A car rental business rents out cars, trucks, vans and buses. When going into this kind of business, you need to first of all specify your niche. What type of car rental business would you be comfortable with? Would you register drivers on your digital platform so customers can order rides from your application?

Would you instead opt for having a physical location where people can come and physically hire the car for their use? Or do you want to simply serve as corporate transportation for organizations that may need it. Knowing your niche will make you highly effective in setting the business up.

Types of Car Hire Business

There are two types of car rental businesses you can do, the daily hire, which involves individuals hiring the car for a short period of time. Then there’s the contract hire where corporate organizations hire the cars for a much longer period of time.

Doing a proper feasibility study and writing your business plan is also very important for this type of business. It will be easier to run your business if you knew exactly where you are going and what you have already factored in. It is important you do your research to understand the pros and the cons of what you are about to venture into, sometimes it would be safer to just be honest with yourself and know whether this is the type of business for you.

You would also have to insure your cars and think of amazing ways to market your business because the level of competition in this type of business is very high. Except you are choosing to buy a franchise, which does not in any way keep you safe from dealing with competition, but it does make it easier for you to just focus on operations. But if you are starting from the scratch, then it would be an uphill task to develop your business to make profits.

Another thing to look into are the governmental policies, licenses and permits that comes with establishing the business. Registering your business of course is also important and drawing up a proper agreement between customers and you is very important. Such an agreement would have clearly stated terms and conditions, that can be put in effect should anything happen.

No matter how you want to run your business, you need a website. Websites and mobile applications are the way businesses are keeping up to speed with the ever changing needs of clients. If you choose to neglect the power of the web, you may miss out on a lot of clients. Security for this kind of business is also something to consider seriously.

19 Steps to Starting a Car Rental Business in Australia

1. Understand the Industry

This industry is subject to the ever evolving trend of consumer needs. It is no stranger to the few structural issues encountered in the more developed transport industries. The manner in which the government has been involved with this particular industry is very different from how they are involved with other sectors of the transport industry.

In as much as rental rates and other types of services provided by the industry has caused for the profitability of this industry to rise, the industry can still be affected negatively by certain factors both from within and external, some of which are the difficulty experienced in attempting to penetrate certain regions. Other factors that can affect this industry would be the rate at which revenue is generated and general pricing and costing.

The Car Rental Business in Australia has recorded revenue of up to $1bn with annual growth documented between 2012 and 2017 going slightly above 2%. This growth rate has been supported by the increase in international travels into Australia.

Because of the boom in this particular industry, more than one thousand businesses have been documented in the country with more than three thousand workers over the entire region working in a car rental facility. The majority of this type of business surrounds major states in the country like Victoria, Queensland and New South Wales.

This type of industry thrives or suffers based on the type of location it chooses to nest in. One of the best places that have really helped the success of the car rental business industry are the Airports. Like it was stated above, the high rate of international travelers coming into the country added great revenue to this industry.

Most times when people come into the country, they would not have access to private vehicles and would want instant car hire. This is the reason why one of the best places to establish this kind of business is at an Airport. However the level of competition in this particular industry, especially around airports is very high. It would take a lot of hard work and perseverance to gain the kind of momentum needed to generate profits.

Another challenge facing putting the car rental business by the airports are governmental restrictions and policies. Because the airports are owned by the government, there may be policies that may make establishing this kind of business in that location a bit stressful especially to the first time business owner.

One of these stringent policies could be mandating the car hire business to get insurance policy for each of the cars in the fleet, as opposed to getting one insurance package to cover all the cars owned by the business owner. Laws like these tend to make operating such a business worrisome to the owners, not to mention certain policies that may be changing.

Another area where this type of business does well is in the city’s commercial hub or the business district of whatever town you may find yourself in. In the car rental industry, this particular area carries certain demographics that will boost the success rate of the business. Some people may want easy, private and convenient transportation about town during business, or businesses could also hire your cars for hours, days or even weeks to do their various marketing outreaches.

Of course this type of area has event centers where functions happen a lot, with guest speakers and others needing vehicle hire services for such events. The business district areas have served the success of this industry and will continue to do so in times to come.

Residential areas have also added to the great success of this industry, bringing in a slightly lesser revenue than the others mentioned above. Other areas that have added to this industry in terms of geographical locations are the country, remote and regional areas.

With the use of the internet mobile apps have made a serious impact in the way we hire cars today. Now a person can simply go to the website, browse the type of car they would want to hire, check if the car is available, book it down, make payment online and simply wait for the driver to come pick him up or he goes to the office to pick up the car.

Most national operators would be generally found within a certain geographical location especially states that have airports within the country, while others operate within restricted locations.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The major set of people that will need this kind of service are international or even local travelers. International travelers because they are coming into a new country, they will most likely not have family or friends that can assist with their commuting, so they would need the services of a car rental service.

When we speak of travelers, we are not just talking about those coming into the country or going out internationally, but also local travelers. Again, certain companies may desire to hire a large number of vehicles for their marketers, during a marketing campaign drive. Or maybe a very important person needs to be transported around town.

3. Decide Which Niche to Concentrate On

One of the ways of developing this niche is to focus on companies that would need the services you provide. Another place you could choose to focus on is to have a commercial car hire business where anybody with the finances can order a ride from one part of the city to another.

You could also focus on people who are organizing activities like weddings, parties, vacations and so on. Strictly focusing on your niche will go a long way in offering effective service to your clients. You could also offer your services to hotels and hospitals or even focus on companies that need to transport sensitive packages across town.

The Level of Competition in the Industry

When starting any kind of business, you have to consider other businesses in the same field in order to find out where you would fit in and how you would begin to maximize your presence in the market. A car rental business is not a cheap business to start up, so you must consider how to win over your competitors in order not to have wasted money in the first place.

This business is highly competitive, with certain companies operating regionally and other smaller companies operating locally. You must know were your playing field is and compete on your level, it makes no sense you being a small car rental company, competing on a regional level with brands that have been known to dominate that plane.

But if you focus on building loyalty within the locality where you operate, even if the regional car rental companies wanted to do something locally, your strong presence with the people may give you an edge over the others. Of course it is possible to start your company on a more regional scale, however this will be more costly to finance and maintain. Then there is the whole business of winning over your competitors on that level.

4. Know Your Major Competitors in the Industry

In every industry, there are brands that have been consistent in maintaining the services they offer their consumers. They have survived various challenges and conditions that would have made others to fold up. These brands have established themselves to be a notable force in the industry they find themselves in.

It will be very intelligent to note who these brands are so as to emulate their positive corporate practice and also innovate around their more negative characteristics. Some of the well-known brands in the car rental business in Australia are as follows;

  • Hertz
  • Avis
  • Europcar
  • National
  • Thrifty
  • FireFly Car Rental
  • Alpha Car Hire

Economic Analysis

This type of business is very capital intensive, not only do you have to think about getting the licenses, permits and other legal documents to operate a business like this, you also have to think about purchasing the fleet and maintenance.

So getting into this kind of business would require you to do a proper feasibility study, loosing lots of money because of lack of proper research is something no one should face. A proper feasibility study would give you more than 70% of what you need to know in order to invest wisely or even decide that this is not the business for you.

You would also have to consider security and other liability issues when setting up a business like this. The drivers you choose to employ would have to have gone through proper background checks or if the customers drive the cars themselves, then how do you ensure your car is not stolen or damaged?

When starting a business like this, you would have to consider exactly where the money is going to come from. Like it was stated above, it takes a lot of money to get it off the ground, how do you plan on getting the funds? Banks would be more forthright in lending money to already established brands than a startup, so you would have to do a lot more work in getting loans from the bank if that’s how you want to go about it.

5. Decide Whether to Buy a Franchise or Start from Scratch

In Australia, there are quite a number of companies that are willing to franchise their model to serious minded people. If you don’t want to deal with the rigors of developing the business, looking for customers, dealing with legal issues and generally finding your rhythm in the business, then simply buying a franchise is the best for you.

When you buy a franchise, you buy the already used strategies that have worked for the company all the years they have been operating. You get to receive mentorship and other types of assistance from the company. Of course whichever way you want to use in entering this type of business, there are positives and negatives.

Every way of entry has its pros and cons, and buying a franchise could be very expensive. So it will be very prudent to do your proper research to know which one is best for you. Starting from the scratch offers you a chance to develop your own personal entrepreneurial abilities.

You would develop yourself in business strategy, planning and innovation, the chance to grow as a person is encouraged. However it will be good to have in mind that not all businesses survive, so before you choose to start from scratch, know what you need to know about the business you are venturing into.

6. Know the Possible Threats and Challenges You Will Face

One of the major challenges one would face in starting a business like this is finances. If you thought getting the initial finances to start the business is tasking, then other issues like insurance policies, governmental licenses and not to mention fleet maintenance will also take their bite out of the financial pie.

Also the funds needed to expand your fleet, may pose a serious challenge and of course when your business is doing well, there will be that need to get more cars into your pool fast enough before competition comes into the picture.

The economy can greatly affect this kind of business negatively is it moves in that direction. When things are not so pleasant economically, customers may view car hire as a luxury and may opt to look for other avenues of commuting.

Being out of touch with technological advances may come as another threat that may cause those in this kind of business to lose profits. We are embracing a more digital world where most things are done on a mobile devise. The raise of fuel prices can also be a threat to this kind of business as well as governmental regulations.

7. Choose the Most Suitable Legal Entity

There are various legal entities you can choose to register your car rental business as. The sole proprietorship, partnership, Limited Liability Company and so on. A sole proprietorship would have to be the worse type of legal entity for this kind of business if you are starting on a medium or large scale.

Should there be legal problems, the state is allowed to touch your personal assets in order to meet the claims, seeing as you are the person who engaged in the transactions under this kind of business entity. However if you are just handling one or two cars and you want to operate within your locality, then Sole Proprietorship is the best to start with.

If you want to expand and grow, you can now register as a limited liability company. But for medium and large scale startups, the Limited Liability Company is the best because of proper taxation obligations and relations with governmental policies.

8. Choose a Catchy Business Name

A catchy business name can bring lots of awareness about your business; names that are very creative do very well in stirring up curiosity in prospective clients. It should also be a name that can easily stick in the minds of those who hear it, so it can begin to wake up interest.

Some of the names you can consider for your car rental business are;

  • Move Car Rental
  • Va Va Voom Car Rental
  • EasyDrive Car Rental
  • Cloud 9 Car Rental
  • Bond Car Rental

9. Discuss with an Agent to Know the Best Insurance Policies for You

Any business one chooses to go into requires insurance policies to cover any unforeseen events that may happen that may cause damage to the business and its owners. While some businesses would have very general insurance schemes, some have specific insurance policies. When going into a business like this, it would be advisable to know the insurance policies that best suits you.

Below is a list of a few Insurance policies for your car rental business;

  • General Insurance
  • Rental Vehicle Insurance
  • Commercial Auto Liability Insurance
  • Liability Insurance
  • Workers Compensation

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

There is no real need for Intellectual property protection for this kind of business since it is a service based kind of business. However one may need to protect their logo and trademarks from being infringed upon by fraudulent persons. So getting intellectual property protection for this kind of business is not so important, but if you feel the need to do so for any number of reasons best known to you, then you can get it for your business.

11. Get the Necessary Professional Certification

You will not require a formal training and certification for you to enter into this kind of business. However if you want to be the one driving, then a driver’s license would be required. This means that you have to go to a proper driving school to learn how to drive in order to get your driver’s license. But generally, you do not have to be certified in any way to start up or run a car rental business in Australia.

12. Get the Necessary Legal Documents You Need to Operate

Legal documents allow business owners to run their businesses without fear. When it comes to the various agencies that keep businesses in check, these documents are the items that keep these agencies working alongside your business as friends rather than enemies.

Some of the Documents required for you to start your Car Rental Business are;

  • Certificate of Incorporation
  • Operating Agreements
  • Business License and Certification
  • Business Plan
  • Insurance Policy
  • Employer Identification Number (EIN)
  • Consulting contract documents
  • Memorandum of Understanding

13. Raise the Needed Startup Capital

Like we have already stated above, this type of business requires a lot of funding to begin and to operate. You would have to know ways of generating the capital to start such a business. If getting a loan from the bank is your only option then it may not be very easy as banks will most likely give this type of loan to a well known rental company than an upstart.

So it would be wise to consider other ways of generating capital for your business. Some Ideas on how to raise money for your car rental business are as follows;

  • Personal Savings
  • You can sell personal property to finance your business
  • You can find those interested in buy shares to your company
  • Family and friends are good for borrowing soft loans for the business
  • Of course going to the bank to apply for loan
  • Getting the finance from business partners and investors
  • Business grant organizations and Investor Angels are also great sources of funds

14. Choose a Suitable Location for your Business

Depending on how you intend to do this type of business, your location may matter or not. If you want to run a car hiring service where the car comes to meet the client wherever they may be to take them were they need to go, then the location of your business may not be too important even if it is a major thing to look into.

Your business can simply have a mobile application that can be downloaded and used to book for the ride, the driver comes to meet the client and takes them where they need to go. If this is the type of model you want to use in running your car rental business, then your location may not be a strong factor as your clients will not need to come to your office.

Another situation where your location may not be so important is if you simply want to have a one car operation with your immediate neighborhood as your place of operation, then you can run this kind of business from the comfort of your home.

However, if you intend to run a medium or large scale car hire business, or you intend to grow into a large operation, then you need to lease or purchase a place where it would be convenient for clients to visit your office. If possible you could find a place close to an airport or a travel station, where those going or coming may easily access your office.

You would also want to locate this kind of business at the heart of the city, where business is at its highest, for the more professional clients or companies around this kind of area to easily come to hire a car. Places with a high level of tourist attractions is also a very good place to locate this type of business, especially if you want to have a niche in the leisure sector of this industry.

Your location really matters when it comes to this type of business. You should also take into account the cost of renting a place and the space you would need for your fleet, maintenance facility and staff. All of these things should be taken into account when preparing to enter this kind of business, this is why doing a proper business plan is highly encouraged.

15. Hire Employees for your Technical and Manpower Needs

The major equipment needed for this type of business is the fleet of cars you desire to use. It would be more advantageous in the long run to purchase new cars as these should last long before having any kind of fault. Most might want to get fairly used cars but the major problem with this is the cost of maintaining these cars over time may prove to be a disadvantage to the business.

Other items you may need to run this kind of business are Maintenance tools, CCTV, Security Cars, Computers and so on. Depending on the way you want to run this type of business, you will need to hire between 4-8 people, ranging from the Manager, the Front Desk Officer, Mechanics, Security Officers, Accountant and even a Software Technician, if you intend to have a strong mobile application and internet presence.

The Service Delivery Process of Car Rental Business

The service delivery of a car rental business is to meet the specific desires of the clients involved whether it be for leisure, corporate or personal purposes. They can either access the company from the internet, their mobile device or in person to find out what cars are available for hire.

They make their booking either by credit or debit cards, then they sign the necessary agreements needed before the client takes the car for whatever service it is needed for. If on the other hand you want to run a simple car hire service where the driver comes to meet the client to pick them up and drop them off, then the process can be different.

They simply need to download your application on their mobile device, or contact the company on the internet. Make the necessary booking for the ride needed, and then the driver comes to meet them and they pay after the ride is over. Well these are just a few ways in which service can be rendered in a car hire business.

16. Write a Marketing Plan Packed with ideas & Strategies

Knowing how to market you business gives a certain type of confidence especially when putting together your business plan. Without knowing how to effectively market your business, there would be no hope of generating proper revenue for your business. With a business as financially intensive as a car rental service, customers must constantly utilize your services in order to stay afloat. Having a proper marketing plan helps in generating customers for your business.

  • Media Houses, Magazines and newspapers are excellent ways of getting information about your business out there.
  • Send brochures, pamphlets or flyers to organizations, residential or industrial areas and any other set of people that may need your services.
  • Attend networking events to meet up with key players and potential clients in your field.
  • Do traditional marketing with the use of marketers and other business development persons
  • The internet and mobile apps have become a great place of influence for businesses, take advantage of this.

17. Develop Iron-clad Competitive Strategies to Help You Win

It is no big news that there are competitions in any industry or business sector. So the best thing to do is face it upfront, you would need to have an understanding of who your competitors are. Not everyone in the same business line as you is a competitor, but the ones who are focusing on the same niche as you can pose more of a competitive threat than the rest.

One thing you can do is to find out what your competitors are already offering in order to develop a winning strategy that will work. Shooting in the dark and making offerings that do not directly address what is lacking in your competition’s service will not help you in winning over them.

18. Brainstorm Possible Ways to Retain Clients & Customers

The first thing you would have to do to retain customers is to provide excellent services for your customers. Customers love it when they are satisfied with the services they are given. You could also offer various incentives to keep customers interested in patronizing you regularly.

Anticipating customer needs is also another way to keep customers coming back, one of the ways you can do this is to set up a poll for customers to express themselves on your services. By looking at the average of what they answer, you should have an idea of where customer needs are headed.

19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

Brand awareness in the minds of the general public can make a real difference in the way prospective clients respond to your business. Even if there are other businesses doing the same thing you are, if people can identify with you more because of what they believe about you, they may choose you.

Below are a few points on how to achieve this.

  • Erect billboards and posters around town.
  • Use digital marketing to pull traffic to your website.
  • Share publicity materials around your target area for operations.
  • Encourage the use of word of mouth among your loyal consumers
  • Utilize Digital marketing.
Ajaero Tony Martins