Before starting a taxi business in your city or town, you need to find out how many cab services there already are and determine whether or not the sector can accommodate a new firm. Below we discuss this and provide you with a guide to risk management. We will also explain the fare tariff and the options for taking bookings.
The Competition
Your main competitors will be other cab firms in your location. This includes stretch limos and vehicles for private hire. Minibusses will be a challenge if you want to cover fares to nearby airports. All public service vehicles can limit opportunities in the industry. Passengers often prefer to use the public transport system as it is cheaper. They may come together with colleagues to start a car club.
Any alternative to taxi services will decrease passengers available to travel with you. Driverless taxis are appearing on the horizon and could be an option for fares within the next ten years.
Risk Management
Many aspects of starting a new business (of any kind) will cost you money upfront. One of the biggest expenses will be private hire insurance. You can use a comparison site to determine how to minimize this monthly payment. Other risks are fire and water damage to your business premises, loss of stock and equipment, and theft.
You also need to be insured against liability suits. If you plan on having several drivers working for you, they and their vehicles must be insured. The business covers injured on-duty incidents, so make provision for this, as costs can be huge. For example, you may have to pay an employee if they can no longer work after an injury or while carrying out legitimate business tasks.
Deciding On a Fare Amount
The initial outlay will concern installing taxi meters in your cars. In the UK, some cities decide on the fare, and you must simply accept the given rate. It will comprise a set charge plus an amount calculated on the trip’s distance and time spent waiting for the customer. Day and night tariffs may differ. Some authorities review this annually and increase the fare amount accordingly.
In towns where the licensing department lets years go by on the same tariff, it may become too costly to sustain the business as you will lose profit and have to rely on this income to cover all your expenses. Tips from customers who were pleased with your service will provide an extra income stream. You can check your local taxi tariffs and stay abreast of changes online.
Taking Bookings
Radio circuits will manage all your incoming requests and contact you via radio to inform you of a passenger needing your services. They will charge you every week.
The software allows you to set up a mobile app on your phone. Customers can schedule a taxi completely online. You can use GPS to reach their location, having received the booking on your device.
This guide will assist you in calculating your income and expenditure.
