How To Start A Roadside Assistance Business

The global roadside assistance market is anticipated to grow massively and reach a CAGR of 5.4% during 2021-2028, and the market size will reach around $38B by the year 2028. This business is a service that assists drivers who suffer a breakdown and require professional help to repair their vehicles. A roadside assistance business is a highly profitable business that has risen to fame recently and has become high-earning or profitable.

Are you looking for a way to start your roadside assistance business but lack the guidance? Hyperlocal Cloud can assist you with this venture and help you get a constant revenue flow through your roadside assistance business.

To understand better, let us dive deep into the blog and decipher the scope of this business.

Where To Use Roadside Assistance Business?

The roadside assistance business is required when:

• Your potential customer will experience a flat tire.
• Refuelling the vehicle will be required in an emergency situation.
• Cooling of the vehicle when it runs down due to excessive heating.
• Getting certain parts of the vehicles repaired after an accident, especially in the countryside.

Such incidents are a boon to your revenue charts when the customer is willing to pay anything to repair the vehicle in case of an emergency.

Steps To Starting Your Roadside Assistance Business

Analyze The Market

This is a niche market but with a high potential to get you flooding revenues. Being new to this trade, studying the market deeply before predicting the revenue charts is advisable.

The feasibility analysis will comprise a deep reach into the aspects of a roadside assistance business. An in-depth market study will also make you understand the challenges that will surface while your business is in the initial phase.

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Create A Business Plan

After you have analyzed the market carefully, you can devise a good business plan. The business plan will have all the details with expert consultations. The expert consultation will help you cover important points like:

• Required steps to start your business
• The outline of your roadside assistance business
• The required capital investment in your business
• The required resources and staffing
• The ideal return on investment

Making a business plan is essential as it will help you get a roadmap and investments or loans from banks.

Choose Your Business Structure

The business entities will come with multiple advantages and disadvantages. All the structure of your business will depend on the legal procedures you wish to follow for your business. It will further shape your personal liabilities, business registration requirements, taxes, and much more.

General Partnership:

Similar to a sole proprietorship, a small business will make no legal distinction between a company and an owner, and in the case of a general partnership, two or more people are involved. The partners will pay the taxes in their share of the business on their personal tax returns.

C-Corporation:

Under this structure, the business is a separate legal entity from its owner(s), who are not personally liable for its debts. Profits are distributed to owners through shareholder dividends rather than directly. It is sometimes referred to as double taxation when both the corporation and its shareholders pay taxes on their dividends.

S-Corporation

An S-Corporation is a tax classification, not a legal entity. An S-Corp can be either a corporation or an LLC; the latter must simply elect to be taxed as an S-Corp. In an S-Corporation, the income is passed directly to the shareholders, who report and pay taxes on their share of business income on their individual tax returns.

Choose An Area Of Expertise

Before you establish your business and start assisting your potential customers, you need to analyze and identify your niche and especially your expertise. Here are some of them to choose from:

• A flat tire service
• Battery jump start service
• Roadside assistance and garage services
• Fuel refilling services
• Truck towing services
• Car towing facility

If you have a really low capital to invest in your business, you can start with single business expertise and choose low-cost expertise on a low budget.

Analyze The Competition In The Market

For a good start, always choose the area where the competition is less and let your business thrive in that area and get fame. After that, when the word is spread, you can switch your business to a new location.

Build Your Office At The Right Location

You can't expect your business to reach skyscrapers at a place where already a dozen of competitors have their claws transfixed. It is advisable to look for generally a less crowded area and establish your office.

Investments

The upfront costs for setting up a roadside assistance business are somewhat similar to a product-based business.

Registration and license fee:

It is very important to get your roadside business trademarked, and this will require a business license and trademark fee, which will cost somewhat between 100-300 dollars. There will also be an extra incorporation cost of $175.

Office Set Up:

You can easily get multiple options while leasing an office space for $1500 in a 2-tier city. Focussing on the business criteria, your business office doesn't need to be established in the main city.

Insurance Costs:

You should get your business insured, starting at just $200, depending upon the valuations and business operations.

Required Tools:

The business for roadside vehicle assistance will require you to buy a lot of needy tools like air pumps, screwdrivers, batter analyzers, and much more. This will cost you an average of almost $3000, depending upon the extent of the geographical area you wish to cover.

Tow Truck:

This is essential for starting a roadside assistance business. Many costs can be saved if the tow truck is rented for use.

Labor costs:

For starting a roadside assistance business, labor costs will marginally fall low if compared to other industrial segments.

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Is The Roadside Assistance Business Profitable?

A roadside assistance business will help you earn not less than $15,000 annually with a minimum of 100 customers running on a membership plan. You can earn more than $50,000 annually with an individual towing facility.

Many roadside assistance businesses charge customers on a yearly basis. The monthly membership can cost between $5-$15, which is somewhat $24-$180 annually. So with a hundred customers, you can earn nearly $18,000.

For an individual set of services apart from the membership plan, the costs will be higher for unsubscribed members. A small tow ride will cost around $50-60. And with 100 tows in a month, you can earn $5000 easily.

Cost Of Roadside Assistance Without Prior Insurance

There are several reasons why a car would break down in the middle of the road. After this happens, the potential customer will become heavily stressed. Many car companies provide roadside assistance with car insurance, but it generally costs a lot in the long run. And with an annual subscription for roadside assistance, with an investment of a few dollars, you can get assistance within a few minutes. The towing services for the car will be close to $125 for a 5-mile journey, and this price differs from one US city to the other.

Many car companies only cover the costs for four to five times a year if your car needs roadside assistance. For the customers to save on the high costs and anxiety of a broken-down car, they will need to subscribe to an efficient roadside assistance provider like you!

To simplify, let us have a look at the table for the startup costs:

The Cost	Price Range ($)	Average Price ($)
Business Name & Corporation	150-200	175
License and permits	100-250	200
Insurance	100-300	250
Business Brochures	250-350	300
Website Setup	1000-2000	1500
Tow Truck Down Payment Charges	5000-10000	7500
Tools and Equipment	2000-3000	2500

Requirements For Setting Up A Roadside Assistance Business

To understand the depths of this new niche business, it is highly important to understand the requirements of the business, which will range from a tow truck to a customer care service center. With the right mechanical tools equipped by your business staff, your business is good to go.

Now let us have a look at some of the requirements to help you get to know better:

Vehicles

The most important requirement for your roadside assistance business is the vehicle the staff will use to reach the potential customer in the shortest time. And this will cost you $1000-$2000 depending on the amount of staff you wish to send on-site. You will be required to customize the car as per the need of your business which will fit on fuel tanks, toolkits, ropes, and much more. The vehicle can be a truck, van, or spacious sedan to fit the tools precisely.

Customer care service center

Another important aspect of opening your roadside vehicle assistance business is a call center that can work 24*7 to take customer calls from remote locations mostly. This will also give them a sense of security during a road accident at night. Your business will receive multiple queries if the customer care center works well day and night. This will also increase the number of potential customers of your business. A dedicated US-based call center will generally charge $25-$30 dollars per hour for the basic services. The price will increase with the tech and licensed insurance agents in the team at $35-$40.

A Tow Truck

Another important need for your roadside assistance business will be a tow truck to lift accident-ridden or broken-down cars. Buying a tow truck will cost you thousands of dollars almost instantly but renting it might save a lot of extra costs.

To understand better, let us look at the prices of a tow truck service.

Miles To Cover	Range/Price	Average Cost
Upto 5 miles	$35-$125	$80
Upto 40 miles	$125-$275	$145
Upto 100 miles	$275-$600	$145
More than 100	$600-$1500	$200

Tools and Equipment

Mechanical equipment is a necessary need for your roadside assistance business. Without them, the customer’s car cannot be fixed in any case. You can easily sort and buy them with the help of a regular car mechanic.

Conclusion

In conclusion, the towing businesses' revenue considerably declined a bit last year, but the current year predicts huge growth. People are ready to put more mileage on their cars, and roadside demands have increased. People have started to prefer second-hand vehicles more, negatively impacting their run times, and they have a higher chance of run-down. Thus, the demand for roadside assistance has increased. And with an automated app, you can employ your staff more efficiently.

With a solid marketing plan and connections with multiple markets, the roadside assistance business you wish to open will surely become sucessful surely.

New To The Roadside Assistance Business? 

We are the experts who have the right leadership to help you explore the true potential of your business. Contact us and get started. 

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Why Choose HyperLocal Cloud For Your Roadside Assistance Business?

We are the best mobile app development company worldwide and offer seamless solutions for several business needs. We have qualified app developers with years of expertise in market trends. We also have tech specialists and top-notch business analysts with massive experience creating result-oriented products. We will provide you with an easy-to-use roadside assistance app through which you can dispatch your assistance team within seconds after a potential customer reaches out to your app.

Contact us now and kick-start your roadside assistance app through our seamless set of services. We ensure that you get a constant revenue flow through our help!