If you are an entrepreneur who loves cars and currently looking for an excellent business idea, a car hire company is the best way to go. This is a great opportunity for you to take advantage of the growing demand for car rental services all over the globe. People lease or rent cars for various reasons. It can be for special occasions, fishing or camping trips, road trips, or business needs.
With that in mind, you can choose to specialize in individual services, corporate services, leisure services, or general transport services. Regardless of what niche you want to focus on, there are certainly many more important things to consider. Let’s discuss the first steps into opening your car hire business:
Choose how to start
One important part of starting a car rental business is to actually know how to begin. Are you planning to start from scratch and create your own name? Or, are you looking to buy a franchise? If you opt for the first one, you’ll need to start drafting strategies and deal with paperwork. While this may be a more challenging start, experts recommend this for those who want to grow as a wiser entrepreneur and acquire more experience.
On the other hand, if you’re looking to buy a franchise from an established car hire company, you’d generally only have to deal with rendering service to customers. Most car rental companies will readily provide you with everything you need, from the techniques, structure, strategies, to the equipment.
Find the right location
The location you choose can make and break the success of your car rental startup, so be sure to pick wisely. If you intend to start with a car for hire, you can most definitely run it from your home. However, if you’re planning to start a standard car hire service, you’ll have to find a facility that favors your predetermined target market and budget. Ideally, it should be situated in a well-traveled route, allowing you to have a bigger opportunity to attract potential clients.
In case you want to serve commercial and industrial rentals, you’ll need to find a location near the commercial zone. On the other hand, if you’re planning to cater to business travelers, find a spot close to the train station, the airport, or other travel hubs.
Create a cost analysis
Now, for the not-so-fun part, you need to prepare your cost analysis. This might depend on the scale you’re looking to begin with. Obviously, you won’t need that many funds if you’re planning to target regular clients that hire SUVs, starting with bigger customers looking to rent out luxury vehicles like limousines.
On average, opening a small car rental startup in the U.S. can cost you around $600,000 and up. The costs include your business’ incorporation fees, liability insurance, permit, licensing, leasing a facility, the cars for rent, office equipment (if necessary), as well as other expenditures such as signage and business cards.
Furthermore, don’t forget to also account for the maintenance needs of the vehicles. If you’re looking to maintain and repair the cars in-house, you’ll need equipment such as an air compressor, jack stands, oil caddy, battery jumper and charger, and a transmission jack. You’d also want to keep the cost down by investing in the professional-grade ceramic coating, which allows you to not wax the cars for several years to come. Nevertheless, if you’re looking to start with a medium scale to large scale car rental company, it would cost you around $1,000,000 to $2,600,000.
Consider leasing or rental regulations
Lastly, you’ll need to take into account the car leasing and rental regulations for your business. Offering car hire services obligates you to ensure that the vehicles you release are in excellent condition and are safe to drive. While the manufacturers are generally accountable for this, it’s your part to reduce the risks to the clients’ safety. For this, you’ll need to regularly monitor all your vehicles, take quick actions in case of problems, as well as ensuring that the clients completely know how to drive the car.
At the same time, you’d also need to ensure your car rental service provides positive, transparent, and fair experiences to clients. This includes accommodating the legal rights of clients to return the vehicle and get a refund if it’s found to be unfit for the purpose or isn’t in great condition for the road. Also, you need to make sure that the leasing or rental contracts are transparent and fair and do not restrict the clients’ legal rights.
Entering the car hire market can be a highly profitable and rewarding business venture for you if done right. Not only do you get to earn a living, but you also get to explore and expand your love for cars. Avoid starting at the right foot by following the easy steps in this guide.