Starting a car rental business is no joke. It may be profitable and there may be a high demand for it, but it is also competitive and presents a huge risk. Before you get into this business, make sure that you’re well aware of these six steps you need to take:
List Down the Pros and Cons
As with any other business idea, you should list down the pros and cons of owning a car rental business. You’re not only going to hand over the keys to the renters; you’re also going to need vehicle fleet management software from the UK or other countries. You’ll need to maintain the vehicles and hire the right people to run the business.
There is a high demand for car rentals, and the potential for income is high. But the startup cost is also high, as well as the cost of potential damage to the fleet. Are you sure that you’re ready to tackle all these problems?
Decide on the Rental Format
There are two types of car rental formats: daily hire and contract hire. Daily hire is the more popular type of car rental business. It targets tourists or vacationers with short-term transportation needs. These individuals usually need a vehicle for only a couple of days.
Contract hire is when the company needs to provide vehicles for long-term rent. It usually entails having a monthly or annual contract that fits the business’ needs. Some companies prefer hiring cars for their employees instead of buying their own fleet. Why? This saves them on the cost of maintaining the vehicles.
Choose a Location
Make sure to place your entire fleet and office in locations that are near your target market. These are airports, bus stations, and hotels. These are where the tourists will most likely go and stay. They can pick up a car rental for the day after they pass through immigration and pick up their bags. This is a convenient way for them to access your car rental office.
Build Your Fleet
This is why the startup cost of a car rental business can reach hundreds of thousands of dollars. You have to start building your fleet. At first, you may have just three to five cars or trucks for rent. You will rely entirely on high turnover to make a profit. As you go along and make a profit, you should buy more vehicles to add to your fleet. You can also lease the vehicles you plan to rent, though that comes with risks, too.
You are legally required to obtain insurance for your fleet. This is for your own protection. In case an accident happens, you can be held responsible for the injuries that your customers will sustain. On top of that, you’ll also have to take care of the damage to the cars. Shop around for the best insurance deals before you commit to any agent.
Create a Website
You need to reach out to your customers. But since you don’t exactly know where your target customers are coming from, you need a platform with unlimited reach. A website will inform your target audience about your services, fees, operating hours, the vehicles in your fleet, and online booking.
Once you have done all these steps, you are ready to start operating your car rental business. Remember that it’s not going to be a walk in the park. It’s a competitive industry, so you have to keep up with your competitors.