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What is Your Business Model?

The towing industry has had many changes in the past 30 years. Has the business side changed?

One can only imagine how excited Ernest Holmes, the father of the tow truck, would be to see the sophisticated equipment we are using today. However, has the business side changed, and if it has, is it better?

For years, towing was usually an add-on to other businesses. For example, someone might have operated a tow truck to support a primary business such as a garage or body shop. Very few independent towing companies existed, especially in rural areas. This has evolved over the years, and as the trucks and equipment performing tow and recovery services on modern vehicles get more complicated and more expensive, operating costs and training requirements increase.

So, what is your business model? Do you run a garage or collision repair shop and use the tow trucks to supplement your primary business? Do you have contracts with roadside service companies? Do you work strictly for cash or for commercial customers? Do you choose to do accident towing and work with police services groups? Maybe you run a towing company and supplement slow times by performing float services, equipment moves, and other types of work that can be more consistent. Some larger companies own trucks just to haul their own equipment. Wrecking yards may only haul for themselves. Maybe you own tow trucks and that is all you do. It does not matter what kind of business model you choose as a business owner. However, it does matter how you run your business.

Owning a business means understanding costs of operations, working with customers, contractors, insurance companies and various other entities to ensure quality, ethical, and safe service in a timely manner. Growing a business is hard work. Keeping up with everchanging government regulations is a fulltime job on its own. There is no magic solution to all the issues that are sure to arise. Every business owner needs help at some time, and that is where associations can help.

The dental profession was one of the worst career choices fifty years ago. People only went to the dentist when they had a toothache. Then the industry changed when a group of dental professionals created an organization and started preaching maintenance of teeth; get in before you have problems. Now look at today’s dental profession. At most post-secondary schools, there is a waiting list for students wishing to become a dentist. This change was a direct result of dentists working together to address the issues their industry faced.

Building a customer base and generating repeat business is integral to most business models. But what if you only run tow trucks? A company that only has tow trucks, whether it is one or one hundred, has to operate in an ever-fluctuating cycle, with little control. Weather affects the amount of work available. For instance, a cold or snowy winter causes more accidents, while a hot summer will see an increase in breakdowns. A good economy results in more people travelling, which is sure to increase volume for a towing business. All of these factors affect the towing industry and the safety of the motoring public.

The towing industry does not have the luxury of pre-booking breakdowns, scheduling accidents or planning highvolume call days based on one-off events. Those are beyond anyone’s control. One day you have trucks and drivers sitting around doing nothing, the next day you may need twice as many trucks and drivers.

“Every business owner needs help at some time, and that is where associations can help.”

The towing industry has kept motorists and public roadways safe for years in spite of being the only first responders not supported by government or public funds.

Among the many challenges the industry is facing now is the attrition of companies and the lack of young entrepreneurs looking to get into the business to fill the void. The increasing number of abandoned vehicles is causing a massive financial burden on many companies. Insurance costs and the limitations insurance companies are putting on the industry are becoming unbearable. Ever-changing government regulations make it harder for companies to remain compliant.

So how does the towing industry survive? The best way forward is in the strength of an association. In my province, the Provincial Towing Association of Ontario (PTAO) represents towers’ best interests. We want to work collectively with all towers. The industry must stand together. Like the dental profession, we can find ways to take a struggling industry and make it more resilient, profitable and a career choice for a new generation. Join the PTAO and be a part of the solution. If you own a tow truck, no matter what business model you choose, or where in Ontario your company is located, you need to be a member of the Provincial Towing Association of Ontario.

Watch Tow Canada for future articles that will address more of these issues in depth.

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