If there is one thing people need when out on vacation or business, it is transportation. A car rental company serves a real need that is unlikely to diminish in the future. While meeting such a demand makes starting your own car rental business sound like a fool-proof plan, there are other factors to consider before opening the doors of your new venture.
Before you ever start scouting locations or building a fleet of vehicles, be honest with yourself about your potential to find success in this industry. While the concept of making money on car hire is quite simple, there’s a lot more to it than handing out keys and collecting cash. What follows should help you make a decision about your business.
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Part 1 of 2: Consider the pros and cons
Step 1: Consider the pros and cons. Whenever you plan to start something new that will be a great project, you should consider its reasons.
Here is a table to give you an idea of the positive and negative aspects:
If you are determined to start your own car rental business after conducting research and creating your own pros and cons, it is important to follow the right steps.
This ensures that all of your needs are met before you encounter hurdles, such as a renter having an accident in your car or receiving a customer complaint. While such issues are inevitable in this industry, do your best to be prepared and handle them in a smooth and professional manner.
Part 2 of 2: Create your business
Step 1: Determine your rental format. There are two primary formats in the vehicle rental industry: daily rental and contract rental.
Daily rentals appeal to vacationers or anyone else with short-term needs and usually cater to individuals. Leases are more of a long-term nature with monthly or annual contracts that often meet the needs of a business.
While it is possible to offer both types of rental, most companies choose to specialize in one or the other. Assess the needs of your region and your competition to help make a decision.
Step 2: Determine a location. Search for available real estate near where your clients are likely to be, such as airports, bus stations or hotels.
Keep in mind that your customers will only be able to reach you to a limited extent, and – even if you offer a shuttle service – the shorter the travel time, the better.
Also consider the general security of your potential location. After all, vehicles don’t come cheap, and you want your customers to feel safe when they arrive and leave.
Note: Whatever you choose, you may be able to install CCTV cameras or hire a security guard to protect your investment and customers.
Step 3: Build your fleet. Start growing the rental cars and trucks you list for rent.
You cannot offer a vehicle rental service without vehicles, which is why the start-up costs associated with this business are so high. When you first start, your fleet or collection of cars and trucks can be relatively small, and profits can count on high sales.
Tip: Buying your first fleet is the most cost-effective long-term option, but ironically, you also have the option to lease the vehicles you want to rent.
Step 4: Get fleet insurance. Before starting your car rental business, having good insurance for your fleet is a legal requirement.
This is ultimately for your own protection. Not only can a customer damage your property, but one of your customers can be damaged by an accident and hold you liable.
Therefore, don’t be too quick to consider the choice of insurance companies and coverage, and look for the best deal before you commit. Some of the best commercial auto insurance companies are probably names you recognize from the private sector.
Step 5: Set up your website. Since much of your business will come from people out of town, you should advertise with unlimited reach.
A website is a valuable tool to inform potential customers about your services, to mark the vehicles in your fleet, and even to book online. It works for you 24/7 and can be configured to automate much of your paperwork and other processes.
To prevent your website visitors from going to your competitors, you should provide at least the same online capabilities as other car rental services in your area, even if it means enlisting the help of a web developer.
Step 6: Prepare for daily activities and good administration. Once your vehicle rental business has opened its doors, it needs daily attention to function like a well-oiled machine.
Have sufficient staff to meet your customer’s needs and a record-keeping system. In the past, such records were laboriously hand-kept on paper, but modern businesses often use fleet management software.
Such software is initially a costly investment, but it does save money and money along the way.
While there are many reasons for not opening a car rental business, such as the high start-up costs and potential liability issues, the benefits can outweigh the risks. With the right planning and the right tools, your day-to-day operations can run smoothly and you are prepared for accidents or collision at a proverbial speed. Once your business gets off the ground, you can rest easy knowing you’re meeting a real demand that won’t diminish over time and have a system for smooth operation. When assembling your fleet, make sure vehicles are inspected before purchasing.