Are you one of those start-ups who want to set up their business in the car rental industry but finding it hard to get it run smoothly? Well, if this is the case, you are not alone, as lots of new businesses handling a car fleet and contracting vans face the same issues. Here are a few tips for a car rental startup.
 From handling staff performance to revamping your business model and changing your strategy, there are a lot of challenges that a new business must deal with. Therefore, it is always better to learn from the professionals and address the problems before they become a huge problem.
Tips for a car rental startup
Create a plan for your Business
This is one of the important tips for a car rental startup. A clear plan is important for achieving success as an entrepreneur. It will help you to map out the details of your business and find some unknowns. Some of the few important topics to keep in mind are:
- What are the startup and current costs?
- Who is your target audience?
- How long will it take to break even?
- What will be the name of your startup?
What are the costs involved in starting a car rental business?
The business will need a fleet of vehicles, an office, printers, computers, a high-speed internet connection, payment of incorporation fees, insurance for automobiles and business, vehicle maintenance devices, a closed-circuit camera system, employee salaries/ wages, and marketing efforts.
What are the current expenses for a car rental business?
Considering the present expenses of a car rental business is one of the important tips for a car rental startup. Ongoing expenses include employee salaries, utilities, insurance, the addition of new vehicles to the fleet, high-speed internet, maintenance of the website, and marketing. The lowest level of staff will earn between $8 and $12 in an hour. An on-site mechanic will command a salary between $35,000 and $70,000. Bring a marketing expert on board and he will need an annual salary of about $30,000 to $65,000. The same salary rate is applicable to an accountant and web designer. Insurance is important for safeguarding your business and automobiles. Keep aside at least $500 to $1000 every month for this expense.
Utilities including high-speed internet will run numerous hundred dollars in a month. You can buy or lease vehicles that will be included in the fleet. You must look forward to adding a new car every couple of months so have at least $20,000 to $30,000 with you for such a buy. Conclude this cost across the whole year and new additions to the group will probably cost around $100,000 every year if purchased completely. Servicing the vehicles will generally cost between $500 and $1,000 or more a month, based on how many customers you have. The rent of your office will be probably between $700 a month and several thousands of dollars every month. Allocate about $500 to $1000 every year for website enhancements. Nearly $500 per month for advertising.
Find out who is the target customer?
The ideal customer is a business that needs several car rentals for employees. Another popular customer persona is a unit of business travelers who are interested in spending a good amount of money on car rentals while they are away from their homes.
Establish a legal entity
This is one of the important tips for a car rental startup. Forming a legal business entity like an LLC prevents you from being personally responsible if for any reason your car rental business is litigated. There are large numbers of business structures to select from. You must also consider using a registered agent service to help you safeguard your privacy and stay compliant.
Open a business bank account
Using a dedicated bank account is important for protecting personal assets. When your business and personal accounts are combined, your personal assets, including car, home, and other valuables are at major risk if your business is litigated.
Buy a business credit card
This helps you to differentiate your personal and business expenses by putting all your business’ finances in one place. It also builds your brand’s credit history, which can be of great use to raise investment and money in the future.
Revising your business model
It is practical to start with the foundation blocks. Therefore, it is significant to bring some changes to your business model and address the problems. Just spend some time in evaluating factors like vehicles, customers, market, competition, manpower, growth scope, and latest technology. Your business model must be well-equipped to handle the changing market. Ask yourself, does your business still generate value? If not, then it is time to revamp.
Keep a track of the numbers
Keep in mind, an obsession with the numbers is great quality. There is no way that works better for performance management than keeping a track of the numbers repeatedly. In addition, numbers are not only top-line expansion and competitive comparisons. There are several things to consider while making your decision, including an average rental length, utilization, revenue per user, and several other metrics.
Information about your fleet of vehicles and customers
In the car rental business, two things are important: knowing everything about your car and customers. If your customers perceive that a used car in good condition is good, you can always give it a try. Secondly, you should always keep the rate in check to keep yourself as a competitive and fair price.
Have a disposal plan ready
As a car rental service company, having a disposal plan is significant. When the time is perfect and the after-market is ready with a correct rate, you must be prepared to dispose of the car that has become over-used.
Keep in mind the dangers
For a business using a kind of fast depreciating asset like vehicles, it is significant to spend some important time on subrogation. Are you sure you are making the correct claim to the insurance company at the right time? It has been a neglected area for several car rental firms, and you must stay clear of making mistakes too.
Pay importance to advertise
Can any business survive and maintain expansion without any sales and marketing? Just like any other kind of business your car rental organization should give utmost significance to marketing. Advertising is important for any business. You must inform your customers about the USP of your organization, products, or services. One of the best forms of advertising in this current age is digital marketing. You must have a website for your car rental startup.
Do not hide anything from your customers
A complete disclosure of the rental agreement without hiding anything from them will make sure the customers get complete customer satisfaction.
Tips for Non-Car Owners
How will you start a car rental business without a car?
It seems impossible to start a car rental startup without owning a car but is quite possible and much simpler for those who own a car. All you need to do is build and operate a magnificent car rental app. You can even outsource the app development work to an app development company. Â Find the best car rental app development company that can build a great app for your business.
How does the car rental app work?
A car rental service app acts as a platform for people who are looking for a car for rent (rentee) and for those who provide cars for rent (renter). The renters can register on your app and provide information about the vehicle. The customers can access your database of renters and choose the vehicle they prefer. You just need to provide the location of the vehicle to the concerned customer.
Follow these tips for a car rental startup and have a successful business.