Despite stiff competition from rideshare apps, the global taxi industry is still predicted to grow from $83.0 billion in 2019 to $94.4 billion in 2023. This indicates that there will be plenty of opportunities for success in the transportation industry in the future.
If you’re thinking about starting a taxi business and want to take advantage of this anticipated industry growth, you will have to develop your business plan carefully and work hard to stand out from the competition. We put together this guide to starting your own taxi business in order to help you understand what it takes to be successful.
Benefits of Starting Your Own Taxi Business
In addition to the projected industry growth, there are many other benefits to starting your own taxi business. First and foremost, you’ll have the opportunity to be your own boss, which is the ultimate dream for many people. As the owner of your taxi business, you can have a more flexible schedule, enjoy a better work-life balance, and exert more control over your own day-to-day. Additionally, there is potential to earn a comfortable living as the owner of a taxi business. In the United States, the taxi industry is made up of about 7000 establishments with about $6 billion in combined annual revenue, and there are no major taxi companies that dominate the industry. Lastly, thanks to technological advances, managing operations, and communications for your taxi business has never been easier.
An Introduction on How to Start a Taxi Business
Starting your own taxi business from the ground up is no small undertaking, but it can be incredibly rewarding. As an introduction to how to start your own taxi business, below is a quick summary of the key steps you’ll need to take:
- Research the market and create a business plan.
- Apply for a loan or seek investors, if needed.
- Register your business and obtain a license.
- Purchase vehicles and equipment.
- Register vehicles with the DMV.
- Invest in comprehensive commercial taxi insurance.
- Find the right tools and technology to manage operations and communications.
- Market your services to your target customers.
- Hire drivers (or drive yourself).
- Get to work!
Of course just starting a business doesn’t mean it’s going to be successful. You’ll need to plan carefully and be strategic in order to make the investment worthwhile, especially with the high level of competition coming from rideshare apps such as Uber and Lyft in recent years.
Important Considerations When Starting a Taxi Business
Before starting a taxi business, you should carefully consider the following questions:
Where will your business be located? When it comes to any type of transportation business, location is a key consideration. You should do careful, location-specific market research on several cities or towns and compare the opportunities and challenges you foresee. Although your first instinct may be to open a taxi business in a large city with lots of airports and hotels, you have to consider the fact that there will likely be many other taxi and rideshare companies you’ll have to compete with. On the other hand, more rural communities tend to be less likely to use rideshare apps, so you may have less competition.
What type of transportation service or vehicle would be best? Think outside of that little yellow box and consider all your vehicle options, not just taxis. Other types of transportation companies you can start include limo, town car, livery, shuttle bus, and non-emergency medical transportation (NEMT) services. Each of these businesses have different clientele and opportunities that will factor into the location of your business.
Who is your ideal client? What is your target market? If you can find a niche market and advertise your business successfully to that market, you’ll be much more likely to succeed. Narrowing your focus helps give your business a sense of direction. Keep in mind, you can always grow and expand your market later on, but it’s generally a good idea to start small and work your way up.
How will your business keep up with and stand out from the competition? First, you need to understand who your competitors are and how they do business. Think about what you can offer that is special or goes above and beyond the norm.
How will you protect your investment? Starting your own taxi business requires putting money into purchasing vehicles and equipment, getting your business licensed and registered, hiring drivers, and more. Don’t allow your hard work and financial investments to be derailed by not protecting your taxi business with proper insurance. We’ll explore your taxi insurance options in more detail in the sections below.
These are just a few of the crucial questions you should keep in mind as you create your taxi business plan.
Tips For a Successful Taxi Business
As you go about starting your taxi business, keep the below tips in mind:
Creating a detailed and strategic business plan is essential. This business plan should include a market analysis and a careful financial plan. You may also want to conduct a SWOT assessment, or analysis of your business’ strengths, weaknesses, opportunities, and threats. If you can create a flexible and adaptable business plan it will help you stay agile and competitive.
If you don’t hire the right people for the right jobs, even the best-laid plans can fail. For example, if your drivers aren’t committed, you’ll end up focusing too much of your attention on managing, supervising, and scheduling them. Frequent turnover is extremely time-consuming and can cause major disruptions for your customers.
Internal communication is key. Ensuring good communication between the operator and your drivers will result in better teamwork and less frequent delays for your customers. There are many technologies and tools available that you can use to streamline communications within your business.
Focus on creating a customer-centric experience. Put yourself in your customers’ shoes frequently and try to see things from their perspective. For example, nowadays, customers value convenient, mobile booking and payments. Also, consider creative ways to keep your customers coming back, such as loyalty schemes or reward programs.
Establish community partnerships wherever possible. You should try to partner with airports, hotels, restaurants, and bars and make sure your transportation services are promoted and available to their customers.
Don’t underestimate the power of marketing! Be sure to develop a marketing plan that includes social media marketing, as this is the wave of the future. Great marketing will help you stay competitive, reach new customers, and retain your current customers. Consider using your vehicles to advertise your business while you’re on the road.
Invest in comprehensive taxi insurance to protect your business, drivers, vehicles, and passengers. Why is this so important? Learn more in the section below.
Insurance for Your Taxi Business
Taxi businesses face significant risks and hazards on the road each and every day, which is why insurance is absolutely essential. Standard auto insurance can’t protect your taxi business from all of these risks, so you must invest in comprehensive commercial taxi insurance, which will not only cover accidents or injuries to your customers, but to your drivers, your vehicle, and even your income through a business interruption policy. There are different levels of taxi insurance to consider for your business, but it’s recommended to choose the most comprehensive coverage you can afford in order to avoid being held liable for accidents or injuries that will inevitably occur over time. The most comprehensive taxi insurance will typically cover accidental damage to a third-party property, as well personal injury, windscreen damage, personal possessions, and more. As an example, if your driver were to cause an accident, this level would pay for the damage to the other vehicle as well as your car and any third property damaged. There are other add-on options to consider as well, such as: unlimited mileage, public liability policies, or personal use coverage.
Investing in high quality insurance will help you avoid problems down the road and provide you with priceless peace of mind as a business owner.
How to Start a Taxi Business: Your Next Steps
If you are ready to get started on your taxi business, or any other type of transportation business for that matter, reach out to our knowledgeable agents for help with any and all of your commercial taxi insurance needs. We provide low rates and excellent personal support for taxi, limousine, and non-medical transportation companies. To protect your business and get covered, call us at 541-223-5222 or request a taxi insurance quote online now!
