a battery jump-start.
- Create a price list for your standard services like lockouts and tire changes.
- Establish your towing rates, including a hook-up fee and a per-mile charge.
- Calculate your break-even cost per call to ensure every job is profitable.
Step 10: Control quality and scale your operations
Maintain service quality
To measure quality, aim for an average response time under 45 minutes within your core service area. You can also track customer satisfaction through your Google Business Profile reviews. A rating of 4.5 stars or higher is a strong benchmark for success.
Formal certifications from WreckMaster or the Towing and Recovery Association of America (TRAA) signal professionalism. Some new owners make the mistake of chasing every call, which leads to burnout and slow response times. It is better to provide excellent service in a defined zone.
Plan your expansion
When is it time to add a second truck? A key indicator is when your first truck is busy for over 70% of its shift. If you find yourself turning down more than three profitable direct calls per day, you are ready to expand your fleet.
Once you add a second truck, dispatch software like Towbook or Beacon becomes a necessity. These platforms help you manage multiple drivers, track job locations, and handle billing without the chaos of manual coordination. They typically cost between $50 and $150 per month.
Here are 4 immediate steps to take:
- Set a goal to keep your average response time under 45 minutes.
- Look into advanced WreckMaster or TRAA certifications for your team.
- Start to track the number of profitable direct calls you turn down each day.
- Request a demo from a dispatch software provider like Towbook or Beacon.
You now have a clear path to launch your roadside assistance business. Remember that your reputation for fast, reliable service is your best marketing. Master your local area before you expand. The road ahead is clear, and you are ready to take the wheel.
As you help drivers, make your payments simple. JIM turns your phone into a card reader, so you can accept payments on the spot for a flat 1.99% fee with no extra hardware. Download JIM to get started.
