If you live in a densely populated area and have a knack for helping people, starting a roadside assistance company might be the right business opportunity for you. Roadside assistance companies provide services like flat tire changes, jump-starts, and towing to stranded motorists. With the right mix of marketing and customer service, you can build a successful roadside assistance business.
According to the American Automobile Association, there are over 50 million members of roadside assistance programs in the United States. That means that there is a significant demand for these services. If you’re thinking about starting a roadside assistance company, now is the time. In this article, we’ll walk you through everything you need to know in order to get started.
Many insurance companies and organizations like the AAA subcontract to smaller companies to provide roadside assistance to stranded motorists. You can take advantage of this trend by starting your roadside assistance business.
Table of Contents
- What is a Roadside Assistance business?
- Why would I want to start a Roadside Assistance business?
- How do I start a Roadside Assistance business?
- How much does it cost to start a Roadside Assistance business?
- How do I find customers for my Roadside Assistance business?
What is a Roadside Assistance business?
A roadside assistance company is a business that provides emergency services to motorists in need. These services can range from jump starting a dead battery to changing a flat tire, to even providing roadside tows. Many roadside assistance companies are owned and operated by individual entrepreneurs, utilizing their own vehicles and equipment as well as building a network of partners for larger roadside needs. Such companies can offer both on-demand service via phone call or online reservation, as well as membership plans for regular customers. In today’s society where car ownership is nearly essential, roadside assistance companies serve an important role in keeping highways safe and motorists on the road.
Why would I want to start a Roadside Assistance business?
When it comes to roadside assistance, insurance companies have two options: provide the service themselves or outsource it to a company that specializes in roadside assistance. There are pros and cons to both approaches, but ultimately, outsourcing is the best option for insurance companies. Here’s why:
When an insurance company outsources its roadside assistance program to a specialized provider, it can focus on its core business and leave the provision of roadside assistance to those who know how to do it best. Not only does this allow the insurance company to focus on what it does best, but it also frees up resources that can be better used elsewhere. In addition, by partnering with a reputable roadside assistance provider, the insurance company can improve its customer service and retention rates.
Outsourcing also allows insurance companies to tap into a larger pool of resources. For example, when an insurance company partners with a roadside assistance provider, it gains access to that provider’s call center and dispatch services. This means that the insurance company can offer its customers 24/7 support and assistance, something that would be difficult (and costly) to do on its own.
Lastly, outsourcing gives insurance companies the flexibility to customize their roadside assistance programs to meet the specific needs of their customers. For instance, an insurance company may want to offer different levels of coverage for different types of vehicles or add additional benefits such as trip interruption coverage. By working with a specialized provider, the insurance company can create a tailor-made program that meets the unique needs of its customers.
By starting a business that becomes this specialized provider, the customer is the insurance company, not the individual motorist. This reduces your customer acquisition cost and your marketing expense.
How do I start a Roadside Assistance business?
In this section, we’ll walk you through the steps of starting a roadside assistance business, from researching the market to obtaining the necessary licenses and insurance.
Research the Market
Before you start your roadside assistance business, it’s important to research the market to see if there’s demand for your services. You can do this by conducting a survey of local businesses or by speaking with tow truck drivers and auto mechanics to see if they have any recommendations.
Choose Your Target Market
One of the first things you need to do when starting a roadside assistance business is to choose your target market. Are you going to focus on providing services to stranded motorists? Or will you provide assistance to businesses with fleets of vehicles? There’s no right or wrong answer here, but it’s important to have a clear understanding of who your target market is before you proceed.
Choose Your Service Area
Another important consideration when starting a roadside assistance business is your service area. You’ll need to decide how large or small of an area you’re going to cover. Keep in mind that the larger your service area, the more vehicles you’ll need to have on call in order to meet customer demand.
Obtain the Necessary Licenses and Insurance
Once you’ve decided that there’s a market for your services, you’ll need to obtain the necessary licenses and insurance. Depending on your location, you may need a business license, a tow truck license, and/or an auto repair license. You should also obtain liability insurance to protect your business in case of accidents or injuries.
Purchase Equipment and Supplies
Next, you’ll need to purchase equipment and supplies for your business. It’s important to have the necessary equipment for any roadside emergency. This includes jumper cables, tow straps, and a fully stocked first-aid kit. It’s also helpful to have a portable air compressor and tire sealant in case of flat tires. Additionally, having roadside flares and reflective signs can help ensure the safety of both you and your clients during roadside repairs. As your business grows, consider investing in equipment such as a roadside winch or hydraulic jack for larger vehicles. By ensuring that you have all the necessary equipment, you can provide high quality roadside assistance to your clients and grow your business.
Hire Qualified Staff members
Last but not least, you’ll need to hire qualified staff members who can provide outstanding customer service. Look for individuals who have experience working in the roadside assistance industry or in customer service positions. Train your staff members thoroughly so that they know how to best serve your customers’ needs.
Subcontract to Insurance Companies
As an entrepreneur in the roadside assistance industry, subcontracting with an insurance company can be a great way to expand your customer base and generate additional revenue. But how do you find the right fit?
Start by reaching out to insurance companies in your network and asking for information about how to become a preferred vendor. You can also research potential partners online through industry directories and customer reviews. Once you have a list of potential matches, carefully review their roadside assistance coverage and rates before reaching out to make initial contact.
Keep in mind that building a successful partnership may take time and require continued communication, but the long term benefits can be worth the effort. By carefully selecting an insurance provider to subcontract with, you can provide valuable roadside assistance services to a wider range of customers while growing your own business.
How much does it cost to start a Roadside Assistance business?
The cost of starting a roadside assistance business can be broken down into three main categories: vehicle expenses, employee expenses, and marketing expenses.
Vehicle expenses include the cost of the tow truck or other vehicles used to provide service, as well as the cost of fuel and maintenance. Employee expenses include wages and benefits. Marketing expenses include advertising and promotion.
According to industry experts, the average cost of starting a roadside assistance business is between $10,000 and $50,000. However, some businesses have been able to get started for as little as $5,000.
Vehicle Expenses
The most important expense when starting a roadside assistance business is the vehicle or vehicles you will use to provide service. If you already have a tow truck or other suitable vehicle, you can start your business for as little as $5,000. However, if you need to purchase a new or used vehicle, you should expect to pay between $10,000 and $20,000. In addition to the cost of the vehicle, you will also need to factor in the cost of fuel and maintenance. Expect to spend an additional $1,000 per year on fuel and $500 per year on maintenance for each vehicle.
Employee Expenses
If you plan to hire employees, you will need to factor in the cost of wages and benefits. The average hourly wage for a roadside assistance technician is $15-$20. If you are planning to hire full-time employees, you should expect to pay each employee an annual salary of $30,000-$40,000. In addition to wages, you will also need to provide benefits such as health insurance and paid time off. Benefits will add an additional $5,000-$10,000 per year per employee to your costs.
Marketing Expenses
To generate customers, you will need to invest in marketing and advertising. The amount you spend on marketing will depend on the size of your market and the type of marketing campaign you plan to launch. A basic online marketing campaign can cost as little as $500 per month. A more comprehensive campaign that includes print advertising and direct mail can cost several thousand dollars per month.
How do I find customers for my Roadside Assistance business?
If you’ve recently started a roadside assistance business, you might be wondering how to get customers. After all, your business won’t be able to survive without a steady stream of customers coming in the door (or, in this case, calling for service).
There are a few different ways that you can get customers for your roadside assistance business.
Reach Out to Companies with Large Vehicle Fleets
When it comes to roadside assistance services, large corporate clients with auto fleets can be a lucrative target. However, it’s important to understand the specific needs and requirements of this demographic in order to effectively pitch your services.
One potential strategy is to offer customizable packages for corporate clients, including options for roadside assistance as well as regular maintenance check-ins and emergency car rental. Another key aspect is ensuring a prompt response time, as delays can affect the productivity of employees using company vehicles.
Building a strong network with local mechanics and tow truck providers can also help to guarantee reliable service. By understanding the unique needs of corporate auto fleets and offering customized solutions, you have the opportunity to establish long-term partnerships with these valuable clients.
Work as a Subcontractor to Insurance Companies
As a roadside assistance service, there is a natural fit for partnering with insurance companies. These companies have a vested interest in the safe operation of vehicles on the road, and an added roadside assistance benefit can help attract and retain customers. To approach these potential clients, it is important to highlight the value that your roadside assistance service brings, such as 24/7 availability, quick response times, and experienced technicians.
It may also be helpful to offer discounted rates or special packages for insurance company customers. Networking within the industry and building connections can also lead to potential partnerships. By targeting insurance companies, roadside assistance services can add a valuable offering and boost their own client base.
