Congratulations! You have decided to take over your financial freedom by becoming an entrepreneur. Good for you. A car rental business, like any other business, needs you to do some heavy research and fact finding to make sure you become a success.
The car rental business is a very lucrative business, especially when you are located in a strategic place (a city with huge population, commercial centers and entertainment outfits). However, I must point out the fact that a car rental business can be capital and management intensive.
Starting a Car Rental Company – Sample Business Plan Template
The first thing you need to do is to carry out a feasibility study. The results of this study would help you determine the advantages and disadvantages of starting the business as well as analyzing the risks involved.
You need to know your target market and approximate your rate of success in this field. You need to determine if you would just be a general car rental operator or if you would offer specialized services. Conducting feasibility research will further reveal to you:
- How to determine if this is the right business for you
- What your start‐up and supplies needs will be
- How to assess local markets, estimate demand, and attract customers
- What licenses and permits you will need
- How to project annual revenues and expenses.
- Who are your competitors and what challenges do they face?
- How can you turn these challenges into business opportunities for your new business?
When conducting your market assessment and research, you must remember that your overriding goal is to understand your potential customers better. At the end of the process, you should be able to answer these key questions:
- What potential customers already exist in your region and/or community
- What are these customers willing to spend money on?
- What price sensitivity do these customers have?
- Who is your typical customer (age, gender, education, income, occupation, etc.)?
When you can answer these questions, you will be able to come up with ways to overcome these challenges to starting the business, learn how to enter the market and apply these solutions to creating a niche market that can support your business.
2. Choose your car rental business model
This is a very important step in the process of starting a car rental business. What level of service will you offer your clients? What brand or class of cars would you focus on? Will you focus on regular cars or luxury cars? Will you target business people or tourists / travelers? Well, only you can answer these questions.
3. Create a Unique Selling Proposition (USP)
When you decide to start your car rental business, you will need to ensure that it has something different about it, something special. The importance of having a USP deals with unique selling propositions, and how you need to set yourself apart from the crowd.
In discovering and developing your own USP, you need to create a brand for your business. Whatever business you decide to launch, it needs to stand out from the competition. If your business is identical to your competition, then you will be forced to compete on price alone, and that can be a tough fight especially if they are well established and you are fighting for market share.
4. Register a Business Name
The first thing to do is to register a business name. What’s in a name? A great deal. The name has to work, it has to do its job, and it has to fit. Your customers have to understand it and should explain enough about your company. Make your name easy to say and spell.
A business plan is a tool that helps you think through the many aspects of starting up and running a rental business. Writing a business plan helps you define why you are going into this car rental business, and keeps you focused as you start operations.
When you develop a business plan, it takes you methodically through various elements of the business, helps you decide if a car rental business is worth your time and financial investment; and identifies alternatives and strategies for achieving success, thereby improving your probability of success.
A business plan will also help you know what equipment you need to start a car rental business and the state of your finances and assets you need to start the business.
6. Start the business
You need to know how many cars you need to purchase to start off and you need an office where you have your business base. You need to know if your business would start up with new cars or fairly used cars. You need to decide where you can purchase these cars either through hire-purchase or if you have the funds through direct purchase.
7. Get the necessary license and insurance cover
You need a business license, fire department permit, insurance and zoning requirements. Rental business insurance concerning cars is different from general car insurance and you need to pay particular attention to the insurance conditions and requirements.
The cars involved need to be in good condition to get adequate insurance cover. Concerning customer expectations, you will need to make the following decisions:
8. Determine your operating hours
Rental business should be open for all scheduled hours, and you should post the schedule where customers can see it.
9. Decide your pricing rate and how you will accept payment
How much would your car rental service cost? Are you going to charge hourly, daily, etc? Will you accept cards and checks as payment? Will you accept out‐of‐state checks? You have to sit and figure this out.
9. Market your car rental business
Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably. A marketing strategy is something that affects every part of your new business. It is about using everything that a business does to create value for others. This includes customers but it also benefits employees and shareholders.
The main purpose of a marketing strategy is to set out the means by which agreed marketing objectives are to be achieved. In these tough economic times, small businesses need to stand out from the crowd, and more importantly look professional.
You will need to create on online presence with advertising directed towards your target market. The immediacy and openness of the online world is driving consumers toward businesses that are human, have personality and are open, honest and transparent.
Once you are through setting up your business and the legal, financial and insurance activities involved in the business, you need to decide how you would run your daily activities in the business.
Research about how to create a client contract form, setup the payment modes you want to collect from your clients, decide if you would create an online hire portal and remember to always create an easy hire solution for your clients. The above guidelines should help you on your way to start your own car rental business.