The taxi business is simply a lucrative business that involves a taxi conveying passengers between locations of their choice. The taxi business is not like other modes of public transport where the service provider determines the pick-up and drop-off locations. One of the good things about this business is the fact that you do not need to be an expert in the transportation field, before you start this type of business.
A taxi business can be started small with a few cars and drivers, and as time goes on it can be expanded gradually as you begin to profit. But before starting or venturing into a taxi business, you need to understand and research this industry to be able to know the various competition and needs of the public.
No business is easy to start; only a zealous mind with the heart of an entrepreneur can be able to venture into the business world and pitch a successful tent. So, for those willing to venture into the taxi business, here is a detailed article on how to start a taxi business In the united states.
23 Steps to Starting a Taxi Business With One Car
1. Understand the Industry
Companies in the taxi business provide passenger transportation by automobiles not operated over regular routes or on regular schedules. The revenue and income of the taxi industry is driven by business and leisure travel. The profitability of individual companies depends on innovation and good marketing. In the taxi business, small companies can effectively compete with the large ones because there are few economies of scale in operations.
Interesting Statistics About the Industry
In the united states, the taxi industry includes about 7000 establishments with about $6 billion in combined annual revenue. No major companies dominate the industry, which is fragmented. The taxi industry is labour-intensive: annual revenue per employee is about $70,000.
Major services in the taxi industry includes the transporting of passengers in taxis; renting of limousines, luxury cars, vans, and other automobiles with drivers; and hearse rentals with drivers. The vast majority of industry revenues come from local passenger transportation services.
Taxis transport passengers after being dispatched per customer request or reservation; they also pick passengers that hail or flag them down while driving on city streets or at taxi stands. Companies typically have a central dispatching office, own a fleet of vehicles, may own fuel tanks and pumps, and may operate a maintenance and repair shop.
Today the biggest taxi markets are Europe which has 450,000+ taxis, USA has 300,000+ and China has 500,000+. This industry which has been around for 100+ years is now in the midst of a radical shake up like it has never experienced before.
The reason for this shake up isn’t farfetched, because just like any other industry that has been touched by the internet, mobile and computer technology… the taxi industry which has been typically regionally and government protected through regulation is now hearing the voice of the customers loud and clear.
The taxi industry as we know is growing rapidly due to innovation, mortality rate, urbanization and internet access but shrinking quietly due to the high discontent complains of customers and the advent of technology which have given way for the production of environmental friendly cars at cheap rate which almost every one can afford and, also Driverless cars are going to be a reality in the mid-term future, which will be a market disrupter.
But it should be noted that this industry will keep blooming if precautions and prospective drivers are trained professionally for the job. Urban congestion is becoming a major problem in the largest cities (where taxis are most prevalent). Most local governments are aggressively pursuing expansion of public transportation and are going to continually raise taxes and license-fees for conventional taxis, which will shift the market size accordingly
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographics and psychographics of those who need and enjoy the services of taxis cannot be overemphasised. Taxis are major or rather daily amenities needed by all individuals ranging from the high and mighty down to school kids.
It can be argued that almost all average earning families have car(s) but do the cars see to all their mobility needs all at the same time? It is a pure fact that all adults and most teenagers have boarded taxis in their lifetime not putting into consideration the many times, intervals or frequency.
The taxi business serves both the able-bodied and the physically challenged; in earnest the taxi industry has no specified age bracket or social status that patronize the business, but all individuals who with a need to be somewhere at a particular time.
3. Decide What Niche to Concentrate On
The taxi business is an interesting business with good niche taxi business ideas for focused and zealous individuals. Most people who venture into this business target the normal plying of customers from location to location without considering or researching other niches that can put foods on their tables.
The taxi business in this age has gone far beyond the normal taxi calls and services we all accustomed to. Niches in this industry that are available for individuals who would want to venture into the taxi business include;
The Level of Competition in the Taxi Industry
Even a layman sitting by the roadside watching the sun would be able to concur wholeheartedly that the amount of taxis plying the road are increasing with each day – which can attest to the fact that the taxi industry is booming, and with success and profits comes competition.
The taxi business is a competitive industry just like any known business industry in the world, it is not a business idea for an individual who is not ready to work his/her hands and get paid. An individual willing to venture into this business must examine some vital information and requirements in other to be able to stand its competitive market.
4. Know the Major Competitors in the Industry
Many names have nominated this industry and small companies are also striving to overtake the big names and shine with the sun. The taxi industry just like many industries in the world is filled with Competition and the struggle for survival. List below are few known names in the taxi business
- Ace cab
- Comfort taxi
- Red Cab
- AAA cab
- Ascot taxi service
- OLA cabs
- Asociación Radio Taxi Iluchmajor Arenal
- South Kerry taxi
- Belek Transfers
- Taxi Alessandro
The economic analysis of the taxi business differs because the taxi market looks very different in each unique country/region (different regulation, ownership structures, urban taxes, infrastructure, etc.) and is undergoing constant change.
A taxi business is not a business you can just wake up one morning and decide to venture into. It requires thorough research of the industry, proper preparations and enough incentives to be able to flourish and get profits.
5. Decide Whether to Buy a Franchise or Start from Scratch
Most taxi business owners started from the scratch but it is not a guarantee that to venture into the taxi industry one must start from the mud. Starting a business from the scratch or buying a franchise has its own advantages and disadvantages.
The taxi business is a goal oriented business and a competitive business where big fishes are swimming deeper and the little ones are struggling to grow bigger. Innovation, commitment and Brand popularity are important incentives that can guarantee success in this industry and only buying into a franchise can provide that easily.
No doubt starting from the scratch gives you proper control over the growth and size of your business, but it will take more time, struggling and commitments before you be able to stand the sinking Sands and attract the service users.
Taxi business has gone beyond cabs plying the cities in search of passengers, and buying a franchise will give a focused individual a befitting foundation to be able to build and construction a business that can flow through time amidst its competitors.
6. Know the Possible Threats and Challenges You Will Face
No business in this planet of ours can be easily started. It takes calculated research, struggles and innovation to be able to build a business. The taxi business is a business for individuals who are strong willed, patient and calculative.
When starting a taxi business, the price of gas and vehicles are major problems you’re expected to face. The high cost of petrol, diesel or whatever it is vehicles run on these days, is high but the introduction of fuel savers in the vehicle world can help reduce fuel consumption in vehicles.
Secondly, fees and taxes can also be a challenge to someone hoping to start a taxi business. Some of these fees include parking tickets, toll fees, licensing fees and several other fees and taxes required by the government. A good way to solve this challenge is to incorporate these expenses in the prices you would be charging your customers.
Another challenge or problem when starting a taxi business is the cost of keeping the cars running and in good condition, you would have to maintain it regularly and this costs money. That’s why you must buy cars that are suitable for the taxi business with respect to reliability and affordability.
In the same vein, cars break down unexpectedly sometimes and this might just mean goodbye to that day’s income. Insurance is also another issue as most countries would require you to have motor vehicle insurance before you can run a taxi business.
Another challenge when starting up a taxi business is the issue of dishonest drivers. Some drivers are simply not straight-forward and would look for ways to short change you with every chance they get. There have even been cases of drivers running away with their employer’s vehicles.
To guard against such events, you must make sure each driver you employ has a guarantor who would be held responsible for any damages. You can also install car tracking devices on all your taxis.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Several factors should be considered when choosing the best form of business ownership when starting your taxi business. The type of business structure you choose will affect the way you file paperwork, face personal liability, pay taxes and, if necessary, file for bankruptcy protection.
In the taxi business just like any other industry in the world, you have five basic choices: a sole proprietorship, a partnership, a limited liability company or a corporation–either an S corporation or a C corporation.
In starting a taxi business on a small scale, the best legal entity is the sole proprietorship because it is Easy, Inexpensive, gives you the complete control of operating decisions and also gives you the control over Generated income. It is also easy to dissolve if the business does not go as planned.
For a medium or large scale taxi business, the LLC is the best legal entity becomes it provides Limited liability, less record-keeping and paperwork, and fewer restrictions on profit-sharing.
8. Choose a Catchy Business Name from the ideas Below
It is always good to start a taxi business with a very catchy name. If you are wondering about the type of name to use, then are samples to choose from.
- Pick-me-up cabs
- 24/7 cabs
- Pick and drop motors
- Blue express
- Metro cabs
- Safe drivers
9. Discuss With an Agent to Know the Best Insurance Policies for You
In operating a taxi business, you must purchase some basic insurance to cover your customers and innocent bystanders in case one of your drivers causes an injury or property damage. Driving is one of the most dangerous hazards, with over 5.8 million auto accidents last year resulting in 2.3 million people injured. Operating in this high risk industry, insurance provides a safety net in case an accident or some other unfortunate incident happens.
- Taxi insurance (private and public hire taxi insurance)
- Auto insurance
- Public liability insurance
- All drivers’ policies
- Business insurance
- Employer’s liability insurance
- Health insurance
- General liability insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
With competition come innovation and idea; and with innovation and idea comes the need for an individual or a company to protect its intellectual property. Intellectual property protection in the taxi industry just like any money making business is about protecting the time, money and effort you put into your business.
It helps you to protect what’s yours, translate your handwork and ingenuity into profitable returns, set yourself up for growth or business expansion, keep competitors away, ensure you’re not fringing in anyone’s right, prevent employees from aiding and helping your competitors, attract investors and also promote your business to investors or potential buyers. Intellectual properties in the taxi industry may include
- Registered and Unregistered trademarks – Your brands name of logo.
- Patents – typically a new way, process or material invented as a business innovation
- Company secrets
- Secrecy agreements – contracts that keep valuable information safe
11. Get the Necessary Legal Documents You Need to Operate
You cannot just wake up; pick up your car key and start picking and dropping off passengers. Every business has due processes, proper documents and permits needed in order to run its day to day activities. The taxi business sure is lucrative but it is very important to Adhere and follow all laws to avoid penalties. Documents needed for a taxi business differs from state to state, but here are few well known legal documents needed to avoid penalties and fines.
- Vehicle permits
- Vehicle for service permit
- Security badge for airport taxis
- Proof of Insurance
- Drivers form
- Business permit
- Commercial driver’s license
12. Write a Business Plan
Yes starting a taxi business requires thorough research and consideration penned down as a business plan, not just for keeps but as a reminder of what the business is all about, the goals laid down and the set procedures to achieve them within a particular period.
A detailed business plan for a taxi business should start with an objective of the taxi company and goals, its missions and achievements, highlights of the taxi company, its business description and a detailed strategy of achieving the company’s goal.
The business plan of a taxi business should be able to describe the service it intends to give and set its criteria and priorities right. Discuss its market and potential competitors. A taxi company prepared to venture and conquer the taxi industry must have a marketing plan and management summary which should be inducted in the company’s business plan.
It should also be able to carefully explain its financial plan, cash flows and its projected profits or losses in other to work accordingly and strive to make more of profits. Business plans for new taxi business must be kept simple and considerate – within an achievable time frame.
13. Prepare a Detailed Cost Analysis
The exact costs of starting a taxi business will depend on the area where your business is located and the size which you intend to start up with. Starting up a taxi business can never be easy but for the purpose of this article, here is detailed cost analysis for a small scale taxi business.
- Vehicles – $15,000
- Equipment like top lights, meters etc. – $700
- Licensing – $800
- Insurance – $300
- Lease of garage, offices etc – $2,000
- Gas and other incidents – $700
- Miscellaneous like calibration, installation etc – $500
From our promiscuous study and research, the amount required to start a small scale taxi business is estimated at $20,000. Medium scale taxi business at $190,000 and a big scale taxi business estimated at $500,000.
14. Raise the Needed Startup Capital
No matter how great your ideas and goals might be, without proper and enough financing your ideas are just like water poured on a rock. Finance in the taxi business is a big ingredient that can move a business to the limelight and without a detailed business plan; a company won’t be able to land sufficient funds from prospective investors.
Securing funds for a business is not an easy task because no one would want to pledge his/her money in a business that can’t guarantee returns and profits. Basic ways of financing a taxi business includes:
- Funds from Personal savings
- Getting loans from families and friends
- Taking small business loans
- Getting microloans
- Attract an angel investor
15. Choose a Suitable Location for your Business
When starting a taxi business, one of the major decisions you have to make is to choose a suitable location for your business. In order to do this, you have to make a careful assessment of costs. The ideal location should be one where costs are minimised. You should be able to look at the benefits which each area have to offer as well as any government help which might be available.
A suitable location for your taxi business should have easy access to all major routes in your area and enough parking spaces to safely store all your vehicles. A location for a taxi business or a dispatch office for your taxi business should be easy to locate, convenient for the taxis to be refuelled and repaired. Centrally located sites are best if you will be serving your entire city.
16. Hire Employees for your Technical and Manpower Needs
Though a taxi business can be started and managed by one person (most company owners serve as drivers), it doesn’t necessarily mean that the taxi business is a business for just one individual. Yes the size of a taxi business is the main factor that decides the manpower needed for the business.
The advent of technology have shut down the excess need of manpower in this business world or rather have changed the requirements or individual needed for the job. In this our age and with the introduction of mobile applications into the taxi industry, costumer care representatives are being replaced by programmers and Web designers.
The taxi industry is strongly being taken over by technology and science. It is no longer the old human to car industry we are accustomed to but now an industry that is going through positive change to be able to provide unadulterated services. Few equipment which is needed to start a taxi business include;
- Dispatch systems
- Top lights
- Taxi meters
- Electronic transaction systems
- Taxi driver protection screens
- Safety cameras for taxis
- Decals, labels and livery
A taxi business can be started from the comfort of your backyard and doesn’t necessarily need all the above to be able to flourish, but for a medium and large scale tax company, all these equipment are needed to be able to checkmate and protect your drivers. A taxi business is sure lucrative but it requires preparation and thorough research.
The Service Delivery process of the business
The taxi business has no means of production or raw materials to manufacture but only peculiar services to render, Services that are built on the movement of man from a location to another. Taxis don’t only transport able bodied humans but also sick individuals in terms of health taxis. Taxis also function in the various transport methods like the water and air taxis.
The service provided by the taxi company cannot be stretched. It simply begins with the need of a customer or goods to be at a particular location at a given time. The customer can simply wave/flag down a taxi, call a taxi company, stand at a taxi stand, or use the technology inclined taxi app to ask for services. Then the information is processed and a taxi driver picks up the passenger and drop at the agreed location.
17. Write a Marketing Plan Packed With ideas & Strategies
Venturing into the taxi business is not a decision you can make in few hours and start the next day. Competition and technology have moved the taxi industry to another level and only hardworking and creative individuals would be able to catch the lines and flow with time.
Creativity pushes you to search for ways to make a difference in the taxi business; it gives you the adrenaline needed to create innovations that can sour the business up high. For the sake of this article and this articulated research, you need to consider the following;
- Push out your brand name to be able to survive
- Consider making up business cards or magnets you can give out so people will have your number handy and at the ready when the time comes for a taxi to be called.
- Create relationships with repeat customers and with people who call taxis often (like bar owners or hotel managers) and maintain those relationships, you’ll likely find yourself with a steady stream of business.
- Talk to local bar owners and see if you can make a deal with them to be “on-call” for customers who have too much to drink.
- Drive your taxi to these locations and join the line of waiting taxis or if there are special requirements. Sometimes, airports especially will have specific “airport taxi services,” but this is not always the case. Looking for ways to make you taxi unique and attractive to be able to attract the attention of customers would be able to make you stand out in this marketing idea.
18. Work Out a Reasonable Pricing for your Services & Products
Right product pricing in the taxi business can be achieved through the proper billing of passengers. You should be able to inculcate your expenses into your billings without making it seem so exaggerated or expensive for your customers.
Also in other to avoid losses and over charge, you should be able to maintain your vehicles and equipment to avoid total break down and cost. Insure constant renewal of your insurance to cater for some mishaps and accidents. Also try using fuel savers to help reduce the amount of fuel being consumed by your vehicles.
19. Develop an Iron-clad Competitive Strategies to Help You Win
Most people who see competition in their business as bad omen have failed and crashed but people who saw it as a need to improve and create a stand has survived. Competition is what brings about ideas and creativity. Without competition, the taxi business would be boring and will lack new ideas and orientation, and no one will strive to satisfy the general public.
Strategies to be able to win your competitors in the taxi business involve you identifying a void or an opening in the taxi business and filling it. A business doesn’t necessarily have to be revolutionary in order to succeed. Rather than struggling to come up with a brand new idea, take a look at the industry and see where there’s a void to be filled.
Also, another strategy to defeat your competitors is to create a customer-centric culture by teaching your drivers to be show and exhibit hospitality and friendly personality. To understand costumers need and listen to complains.
In other to win your competitors, you will need to create an advantage and strive not to compete on prices. People might be happy to pay cheap fares but most people would take into consideration their comfort and happiness to the price they pay.
A competitive and crowded industry indicates that customer demand exists, and that the market is viable. If you carve and grow your ideas, there will be room for your taxi business.
20. Brainstorm Possible Ways to Retain Clients & Customers
The major reason why customers tend to stop patronizing your taxi business is because they are dissatisfied with your services. Proper service production and acknowledgement can keep your customers loyal and within reach. Success is not a key on a keyboard but a target for all business franchise.
Satisfy your customers by making them part of the business. Make the feel like they own the business by being passionate about them, listening to their ideas. Also teach your drivers to show hospitality and respect your customers. Your drivers should always be punctual, foster positive relationship with costumers.
21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
As a focused entrepreneur, you have to know that just having a brand alone is not enough. To win over customers you need to make sure you shout about your brand and get your name in front of as many eyeballs as possible. It takes planning and innovation to be able to push your taxi business to a point where people can easily identify it and patronize you.
Ways of boosting your brand awareness and creating a corporate identity in the taxi business may include;
- Use the web to promote awareness of your taxi business by developing a website. Hire a search engine optimization company or learn the process on your own to ensure that your website appears high in Web search results. Contact website owners in related industries to see if you can place ads on their websites.
- Create a social media presence – social media sites such as Facebook and Twitter can be vital tools in developing brand awareness in the taxi business because they serve as forums where consumers discuss their lives, including their activities and items they like. When a customer enjoys the services you provide and tell people about it, she/he is doing free work to increase your brand awareness for you. The easier you can make it for people to provide a link to your company so others may follow, the more people will become aware of your brand.
- Advertise using traditional methods like the newspapers and magazines. You may be able to use the declining significance of print publications to your advantage by negotiating a lower advertising rate. Create attention-grabbing advertisements that prominently display your taxi business and explain its value and services. Contact local or even national publications and work with their advertising departments to insert your ads in the most prominent way possible. Select publications that appeal to your customers.
- You can also Sponsor public events. If you host or contribute to a charity event, such as a golf tournament, you can prominently display the name of your company to consumers with disposable income. In addition to the benefit of having your name or logo in front of these potential customers, your company and services may be seen in a favourable light for contributing to charity.
- Contact local charities you support to gauge their level of interest in your sponsorship. Suggest events such as milestone celebrations for long-running institutions or weekend family events that would generate buzz and publicity both for the organization and your taxi business. Network with business leaders, local politicians and media sources to broaden the reach of your product.
It is also important to note that the general attitude of your drivers can serve as a means of boosting your brand. If your drivers are termed as having friendly personalities, it will be a stepping stone for your business to flourish. Train your drivers and workers to understand the human psychology and strive to keep the consumers happy.
22. Create a Suppliers/Distribution Network
It can be argued wholly that the taxi industry has no Suppliers/Distribution Network because no raw materials are being sourced from a supplier and refined to be able to meet with the needs of the costumers. But the business world has gone beyond those ideas.
The cycle of the taxi business has always been about passengers waiting or flagging down a taxi but with change having taken over the industry, one can easily hail a taxi using the technology in their pocket: the Smartphone.
The world is being changed by technology and the taxi industry is not left out. The Supply and distribution chain of the taxi business is now directly between the passenger and the driver, with technology being the middle man that makes to Business smooth and simple.
23. Tips to Run a Taxi Business Successfully
The problem with most entrepreneurs in the taxi business is that they strive to be like others. You can’t make money and be successful if you are “just another taxi company.” If you are like everybody else, you will be making same (ordinary, standard) money as everybody else. If you want to be more successful than an average taxi business owner, you need to stop being one of them.
To run a successful taxi business and prevail, you need to create a new and unique marketing plan different from what others are doing. You need to bring your creativity into your business. Define your taxi business niche and go after your targeted costumers. Have good fleets and maintain them right from the exterior down to the interior. Also, make sure it also includes the features customers vie for.
Also employ professional and well trained drivers because your drivers represent the company in the field. You must look into hiring licensed, trained and courteous driver who can deliver high quality service for your customers and not the Van diesel kind of drivers.
You need to keep building your business reputation, a solid reputation that customers can trust; you need to have authenticated registration to that state regulatory body and license from the concerned authorities. But the recognition of your taxi company shouldn’t just depend on licenses but on the good quality service you provided.
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