Vehicle Transport Business Ideas: How to Start a Passenger Transportation Company

People need transportation to go to work and other engagements. Running a transport business is moderately challenging and lucrative. The business requires huge capital investment and proper management.

Transport companies need lots of parking space and a garage. The business model is small or large scale.

Transport companies vary in structure, type of vehicles and number. You have the taxi cab business, luxurious interstate buses and local commercial buses. Other types are individual cab/bus owners and cross country vehicles.

Different kinds of Transport Companies

You need to determine the type of transport Company to incorporate. Transport involves both goods and passengers.

Some examples are bus shuttles, Commodity Trucks, Limousine services and Taxi cab business. Once you decide between cargo or passenger transportation you have a blue print of what you need.

Write a Business Plan

The business plan should focus on type of vehicle to purchase, getting finance, and recommended fares. Other things to include in the plan are future growth, profit and loss, maintenance and management.

Other considerations are insurance, fees and fuel. While compiling your plan do lots of research on established companies in your area.

Register your Transport Company

Register your company as a limited liability company with the corporate affairs commission in your country. Choose a good business name and get an operation license. You are required to join an association in your locality.

The licensing and permits differ according to the sector you choose. There are many administrative permits and licenses.

Transport companies that cross state lines have other licenses and permits. Apply for business licenses from municipal office or the State.

Membership in certain unions is mandatory. However, remember you are free to choose who to associate with.  

Insurance

Vehicles need comprehensive insurance because of the nature of the business. There are different types of insurance like cargo and liability insurance, drivers insurance and company insurance.

Others are health insurance pension funds and insurance against loss of cargo or accidents.

Hire Employees

Transportation attracts lots of staff strength to run the operation. The staff include sales clerks, accountant and management staff. Other staffs needed are porters, check-in employees, drivers and conductors.

Some have mechanics, cleaning staff and park attendants. Keep your staff numbers down to reduce undue wages and expenditures.

Purchase the Vehicles

The most expensive investment is buying the vehicles.  Transport companies need to start their enterprise with new vehicles.

Interstate transport companies use large luxurious buses and mini buses. Large communal buses are very expensive.

To effectively service a single dedicated route a new bus company needs at least two buses. So if you have ten routes the minimum number of buses needed is twenty buses.

Young transport companies concentrate on only one or two routes. So purchasing four large luxurious buses to service the two routes is just adequate.

You need serious bank loans to start a vehicles transportation company. Cars and buses don’t come cheap so lots of funding is needed.

Cost and Expenditure

As said earlier the major investment is the cost of vehicles. Other highly significant costs are office and administrative blocks including loading docks.

Your company needs a large parking space and mechanic workshop. Other equipment is regular office equipment like computers, printers, chairs and a weight scale.

Factor into your expenditure staff wages, maintenance and running cost. Other things are electrical bills, tax, local licenses and insurance.

Funding

Transport business is capital intensive so you need lots of funding.  Some major expenditure while setting-up a transport business are the vehicles, garage, fuel, staff wages and vehicle maintenance.

Getting adequate funding for your transport company is very challenging. You need to have good credit to source funds from banks.

You are unlikely to get funding for the entire fleet of four buses. The bank might give you money for two buses with lots of paper work and strict conditions.

They may need a business plan, management structure, company profile profit and liability. They want to know your experience in this business and collateral.

 The collateral could be landed property or company shares. If you have experience in transportation and show clear profit indicators you are closer to getting the loan.

You might have to provide one third of the loan upfront. You also need a dedicated account in the bank to receive funds.

To access loans visit the commercial bank of your choice and collect loan terms and conditions. Your account manger could be of assistance in this regard.

Another effective way to secure loans is through a core investor. You can also sell equity to investors or startup shares. The major advantage of getting loans from banks is that once you pay back they are happy to lend you more.

Pricing

Study the price structure of you competitors to arrive at a good price. Passengers are very conscious of travel expenses and actively seek lower prices. Make sure your prices competitive and affordable.

Branding and Promotion

As a new enterprise you need lots of promotion and branding. Tell them why they should use your services.

Branding and promotion is very important to reach potential customers. Use electronic media, television advertisement and radio jingles.

Place strategic banners, posters and give out hand bills. Offer nice discounts to attract new patronage.

Travelers are habitual and would come back if they enjoyed your services. Give out package deals such as’ buy three tickets get one free’.

How to Start your Transport Business

1.    Write a business plan

2.    Register your business as a limited liability company

3.    Get insurance

4.    Select a good branded business name

5.    Get operational license

6.    Join local transport unions

7.    Actively seek loans from banks

8.    Purchase your vehicles

9.    Rent a befitting office and loading area.

10. Add good furniture and office equipment

11. Hire qualified staff and management staff

12. Dedicate routes and set competitive prices

13. Promote your business

Conclusion

Starting a transportation business is challenging but not insurmountable. The enterprise is capital expensive however the rewards are great. You can make lots of money running a well managed transport company.