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This week: A buyer eyes a towing business with extra trucks, a major contract, and little competition… then the red flags appear.
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This week, we’re headed to a small, isolated town in the southwestern U.S., where a buyer named Ben is evaluating a towing company with a long-standing contract and more capacity than it’s using.
On paper, it looks promising. “They’re kind of the only shop in town,” Ben said. But the deeper he looked, the more questions surfaced:
Let’s dive in…
This long-running towing business is on the market, with its second owner — who took over back in the ’80s — looking to exit. The revenue mix:
It’s a lean operation, but seemingly underutilized. Ben noted idle trucks and unused repair lifts. His read? There’s capacity to grow, with the right team and strategy.
Here’s what the topline financials show:
The asking price is $720,000, and Ben is exploring a negotiated structure with an SBA loan and seller financing. But he’s got concerns. Most notably? Revenue drops.
These dips — and new concerns flagged by the community — will put real pressure on valuation and structure as Ben weighs the deal.
Let’s take a closer look…
Despite the unclear financial history, what really got the community’s deal coaches and members talking was something else entirely: Insurance.
Candice, a deal coach and former AAA insider, was blunt:
She’s heard of up to 100% premium hikes in a single year for mom-and-pop operators, driven by high-risk accidents, aging trucks, and fewer insurers willing to touch the space. With large contracts, the pressure is even higher. Partnerships often come with mandatory insurance minimums, and anything above that can fall on the owner.
🔍 Her pro tip: Talk to insurance brokers early to gather data before paying for legal or financial diligence.
Another community member flagged a different limitation: the AAA contract may only cover the current geography. Expanding beyond it could require separate approval. And there’s one more catch — these contracts may prohibit working with other carriers.
So, between rising insurance costs, restricted geography, and limited income flexibility, Ben’s biggest risk might not be the shop’s performance but the system it operates in.
Which raises the next question: is towing even worth getting into?
In this space, margins are usually slim, hours can be brutal, and reliance on motor clubs like AAA — which dictate rates, territory, and exclusivity — can limit pricing power and growth.
The industry’s also earned its share of regulation: caps on storage fees, one-hour wait rules, and mandatory release if a driver shows up mid-tow. But not all signs point down.
Cars on the road are older than ever — the average is now 12.6 years, with over 80 million vehicles 16+ years old. That means more breakdowns, more service calls, and more demand for towing.
Meanwhile, tech is streamlining operations. From GPS-enabled trucks to smart dispatch platforms, towers can cut dead miles and boost response time, even with lean teams.
The community flagged larger tow jobs as a major opportunity, where a single tow can earn thousands. But they require bigger trucks, higher maintenance costs, and often CDLs. Deal Coach Stan noted yet another overlooked stream: collision center relationships, which can also bring steady, high-paying jobs.
Candice reminded the group, “The towing business can be very lucrative if you get the right business in the right location and then you work to figure out how to leverage it and manage it the right way.”
She pointed to an operator she knows in Arizona who’s now on her 3rd or 4th acquisition, reinvesting profits and leveraging public and private contracts to scale.
“These contracts are sort of like buying into a franchise without buying into a franchise,” she said. “You can get direct support, vendor discounts, peer networks… But if you don’t work the system the right way, you’ll lose money.”
The seller’s asking for more than $700k. Ben’s math put it closer to $500k. Community deal coach Dan thought even that was generous:
In Dan’s view, Ben is facing “huge headwinds.” Could a lowball offer work? Maybe. But even if it cash flows, he asked: “Do you really want to buy a business where you’re almost running a startup and trying to find new ways to grow?”
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Probably not this time.
The business has bones, but between contract restrictions and insurance uncertainty, this deal had more drag than lift.
That said, towing isn’t off the table. The opportunity is real. But you’ve got to find the right vehicle, and know exactly how to drive it.
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The information contained here may not be typical and does not guarantee returns. Background, education, effort, and application will affect your experience. Your results will likely vary.
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