I Closed My Towing Business After 8 Months… Here’s Why

So last year, I had this brilliant idea to launch a towing business. And we did it for eight months and last week we shut it down. And this isn't clickbait. I'm not going to tell you that we shut it down to launch something 10 times bigger. No, like, you know, we set this goal and I actually failed at it. And so many people share all their wins, but they don't share their losses. That's not what it's like to build a business. And so I'm making this video to tell you kind of what the plan was, what actually happened, some of the numbers, but then ultimately, you know, what we're going to do moving forward. For some context, I own 36 of these Midas auto repair shops here in the Philadelphia and New Jersey area. And I have this thesis that every broken down car that gets towed has to end up at a repair shop. And that if I could launch this towing business, if we could get customers, and then if I could get just a small percentage of them into my stores, that, you know, we can make a lot of money. And we spend tens of thousands, not hundreds of thousands of dollars a year in marketing to acquire customers. And the idea behind this was that we can have Google ads. We can get on, you know, with motor clubs and police clubs and that people would pay us to pick up their car as the towing company. And then we can bring it into one of our shops. And most cars, when they get towed, you know, they're going to spend like a thousand dollars on brakes and tires, steering, suspension, radiators, exhaust. Like now, instead of paying for customers, we are getting paid to bring them into our shops. And so we started with one truck. This was the first truck that I bought. We had a video on that back a couple months ago. It continued to work. And so we bought another truck. We bought the red one. We learned like this is like a volume business. You need lots of volume. We needed multiple drivers. And to really make it work, you got to be 24-7. You got to be in like police clubs and motor clubs and insurance companies. And it's just like, you don't make a lot of money on the per tow. And so you've got to do a lot of them to really make it make sense. But it takes a lot of time to get those insurance into police. And there are all these towing companies that are locked in with those guys for years. So the main way that we got customers was through Google ads. So we were doing pay-per-click ads. It did work. We did get customers, but these trucks were driving all over the place because we were trying to get it going. And ultimately, it put lots of wear and tear on them. We spent a ton of money on fuel. And then the time it would take to go all over the place. Mathematically, it just became very like logistically hard with only three trucks. But then the vast area that we served. And so all that wear and tear, the trucks were constantly breaking. We probably did breaks on almost all the trucks. We had one of our light rails all went out. Like one of them, the radiator blew. Like while we have really great mechanics, like we focus on heavy-duty cars. Like all these cars that you've seen around us, this is what we fix. We're not really equipped to handle the bigger vehicles. But like our guys are like super busy doing all these cars. And so, you know, some of the work we had to get out to other vendors, you know, we didn't get some of the synergies that we thought we would with the trucks. The other issue we had was these hydraulic lines that support the piston. They were blowing out. We had a video. I was on site one day where the whole thing blew when we were in this dealership. And we're up there mopping up, you know, the fluid to clean it all up. And so it just became this thing of like this constant, the trucks are always breaking. It takes our guys a while to fix it or other shops are busy. And earlier, you know, I said this is like a volume business. So, I mean, at one point, we literally only had one truck, like on the road because we were waiting on all these other things. All while we still had a dispatcher. We still had a full-time, you know, manager, you know, doing a really good job. It's just like, you know, hard to make it big enough to make sense. I hope that's dirt and not something else. So, what's next for Rocky's Towing? Well, the first thing we got to do is sell these trucks. Luckily, tow trucks are actually pretty easy to sell. We'll probably have these gone within two weeks or so. For the employees, the guy that was running it, he's now working actually in one of our stores. For the drivers, we did offer them jobs as mechanics, as many of them are. And so, you know, our goal is to make it a soft landing as we could for the guys. So, let me share some of the numbers. So, we brought in about $150,000 of repair work into, you know, our shops over the last eight months or so. After accounting for the cost of goods, the payroll, royalties that we have to pay to Midas, we probably netted about $60,000 on that $150,000. But during that same time, the trucks, we lost about, I want to say it's about $120,000 after paying, you know, full, you know, drivers full-time salary, we have a manager, all that, all those Google ads, repairs, insurance is insanely expensive. I want to say it was like $16,000 or $20,000 per truck per year just in insurance. All in, we probably lost about $50,000, $60,000, you know, in the last eight months running, you know, this experiment. You know, that's not an insignificant amount of money, but we do run a business that does $50 million in revenue. And so, you know, to us, it's kind of this test. You know, if this thing works, the upside is huge. Like the upside of my math, if we could really get this thing growing, was making millions. And the downside is about this, is about, hey, you know, we lose some money, we try it out, it didn't work. And I think to win in business, you can't be afraid to make these bets. You can't be afraid to try things out and know that sometimes you lose and like that's okay. But at least you tried. So many people, you know, are afraid to even make a move or make a bet or do anything. And then they're kind of stuck in the same place. I have won in business and built this, you know, pretty successful operation because I'm not afraid to make these bets. Like I have made bets buying stores that were losing money, knowing that my team could turn them around and we could turn them into profitable stores. We've made that bet many, many times and we win almost every one. I think that's like the big lesson for anyone out there trying to build a business is like, you can't be afraid to make moves and you can't be afraid to like try things. And sometimes it works, sometimes it doesn't, but that's okay. And I think what's more important is learning lessons and applying them so you don't make the same mistake twice. So let me show you what I learned from this whole thing. So today we have 36 shops that do $50 million in revenue. That's about $1.4 million of revenue per shop. I have some friends who have very similar size shops, offer similar services that do $3 million per shop. And so I see that and think, man, if I could get my shops from $1.4 to $3 million, that would take my company from $50 million to $100 million. And so I could double the size of my company without having to buy another truck, buy another shop, sign another lease. And it's all like literally right below us for ours to the taking if we can figure out the process and the people and the teams that they're doing that we need to adapt. That's really what our focus is going forward is all the energy and effort that we were putting into making the towing business good. Instead, we want to take that same energy and just focus it like a laser beam on our business because the opportunity is below us. It's a shiny object. So many people get distracted by a shiny object up in the air, going around like in Harry Potter, the golden snitch. They're all chasing and they're all looking for because it's like the big prize, right? And it's hard to catch it. But if you're really focused, you can grab it. But like, it's not that easy. And it could be towing. For me, honestly, I've had other businesses. It was the same thing that I'm like going after this thing while ignoring what's right below me. That's enough diamonds. But as the business owner, the business that you own, there are these diamonds under your feet. They're covered in concrete and they take time to bust through, to open up, to find these diamonds, but they're there. Just like my friend doing $3 million, that's it for me. The diamonds below my feet is $50 million or more of revenue on my exact same business without adding anything like leases or buildings or equipment. It's really just building teams in process, which is what we're good at. And so instead of chasing this, I need to not do that and then pick up the shovel and go this way. And that's the biggest lesson I learned is that we can try these things. Yeah, it's fun to try something new, the novel idea, the challenge we're going to face. But ultimately, if we really want to make money and we really want to build a great business, instead, we got to get the effort focused on what we already got. And so if you're chasing something or if you have got this idea and I want to start this new thing, just pause for a second and really ask yourself, is this a snitch that you're going after? Or is it something that you need to focus on? And so you're not able to reach the shiny thing. I think it comes back to being able to diagnose what the problems are and what it takes to grow your business. And so for me in the auto repair business, our entire business is really two things. It's people and process. Any problem that we have or any issue or goal, whether we are not making any money or we've got these big dreams to say we want to get more, it all comes down to these two things, people and process. But for us, a $3 million store, we have a store that does $3 million. We're standing inside of it. And so it's not like I'm saying, oh, we got to get to $10 million a store, and we don't have anything even close to that. We have multiple stores doing $2 million, $2.5 million. We have some at $3 million, but it's maybe 10% of our company. And the challenge is really, how do we get 100% of our company to be the top 10? When I think about it, it all goes down to, do we have the right people? And are those people following the right process? We just like literally chip away at it. So like I'm chipping away at on the floor of the concrete, like this isn't going to happen overnight. It's not like we're going to double revenue in a year. But even this year alone, we were up 20% in January. We were up 30% in February. It is now early March, and we are already pacing about 25% up so far this month. If we keep on this pace, I mean, this year alone, we are going to take this thing from $50 million to $60 million if we can grow by around 20% this year. And then next year, if we can keep on that pace, we get it to $72 million. And then the next year, it would be 14, it would be like 84, 6 million. And so it's not say that, hey, this thing's going to happen overnight, but that we work to make incremental progress by growing 10, 15, 20% per year. And that I've learned in business, a lot of times our success will feel like this, where you spend all this time and you're barely making any progress. I call it 1% improvements. It's like a 1% improvement per day. You may feel like nothing's making progress, but then you look back and you're like, oh, we're up 20% this month. We're up 30% this month. All these people that we hired back in June and August and September and December, they're now trained up. They get the process. We built the team. The customer reputation and environment's way better because we have much better people following much better process. And all of a sudden, now we start taking off like a rocket ship. But that requires work. And that requires focus. And there's this old Russian proverb that if you chase two rabbits, you catch none. And it's kind of the same thing, like chasing these other rabbits. And while I thought towing would be kind of like in the Midas realm of auto repair, it ended up being a different rabbit. If we put all of our energy into the one rabbit, the really fat rabbit, worth a lot of money, then we'd be much more likely to catch and kill that rabbit. So that's a wrap on Rocky's towing. No more videos on the business. But you can follow along and see other videos of how we're going to continue to build. And just remember that to win in business, you can't be afraid to take some risks.