Selling A Business
Preparing to Sell a Tow Truck Business: A Step-By-Step Guide
The number of registered vehicles in the United States has steadily increased over the years. In fact, from 1990 to 2015, the number of registered vehicles has increased by over 70 million. With more vehicles on the road, there are inevitably more vehicles breaking down and in need of towing services. If you’re ready to exit your towing business, continue reading for tips to sell a tow truck business for the best price.
How to Sell a Tow Truck Business for the Best Price
The towing industry saw an annual growth rate of 3.0 percent between 2014 and 2019. Looking to the future, experts project of the auto towing industry will be on an upward trend over the next five years. While it might be tempting to hold onto a business that is growing, the time to sell is when the industry is doing well. If you’ve been considering selling your towing business, utilize the following tips to prepare your business for sale.
When preparing to sell a tow truck business, the first thing you need to do is organize all of your financials and important documents. A potential buyer will want to see all of the following:
- Tax returns;
- Financial statements;
- Payroll information;
- Lease information; and
- Truck and equipment information.
Reach out to your accountant for help gathering all of this information.
Hire a Strong Management Team
Potential buyers want to see that your tow truck business is self-sustaining. If the business is heavily dependent on you, what will happen when you transfer ownership to someone new? Ensure you have a dependable management team in place that can carry the business without your presence.
Address Your Weaknesses
Perform an analysis of the strengths, weaknesses, opportunities, and threats (or SWOT, for short) of your business. A potential buyer will be looking for your shortcomings during the due diligence process, so try to address any weaknesses found in your SWOT analysis prior to listing your business for sale. Be sure that the strengths and opportunities outshine the weaknesses and threats of your tow truck business.
Determine the Worth of Your Towing Business
From asset-based approach to future earnings projections, there are a number of ways to value a business. Several factors to consider when valuing a towing business include:
- Tow trucks;
- Lots or property used for car storage;
- Any roadside service affiliations such as AAA; and
- Relationships with auto repair shops.
To properly value your tow truck business, you need to hire a professional. Professional business valuations are highly regarded by potential buyers and will support your asking price.
Hire a Professional
When preparing to sell a tow truck business, consider hiring a professional business broker. A business broker can help you with everything from valuing your tow truck business and marketing it to finding a buyer and closing the deal. With a professional working on the sale of your towing business, you can focus on what’s important – the business itself!
If you’re preparing to sell a tow truck business and need guidance, contact your local Sunbelt Business Brokers office. Our network sells more businesses than anyone in the world and can help you maximize the value of your towing business.
Article updated on December 6, 2019.