Do you want to start a roadside assistance service? If YES, here is a complete guide to starting a roadside assistance business with NO money and no experience.
Even though most drivers carry out maintenance checks regularly in order to ensure that their vehicles are well maintained, there are still occurrences of breakdown of vehicles on our roads due to several reasons ranging from mechanical, accidents to road hazards that will make drivers seek the help of roadside assistance companies.
Due to the fact that vehicle breakdown affects not just the safety of other road users but also productivity factors, it is important therefore that these incidents are handled as quickly as possible for the benefit of the drivers and other road users.
While it is usually in the best interest of everyone concerned that vehicle breakdowns or accidents be handled as quickly as possible, there are usually conditions that might prevent a vehicle that has been dispatched by a road side Assistance Company to reach the scene when it should.
These conditions include; location of the broken down vehicle as vehicles in remote areas might have to wait for a longer period of time to get assistance; traffic jam which might be caused by rush hour, social events, sporting events, accidents, a road construction or other unplanned events, weather or the service providers themselves.
The road side assistance business in recent years has become a value added component for auto manufacturing companies, insurance agencies, law enforcement agencies as well as other companies which therefore led to an increased opportunity for entrepreneurs.
Most entrepreneurs who have therefore started their roadside assistance business from scratch have found that they have need for additional capital in comparison to those that are adding the business as an additional source of revenue or an expansion for their current business, as new startups will need to acquire new tools, equipment and other important assets as well as a tow truck.
What clients expect from you when you start a roadside assistance business is that you will be able to tow their cars to the nearest mechanic, bring gasoline, help repair flat tires, unlock their cars or jumpstart dead batteries. While you can certainly start off this business as a stand-alone business or from scratch, it is expected that you or your employees have the necessary experience required so as to be able to handle whatever job that might crop up.
While you can directly market your services to customers, it is usually wiser to first market your new business to road side assistance programs like insurance companies, AAA and local auto dealers to get the approved guidelines necessary for your roadside assistance business.
One core thing that you cannot ignore when starting your roadside assistance business is a comprehensive business plan.
Steps to Starting a Roadside Assistance Business
1. Understand the Industry
Even though there are no companies with a dominant market share in this industry, it is still an industry that is valued at $6 billion annually and one that has experienced a 2.5 percent growth between the periods of 2011 and 2016. There are more than 38,000 of such businesses in the united states employing more than 86,000 people.
Even though it is expected that the growth of the industry will be limited by the introduction of new and reliable cars, it is expected that revenue will continue to rise as long as people continue to hit the road. Also, according to statistics, those that operate in areas that are prone to storms are likely to generate more revenue than those that are in relatively calm areas.
One of the factors that can be attributed to the growth of this industry is the fact that between the five year periods of 2011 and 2016, the economy has improved, which has therefore led to a decline in the rate of unemployment, which has seen more people not only return to work but feel more comfortable driving their own cars; and an increment in the number of miles for vehicles plying the roads within the country.
This means that as there are more cars on the road, there is a higher chance of there being either an accident or a demand for roadside assistance which will therefore lead to an increase in demand for services in the industry. It is expected that between the periods of 2016 and 2022, revenue will continue to increase even as there will be newer and better equipped vehicles on the road.
This industry according to reports from IBISWorld is said to have a low level of market share concentration with no major players.
The industry is one that is regarded as highly fragmented as most operators only compete on a local level as most of the operators usually limit their services to certain geographical regions. However, it is noted that the market share concentration is however stable.
According to another research study by Hoovers, the roadside assistance industry is one that has more than 50,000 operators that consist of small, individually owned, as well as local operators. Most of the operators in this industry get referred via varied sources with police and emergency calls taking precedence over individual calls.
The industry is one that is highly fragmented with the top 50 companies in the industry accounting for just 15 percent of the overall revenue. This level of disparity means that small companies can compete effectively against large ones.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the assistance of a road side assistance company is not limited to only individuals with cars that have broken down on the road, but it also for insurance companies, law enforcement agencies, government agencies, car manufacturers, car sales outlets as well as research companies.
If you are therefore looking to define the demographics for your road side assistance business in the United States, you will do well to make it more encompassing as this is a service for customers with high, middle or low class income as long as they are able to afford a car.
3. Decide Which Niche to Concentrate On
In starting and running a business of whatever nature, it is important that you understand all there is to know about the business so that you can understand what niche will most likely favour your business in the short and long run. A niche is an area of specialization that entrepreneurs go into in order to stand out or be known.
While niches are a good source of revenue generation, it is important to note that not all niches allow for revenue generation and so you must take your time to conduct a thorough research. While it is easy enough for large companies to offer as many niches as possible, small companies might need to stick to one or two so as to be able to offer better services and also not overstretch their resources.
Below are some of the niche areas that you might consider going into if you are looking to start your road side assistance business;
- Road Side Assistance
- Mobile Mechanic
- Service Garage
- Passenger Car Towing Services
- Light Duty Truck Towing Services
- Wrecking Services for Motor Vehicles
The Level of Competition in the Industry
The location of your roadside assistance business matters a lot when it comes to how you are going to compete with others in the same industry, as this is not a business that you can run from any location except you are a large company that has multiple locations or a company that offers franchises to other startups.
The way most roadside assistance companies survive and can effectively compete against one another is by getting approval from major stakeholders in the industry such as AAA, insurance companies, Allstate Motor Club, auto manufacturers, car sales outlets and law enforcement agencies.
Even though what most clients are on the lookout for are companies they can trust to offer them the best services, they will also trust what their insurance companies or auto manufacturers tell them.
Therefore, if you are looking to start your roadside assistance business in the United States of America, you should be well aware of the competition that you are likely to face and look towards using available stakeholders in the country to achieve your intended goals and objectives.
4. Know Your Major Competitors in the Industry
In every industry, there are brands that have stood out based on certain attributes and this industry is no different. There are several road assistance companies that have become popular due to several factors such as their quality of services, their value added services, how much they charge, discounts, refunds and any other extra costs, their multiple locations, their mileage limit and the areas covered, as well as their brand name.
Below therefore, are some of the well-known road side assistance companies within the United States of America;
- Allianz Global Assistance
- Cross Country Group
- Better World Club
- Blink Roadside
- Good Sam Roadside Assistance
- American Automobile Association (AAA)
- Paragon Motor Club
- Allstate Motor Club
There are different organizations in the United States that offer roadside assistance services directly or indirectly to their customers. However, motor clubs have dominated this industry with about 15 major motor clubs operating in the country. The motor clubs usually manage and utilize a network of providers that are providing services locally.
The industry is one that has high workforce turnover especially as the working conditions are often seen as difficult and dangerous with demanding work schedules. Most of the requests that road side assistance companies get are usually that related to towing, followed by tire changes, jumpstarts and lockouts.
Most roadside assistance businesses usually get their requests from a variety of referral sources as well as through contracts.
5. Decide Whether to Buy a Franchise or Start from Scratch
As an entrepreneur, one of the decisions that you will make during the course of starting and running your business is whether to start your business totally from scratch or to buy an existing franchise. No matter how good an option sounds to you, it is only your overall goals and objectives that can help you know which will be best for your company in the short and long run.
If your aim is to generate revenue as soon as you start the business without putting too much effort into advertising the business to customers, then it is highly important that you consider buying a franchise. However, before buying a franchise from any company, ensure that you have carried out a thorough research that will allow you know if the company you intend buying from will favour your business so that you do not end up wasting resources in buying a franchise that will not work for you.
If your aim is to however start your business from scratch, you must be aware that this is often referred to as a trial and error type because you will basically be facing challenges that are new that may grow or mar your business. This is why you are expected to have conducted a thorough study before starting your business and also have a well written business plan that will allow you to understand what to expect from your business and how you can grow it to the level that you want.
6. Know the Possible Threats and Challenges You Will Face
In starting any business as an entrepreneur, one of the things that you will need to take into consideration are the threats and challenges that will crop up during the process of starting or when actually running the business. If you are not prepared for any threats or challenges, then not only will your business be affected negatively but you might also not be considered as a serious entrepreneur who did a thorough research about the business before going into it.
Some of the threats and challenges that you are therefore likely to face during the process of starting your road side assistance business are; having to deal with competition from already existing road side assistance businesses, knowing the appropriate number of staff you will need should any emergency crop up requiring more hands than necessary, getting certain equipment or tools such as a large tow vehicle due to finance, and having to deal with competition from new players offering same services in the same location.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
One important decision that you will ever make during the course of starting and running your road side assistance business is that of legal entity. The choice of a legal entity is not to be taken lightly and so you might need to engage the services of an attorney or accountant to help you out.
The legal entity you choose for your business will affect the amount of taxes you will pay, the personal liability you will face, how you can raise capital with which to start your business and how much of paperwork will be required. There are several types of legal entities in existence in the United States for entrepreneurs looking to start a business and they are; sole proprietorship, partnership, corporation and a Limited Liability Company (LLC).
8. Choose a Catchy Business Name
When looking to start any sort of business, one other important decision that you will ever have to take is what to call your business, because it is important that your business has the right identity that will enable you to positively communicate the identity to your intended target market. A business name is very important because it is must be memorable, unique, easily pronounceable and creative.
Below are some of the business names you might consider choosing should you be looking to start your road side assistance business in the United States;
- Triple G Assistance
- Mekam Road Assistance
- Chillz Motor Club
- Salie Motor Services
- GGG Auto Assistance
9. Discuss with an Agent to Know the Best Insurance Policies for You
When starting any business in the United States, it is important that you have the insurance policies necessary to protect you from any incident that might occur. If you have no knowledge on what insurance policies you might need for your road side assistance business, it is best you consult an insurance agent or broker who will advise you on what insurance policies will be best for your business.
Below are some of the basic insurance policies that you might need to purchase when it comes to starting your road side assistance business in the United States;
- General Liability Insurance
- Professional Liability Insurance
- Auto Insurance
- Health Insurance
- Trip Interruption Insurance
- Workers’ Compensation Insurance
- Payment Protection Insurance
- Business Owner’s Policy Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The road side assistance business is one that requires you to provide services of a certain nature to drivers whose vehicles might have broken down and so due to this, you will not be requiring any sort of intellectual property protection except you invent a product or software that will help make the industry become better and in which case you will need to seek the services of a lawyer to help you apply for an IPP with the USPTO.
This does not however mean that entrepreneurs in this industry cannot apply for an IPP on things like their company names, logo, slogans, domain names or any other thing that they might consider important. It is up to you to decide if this is important enough for you to consider applying for an IPP.
11. Get the Necessary Professional Certification
Even though the road side assistance business can be started by virtually anyone, entrepreneurs are taking advantage of online certifications in order to have an edge over their competitors. Below are some of the online certifications that you might need to take to have an edge over your competitors;
- Roadside Assistance Certification
- Pro Towing Certification
- Pro Dispatcher Certification
If your aim is to take some of the online certification courses, then ensure that they are from accredited and reputable companies.
12. Get the Necessary Legal Documents You Need to Operate
When starting any business in the United States, it is important that you have in your possession essential legal documents that will allow you to run your business without hitches of any sort from the law. Not having legal documents with you will mean that you are running your business illegally and when caught by the authorities, you might be made to pay a fine or risk being banned from running such a business anywhere in the country.
If you aren’t sure of what legal documents you might need, it is best to seek the services of an attorney or accountant to help you out. Below are some of the documents that you will need in order to run your road side assistance business without hitches in the United States of America;
- Certificate of Incorporation
- Operating Agreement for LLCs
- Insurance Policies
- Business License and Permit
- Business Plan
- Employer Identification Number (EIN)
- Federal Tax Identification Number
13. Raise the Needed Startup Capital
When intending to start any business as an entrepreneur, one of the major factors that will define how your business will kick-off and grow is finance and so if you do not have the required finance, or have given deep thought to where you intend to get the required capital to start and sustain the business till it starts generating its own income, then you might as well not bother about starting the business at all.
While sourcing for capital is not seen as an easy task for any entrepreneur, the process can be made easier if there is a written plan at hand that will convince whoever the entrepreneur intends to approach. One rule when it comes to approaching a third party in order to source for capital is that you must have committed your money no matter how small; this shows your level of seriousness.
Below therefore are some of the financing options available to you when you are looking to start your own road side assistance business;
- Use part of savings and sale of stock or properties as part of startup capital
- Source for soft loans from family members and friends
- Approach an angel investor or a private investor for startup capital
- Apply for loan from a commercial bank
14. Choose a Suitable Location for your Business
Where you choose to start and run your road side assistance business is very important because where you are located can have an impact on how much you generate and how your business eventually grows and becomes a success.
When starting a business, there are several important factors that the entrepreneur must take into consideration and these are finance, marketing and location. Each of these factors is intertwined as not making the right decision on any of the three can affect your business immensely. Without having the right amount of startup capital, you are bound to be limited on the choice of location you pick; also your location can affect your marketing efforts.
One thing with a road side business is that you can start and run it from home especially if you are either starting off the business on a low budget or running on a very small scale where you are employing no one else. The benefit of running your business from home is that you are not going to bother with overhead and certain running expenses.
If running the business from home, your phone should always be on and you should have an interactive website. Ensure that you create a space in your home where you can keep a desk that will store your important documents, and keep your tools in your garage.
However, if you have looked at your closest and most successful competitors and have seen that they are running their business from a commercial facility, then you might need to consider renting a commercial facility with which to run your business as well. A commercial facility comes with extra expenses so ensure that you have looked into your budget and you can afford it.
The essential factors that you need to take into consideration when looking to lease or rent a commercial facility for your business are; the nearness of the location to your intended target market, the convenience and easy accessibility of the location for customers and employees and how conspicuous the place is. If your location is too far, not only will you spend more in advertising the location but you might also lose your customers to your competitors who are located in a convenient place.
It is best to seek the help of a real estate agent when looking to rent or lease a commercial facility because not only will they be able to know which location will best suit your business, they would also help with the one that will be within the range of your finances.
15. Hire Employees for your Technical and Manpower Needs
Technology has really had an impact on the road side service industry and this has helped businesses in this industry improve dramatically. Technologies have helped improve the use of applications in the dispatch system so that that they are able to use several environmental details to locate drivers that require assistance. The use of street view in these applications for instance can help a dispatcher lock in on the location of the stranded driver in order to give an accurate time of arrival.
It is essential for road assistance drivers that they keep their vehicles maintained properly in order to be able to handle any commute where their assistance is needed. As a road assistance company, it is important that only qualified drivers are in charge of operating your vehicles. Running motor vehicle record (MVR) checks as often as possible, having a safety policy, training regimen and taking action that is deemed corrective on drivers are very important in order to offer only quality services.
Asides from the tow vehicle that you will need in order to provide the necessary service, it is also imperative that you have a safety kit as well which should include flashlight with fresh batteries, fully charged mobile phone, booster cables, flares, triangle warning devices, blankets, heavy gloves, repair tools for flat tires, locksmith tools, map, gas can and other first aid supplies. Administratively, you would require a computer, phones, cabinets, internet, software and printers.
It is necessary when starting out to build a business structure that is solid because this will determine how much your business is likely to grow in order to meet with your intended goals and objectives. You must ensure that you hire not only those that are proficient but also those that identify with your corporate values and are determined enough to see that your goals and objectives are achieved.
Therefore, those that you need to hire in order to be able to achieve your set goals and objectives are; Chief Executive Officer (CEO), Admin and Human Resource manager, business development and marketing manager, dispatch officers, front desk officer, drivers and accountant.
Therefore from the above analysis, you will need at least 8 key staff in order to be able to run your road side assistance business successfully.
The Service Delivery Process of the Business
In order to be able to deliver services to their customers, companies that offer road side assistance have to be able to maintain active dispatch staff especially as events that are contingent in nature such as bad weather and sudden emergencies can require more resources which will mean secondary and tertiary staff will have to be summoned especially if the calls are from law enforcement or government agencies, because road assistance companies often find it easier to just operate on rotation basis.
Most road side assistance businesses often use small tow vehicles with only very few being able to afford the large tow vehicles because the large tow vehicles are often pricey, often exceeding $500,000 and require a high degree of specialization. These therefore means that there are few vehicles that can travel for very far distances to get broken down vehicles and so customers usually call on the road assistance companies closest to them.
Operators in this industry often take into cognizance the inherent challenges involved with a call before being able to provide an estimate time of arrival even though the average time is usually within 60 minutes or less. This means that cars that break down in areas that are experiencing severe weather conditions or any unplanned event that is not deemed regular might have to wait for a longer period of time.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing is one of the most important aspects when it comes to running a business because this is where revenue is generated for the growth and sustainability of the business. Asides from helping to generate revenue for a business, marketing also allows a business to be able to create awareness for itself.
With marketing, a brand cannot only penetrate the market in order to be able to get a fair share for itself but it can also use this to be able to compete and stand out against its competitors. For this to however be achieved, it is important that you conduct a thorough market research about the industry you intend going into.
The essence of conducting a thorough market survey is so that you will be able to know and identify your intended target market, what it is they expect from you and what you should expect from them as well. You will be able to also identify your competitors and know their weaknesses so that you can manipulate them to your own advantage.
Knowing how important marketing is, handling this aspect alone might be overwhelming which is why you might need to hire in-house marketing executives who know their onions well to be able to craft effective marketing strategies that will align with your intended corporate goals and objectives.
Below are some of the marketing ideas and strategies available for your road side assistance business;
- Ensure that you formally introduce your business to stakeholders in the industry such as insurance companies, auto manufacturers, and law enforcement agencies
- Empower your marketing executives to meet with potential corporate clients and individuals
- Install attractive billboards in strategic locations
- Place adverts in newspapers and magazines as well as on radio and television stations
- Pass out fliers and handbills in various strategic locations
- Use your social media platforms such as Facebook, Twitter and Linkedin to market your road side assistance business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Every entrepreneur starting a business of whatever nature knows that in order to survive and grow, it is essential that adequate publicity and promotion about the business be done so that the business can stand a chance of competing with other existing operators in the same region, state or country.
The importance of promoting your business cannot be overemphasized as you not only get to generate awareness for the business, but there is also the possibility of the awareness being turned into revenue generation for the company, which is why large companies do not joke with their publicity campaigns.
If your aim is to be known nationally, perhaps in preparation for starting a franchise in future, then it is necessary that you take creating a corporate identity and boosting awareness for your brand seriously. You might also require the help of insurance companies, law enforcement and government agencies and auto manufacturers to help publicize your road assistance company to your intended target market.
Just like every important aspect of running a business, you must carefully plan for the publicity campaigns that will be effective in boosting awareness for your brand and also creating a corporate identity for your company. You should note that while some publicity campaigns might cost you a lot of money and help you achieve your intended goals, others might and not help you achieve them. Therefore it is not how much you spend to boost the awareness for your brand that will determine the success of your objectives.
If you have the means, you might seek the services of a publicity consultant that has a thorough knowledge of the industry you are in to help craft strategies that are in line with your corporate goals and objectives so that you can effectively compete against your competitors and have the desired edge that will allow your road side assistance company stand out from the rest. You should also be aware that the internet has made it quite easy enough for entrepreneurs to use their publicity campaigns to reach more of their target market than they usually would have.
Below therefore are some of the strategies that you can use to boost awareness and create a corporate identity for your road assistance company;
- Ensure that you create a website and use SEO tactics to enable it to pop up in search engines for your intended target market
- Use your social media platforms such as Facebook, Twitter, Linkedin and Instagram, Google Plus to promote and boost awareness for your activities whilst also creating a positive corporate identity for your road side assistance business
- Go on popular blogs and forums and use these platforms to educate and offer advice to the audience while promoting your road side assistance company as well
- Ensure that you install attractive billboards and flexi banners in various strategic locations in the area which you intend to run your road side assistance business
- Ensure that you place adverts in local newspapers and magazines as well as on radio and television stations to promote your company
- Encourage customers that have been satisfied with your service to refer your business to their family members and friends or to leave reviews on your websites or in public forums that attract a large number of audience