How To Start A Taxi Service Using These Tips and Insights
November 16, 2020 303 views
In this post, you’ll find a large collection of handpicked resources written by various authors, giving you a broad overview of owning and running a taxi service.
Before you reach the resource section further down the page, I’d like to go over a few considerations about this type of service for you to review. You’ll get to the “how-to sections” in the resources. But before, you may want to go over these points to get you thinking about your startup phase.
Background About This Type of Business
Owning and operating a taxi service is an opportunity for those who like to drive, don’t mind traffic, and have good people skills.
As a driver, you always need to be on time.
You need to be able to get through traffic jams by knowing alternative routes during traffic jams. Your cab needs to be spotless, and you have to make sure your passengers feel safe and are comfortable.
Is This What You Want to Do?
One of the important points to consider when looking into a business opportunity is your dedication to the business. The startup phase is usually the toughest; you’ll be more comfortable running your business once you’re up and running.
You also need to consider the issues that may come up, like new competition, new regulations, etc. Once your business is up and running and bringing in revenue, that doesn’t mean your set for life. You need to always be prepared for changes.
When you’re dedicated to the business, you’ll always be ready to take on the new issues that appear.
Once you decide to get started, you need to be dedicated to your business. If you can’t see yourself running this business for the next few years, then what do you see yourself doing, and should you do that instead?
Getting Inside Information
If you want inside information from someone who is experienced running a cab service, you can use a technique to get you the trade secrets from qualified people.
Look for cab businesses that are for sale and interview the owners and pick their brains. This technique has two benefits.
One: You’ll get information from people that are qualified and have experience. You can ask questions and get answers to those issues you’re wondering about.
Two: You may find a good fit that allows you to start your business right away and start earning revenue from the day you take over.
With any business you are thinking of getting into, you need to do your research before starting. You must focus on the area where you are planning to start your service. Is there a lot of competition? If there is, you have to consider if it’s worth the time and effort to get into a saturated market.
Ask yourself the following questions:
How will you compete?
What can you bring to the market that will make your company stand out?
Why would people choose your service over the competition?
Competing on price may trigger a price war. An established business may have more leverage to last the battels compared to a newcomer. You need to consider if it’s better to locate your business in another location with less competition.
Another approach when dealing with a saturated market, you may be able to buy one of the businesses that you plan to compete against.
If there is no competition, then you may have discovered an untapped market. Or you may have found an area where there is no demand for what you have to offer. If there is no demand for the service, there is no use to operate in the area.
Can You Afford This Business?
Have you considered if you can afford to start your business? Becoming profitable takes time for a new business. Therefore, it rarely means the revenue coming in can cover your expenses right away just because you start.
In addition to startup costs, you have to consider that the business may not support you initially.
It’s tough for new business owners to get their business to a state of stability and profitability.
You have to keep this in mind, and if you are planning on getting financing for your business, you need to factor in your salary. Otherwise, you’ll end up with a lot of extra stress, trying to make ends meet with your business bills plus your personal bills.
Startup Cost Considerations
Your startup cost will depend on your setup. If you plan to have one cab and do all the work yourself, then your startup costs will be a lot less than starting with a large staff, a fleet of cabs, a commercial location, etc. To determine your startup costs, you need to define what type of setup. You’ll find more about startup costs in the resources further down the page.
You want to make sure your business is registered and legal. You can’t just buy a cab and start taking fares. Find out what you need and apply for the permits you need.
Getting a license for a cab in your area may be limited. Be sure to check with local authorities to see if cab licenses are available.
It’s very important to get the right insurance for your taxi. Since you are running a business and carrying passengers. You’ll need special coverage. You can’t use your personal insurance. Failing to get the right insurance can be devastating in case of an accident.
I’m a firm believer in getting more coverage than needed. The difference in price for the next level of insurance, in most cases, is affordable.
When you have coverage for any problem that may occur will put your mind at ease. After all, if we knew that no accidents would happen in the future, we wouldn’t need insurance, would we? But you never know what might happen; make sure you are covered.
Buying A Taxi
Before buying a taxi, you need to look at what type of routes you’ll be taking. For example, if you plan to do airport runs, you may want to look at a van to hold luggage and passengers.
If your routes are in a heavily populated city, you need to focus on a vehicle best suited for city driving, with good gas mileage and enough space to make your passengers comfortable.
You also need to focus on repairs and maintenance. You want a vehicle that you can depend on. You don’t want to be driving something with a history of problems. You want a vehicle with a great track record and can take commercial use wear and tear.
You may plan on getting a used vehicle to save money. And when starting out, you may need to do so. I would suggest once your business becomes stable, the first thing you want to upgrade will be your vehicles. You can’t afford to have downtime due to repairs. If a call comes in for a fair, you can’t tell them, I’m getting my cab repaired; it leaves a bad impression.
How Will You Operate?
There are many options and routes to take when starting a business. For example, will you run a one-person operation or hire a large staff and run a fleet of cabs? Will you manage the business? Will you be a driver or dispatcher. Or will you hire a manager and monitor operations.
You need to identify how you will run your business to make the startup process quick and efficient.
I recommend for any business you own or operate, you need a thorough understanding of every job. If your plan is to hire people while you monitor or manage, learn as much as possible about each position to better understand the business’s needs.
Home Business or A Commercial Location?
Will you locate your business from home, or are you planning on a commercial location?
If you have a one-person operation, you could start at home, which will slash your startup cost. Running from home will work if you plan to stay a one-person operation and not plan to expand your operation. You can always start small and expand.
Getting the Word Out and Getting Customers
How will you get the word about your Taxi service?
Use Your Cab as a Billboard
One of the best and low-cost means of advertising is your cab itself. Make sure your phone number and website are easy to see and read on your cab.
If you accept email and Text calls, you want a number and web address that’s easy to remember.
You could give each passenger a business card offering a discount on their next fare.
You could also start a point system for customers who regularly use your service to give them a free fare for every ten paid fares.
Safe Ride Home
You could drop by local bars and restaurants and give them your contact information for people that may have had too much to drink and need a safe ride home.
In return, you could recommend their business to people that are looking for a restaurant or bar.
Direct Lines From Other Businesses
You could have a direct line in local establishments that require cabs daily. For example, our local Wal-mart has direct lines at the entrance to cabs in the area. If you are a one-person operation, you may not be able to handle the volume because you are dealing with one fare at a time.
Next – To the How To’s and Insights
It’s time for the resources I mentioned at the beginning of this post. Take some time to go over the resource sections. If you spend a few hours sifting through the information, you’ll gain a lot of knowledge and information. You may want to split it up over the next few days so you don’t get overwhelmed.
A Collection of Resources Related to Starting a Taxi Service
Disclaimer: Information on this site is intended for educational purposes. The publisher and authors are not liable for any damages or losses associated with the information contained on this website.
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