Several months ago, I wrote an article about selling your business and how to prepare for retirement. In the past two months, I had three different companies show an interest in buying my company. It’s time for me to prepare for my future, but before we do that, I am going to spend the next few articles telling you the story on how I got there.
Let’s get started. Over 25 years ago, I was working on an 18 year career in computers. One day my brother-in-law came to my wife and I saying he just bought a tow company and he wanted us to run it. We both gave up our careers in computers and started to run a tow company. At the time we knew nothing about towing and I’m not sure I ever had my car towed. To make matters worse, it was not just towing, but it was a private property towing company. I never even heard of private property towing.
From our past career, we learned a lot about running a business so we just applied all the rules. We did the following:
- We learned all the rules for private property towing in Texas. We learned quickly that Texas did not like private property towing. Remember this was over 25 years ago, and it was like the wild west in Dallas.
- We identified who our competitors were. We found a towing lawyer, and he set up a meeting for all my competitors to meet and discuss towing in the city of Dallas. Remember, I was new at this and learned that one of my competitors served prison time as the best car thief in Texas. When he started his company, he hired everyone with whom he was incarcerated. My biggest competitor was worse than the guy from prison. As time went on, every 3 months, he would threaten to kill me. Welcome to private property towing in Texas.
- We learned who our customers should be. We learned that low-income apartment dwellers were the best customers.
- We identified a staff we thought we would need. We identified drivers that were stealing or damaging trucks and got rid of them. Even though drivers were hard to find, once the industry found out how we operated, everyone wanted to work for us.
- We fired the people that did not fit our profile as a company. I knew what I wanted my company to look like so I just had to find the people that would fit the profile.
- Our doors were not opened for three weeks, and I sent my wife to the Florida tow show. It was a chance to learn about towing, who the players were, and the things I might need to support my business. Everyone should attend a tow show to learn about what is taking place in the industry and how it could make their business better.
We immediately joined the Texas towing association. Again I wanted to learn who the players were and how towing was run in the state of Texas. Although I made a lot of friends, it was obvious that they did not think much of private property towing. They told me it makes the industry look bad. I could tell you stories that made them think that, but I quickly learned they were not as clean as they wanted you to believe.
Its now time to look at the business side of my company. When setting up our business, we did the following:
We developed a business plan. If you make a good business plan and follow it you will be successful. We identified the cash that was needed to operate and identified the steps necessary to make our numbers.
We identified what equipment was needed; how many trucks it would take; and what was necessary to keep these trucks on the road. I wanted all my trucks to look alike. They were all F450’s, and I would let my drivers pick the kind of lift they wanted. This gave them ownership in their trucks, and they would take care of them.
I wanted them all the same color and all the same logo’s. This made us look intimidating, and our competition would fear us. One of my competitors told me that he wanted different colored trucks so his customers knew he had more than one truck.
- We made marketing material that we handed out to our customers. On the cover there were 7 trucks. We used technology to create our 7 truck look even thought I only had five trucks.
- We did nothing by accident! We knew we wanted to add x number of customers a month, and we knew what it would take to get them.
- We sponsored different events that supported the police and they loved us. We made sure our customers knew what we were doing, and it did not take long for the word to spread.
- We created a budget to match the business plan so we knew what our expenses were and how much revenue we would need.
- We looked at our major expenses and tried to eliminate them. We were holding public auctions once a month using an outside vendor to auction the cars. This was very expensive. Having a computer background, we developed our own software to do our auctions. This save me 20% of the auction revenue I was losing to an outside source. When I worked in the computer industry, I had $5.00 and an American Express card in my wallet. Our very first auction generated $60,000 in cash on my desk. That’s when I knew I was going to like this industry.
We are going to leave it here for now but I want you to take away two things: one identify what you want your business to look like. Two: create a business plan that helps you build your business.
In a future article, you will see how I used these two steps to build a successful business, so until then travel safe and we will talk again soon.
