How to Start Taxi Business

The taxi business is very lucrative and challenging. This is because of the huge customer base and many operators. An investor needs to purchase a vehicle, hire a competent driver and acquire permit.

Startup is high and the business is location based. To succeed the drive should have a fair knowledge of driving routes and mapping software. Here are a few ideas on how to enter the transport industry.

Challenges and Risk in Starting a Taxi Business

The major challenge is funding the business. You need at least N2 million ($5500) to own a single cab. Other difficulties include bad roads, robbery, exhaustion and accidents.

Taxi drivers also face extortion, multiple fees and levies. The business is highly competitive and the vehicle needs regular maintenance.

• huge startup
• bad roads
• highway robbers
• exhaustion
• accidents
• extortion
• multiple fees
• levies
• huge completion
• vehicle needs regular maintenance

What you need to start a Cab Business

To successfully run the business you need certain items. The primary equipment is the vehicle and a functional meter. Choose a bright commercial paint identical to cabs in your demography.

Common colors are yellow, green or blue depending on the state or local government. You need a business license, vehicle insurance and driving license.

The grade of the driving license should be a commercial one. Others are decals, stoplights’, and operational office. It is important to have a dedicated telephone line, website including marketing materials like flyers or posters.

• a vehicle and meter
• business license
• vehicle insurance
• driving license
• decals
• stoplights
• operational office
• dedicated telephone line
• website
• marketing materials

Ways to Start a Taxi Business

There are three ways to enter the industry. You could start from scratch or join a franchise. You can apply to drive in a cab company or try hire purchase agreement. There are also online cab opportunities through clever apps like UberCabs.

Joining a franchise or buying an existing business requires serious funds. However private ownership depends on the number of vehicle in your fleet. You can start with one car and gradually expand as the business grows.

• start from scratch
• join a franchise
• apply to drive
• try hire purchase agreement
• online home based cab opportunities

Why Start a Taxi Business

The business is highly lucrative because of the huge demand for public transportation. The job provides and efficient, comfortable and fast way to reach your destination.

The business is practicable from home, convenient and cost effective. There is a tendency for referrals and repeat patronage. There is time flexibility and practicable part time or full time.

Another reason is because commercial motorcycle business is dangerous and outlawed in many countries. The huge profit making makes the business very attractive to individual owners or fleet companies.

Startup Cost for Cab Business

The startup cost depends on the size and scope of the business. An individual could start with one car or a fleet of vehicles. Startup cost includes purchase of vehicle, licensing, equipment.

Others are business registration, rent and operational office. Incorporating a limited liability through an attorney would cost from N100, 000 to N150, 000 naira. A business license costs about N15, 000 while an imported used car N1.7 million.

Popular choice of vehicles is those that are fuel efficient, easy to maintain with lots o spare parts. Popular types are Hyundai, Toyota, Mazda and Renault brands.

How much can you make From Taxi Business?

The question is how much can you make from taxi business. The profit depends on many factors such as demography, frequency of passengers, fee charges and competitors.

In Nigeria an average fair costs N3000 about $10. So an average driver can make N10, 000 to N36, 000 ($100) a day. The major expenses are occasional vehicle maintenance and fuel.

For maximum profit make sure you use a fuel efficient car and mapped routes. A taxi company charges the driver a flat rate not exceeding $50 a day (N18, 000). The driver is mandated to take care of fuel and minor repairs. The company’s insurance firm takes care of major damages or accidents.

Owning a taxi company is highly profitable especially if you have a fleet of vehicles. For example a cab company with ten cars stands to make N180, 000 in daily. This is estimated at N18, 000 per driver flat rate. The rate can differ based on location and the company needs to sign a contractual agreement with the driver.

Licensing

The transport industry is highly regulated and conformity is mandatory. The driver needs to have a commercial driving license and company a business license. The company should have a business name and logo.

The local department of motor vehicles or Federal Road Safety is in charge of issuing license in Nigeria. The vehicles should have motor registration, vehicle insurance and MOT certified.

Others are commercial color/marking and association registration. Each locality have transport union associations that demand registration and strict compliance. They collect a monthly, daily or yearly fee from the cab operators.

• commercial driving license
• business license
• business name
• logo
• motor registration
• vehicle insurance
• MOT certified
• association registration

Use Tracking Technology

It is impotent adding a tracking technology to your vehicle. The software is used to track the movement of the vehicle. It also offers protection and recovery from theft.

Another technology to use is a speed limiter to ensure the safety of the driver and passenger. In Nigeria it is mandatory for commercial transport vehicles to install speed limiters. The gadget is available at the Federal Road Safety Office and renewable every year.

Software Solutions

• tracking technology
• speed limiter
• internet connection
• smart phone technology

Hire Drivers

The driver should have driving experience and current driving license. The driver should understand road signals, use defensive driving and is courteous to passengers. The ability to work long hours is another advantage. The driver should dress appropriately in uniform or decent cloths.

Vehicle Color

The vehicle color depends on the official taxi colors in the locality. Make sure the color conforms to acceptable provisions for commercial vehicles. Primate cabs that operate using smart apps are excluded from this requirement.

Get vehicle Insurance

Some taxi owners go for third party insurance. This is not recommended because it does not cover cost of accidents. A better policy to consider is a comprehensive insurance. Make sure the vehicle has appropriate papers like vehicle license, insurance and MOT.

Marketing

Marketing considerations are social media, blogs or websites. Others are print, electronic and radio. The business works on referrals, word of mouth.