So You Want To Know…

Just How Much Revenue Does It Take To Be Profitable?

Today’s towing company has many challenges that companies twenty years ago did not have such as hours of service, incident management or human resources but one thing has remained; making a profit is still the most important objective of a business. In order to know if you are making a profit you must first understand what it costs you to run a call. Some owners still feel that if they have a few hundred dollars in their pocket, they must be making a profit but, are they really?

What about when you want to purchase a new truck or buy the property you are leasing? When you go to the bank, almost all banks today won’t take your word that you are financially viable, they need to see proof. Many of you may remember the days when you knew everyone at your bank, and they knew you. You could walk in, sit down with the bank manager, fill out a short form and he or she would approve your loan right on the spot. Not anymore. With many banks consolidating and having corporate offices in god knows where, the person that will be approving your

loan doesn’t know you or your business. They don’t care that you are a hard worker or if your son played ball with their son, they want to see numbers. They need to ensure you will make the monthly payments; they need to see a profit and loss and your business tax returns in order for them to determine whether your company is viable. Remember, they have someone they have to answer to as well.

So, where do you go from here? Well, let’s look at revenue. Recently, towPartners had a survey on their website www.towpartners.com asking the question “What is the minimum revenue per month a light duty carrier has to run to be profitable”? We were pleased to see out of 235 people responding to the question 25% felt that the minimum amount should be $8000.00. It was somewhat surprising that 14% answered $4000.00 and 7% answered more than $16,000.00. These numbers will fluctuate based on your geographic region but, how do you figure out how much revenue each of your trucks is producing?

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Why Should You Be a Member of Your Towing Association?

Have you ever asked yourself why you should be a member of your towing association when you received your annual dues bill or a solicitation in the mail from you state or national towing association to join their organization? Have you ever questioned whether it really matters if you are a member of a towing association? As a towing and recovery business owner you must make intelligent decisions throughout your day that can and will impact your business. However, what about joining your state association? Can that impact your business?

When you decide as a business owner to join a group, whether it is your local Chamber of Commerce, Rotary, Lions Club or a trade association, you need to ultimately take the time to analyze the pros and cons of joining. What are the key reasons that you are joining? Do you want to be a part of your community? Do you want to interact with fellow entrepreneurs? Or is the main reason you are joining a particular organization is to further improve your business or increase your bottom line? Making the decision to join a trade association is different than supporting your local community organization. Community organizations concentrate their energy and resources in the community you live and work; while a trade association strongly expects to increase your business by strengthening the industry through member education, business support, representation, networking, research, and consumer outreach.

According to Webster’s dictionary the definition of a trade association is “an association of people or companies in a particular business or trade organized to promote their common interests”. That being said, when you join your state or national towing association you are supporting the commitment to properly educate law makers, government entities and the motoring pubic of the towing industry. You are also taking part in the primary purpose of a towing association; to assist in positively influencing public policy in a direction favorable to the association’s members. This can take the form of contributions to campaigns of political candidates and parties through Political Action Committees (PACs) funds; contributions to “issue” campaigns not tied to a candidate or party in addition, your association can lobby legislators to support or oppose particular legislation that can impact the towing industry.

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