There are plenty of business opportunities awaiting those who have a passion for cars. One of them is a car rental business—especially if you live in a tourist spot or a city best explored through driving. At the same time, the numbers say that the demand for rental cars is not just growing; it’s growing exponentially, especially since customers need cars for outstation traveling and corporate leasing.
If you have a passion for cars and you’re thinking of spending the rest of your life tending to them, a car rental business might help you make some money out of your passion. Here is a simple guide to help you establish a business plan.
Know your essentials
It doesn’t matter what industry or products you’re trying to get into the market; any business needs a clear business plan or strategy. It will be key to the success of your venture, and you need to map out the details and the specifics and figure out the uncertainties and the unknowns. Here are a few questions your business plan needs to be able to address:
What are the business’s startup costs, as well as the amount that will keep it going for the first few years?
Remember that this type of business entails investing in a fleet of cars, not just one or two vehicles. You also need to consider your office, parking space, computers, reliable high-speed internet, printers, insurance of all stripes, incorporation fees payments, maintenance for the vehicles, security system, marketing efforts, leased equipment inspection specialists, and employee salaries. The ongoing costs, on the other hand, include utilities, insurance, employee salaries, office space, parking space rent, website maintenance, and marketing efforts.
Do you have a specific target market for your car rental business?
What are their purchasing habits, values, and other pertinent information like age, marital status, and gender? Most importantly, which of your customers will require renting a car multiple times? This includes companies who might need cars for their day-to-day operations but may not necessarily have the funds to invest in their fleet of vehicles. Another type of coveted client is someone willing to spend a significant amount while they’re away from home.
How much are you planning to charge your customers?
The fees will, of course, depend largely on the type of cars you will have. When considering the lower end, like a Nissan Versa, it might cost upwards of $35. More high-end or luxurious cars like Lexus or Mercedes-Benz might be rented out for upwards of $100 per day.
How much are you expecting to earn?
The answer to this question will depend on many variables, like your business’s location, the diversity of your car collection, and if your rates are on the competitive side. Marketing will also help play a big part in this. You might be able to make five to six digits in the first couple of years, and if you continue to work to expand your business, you might be able to reach the mid-six figure mark. If you grow enough to expand across regions or even countries, you might be able to rake in millions of dollars annually.
What steps can you take to increase your profit?
Once you’ve reached stability in your business, consider selling some older cars in your fleet, especially those that are no longer in style. You can also choose to trade them in instead of selling them. Another way to increase your profit is by charging extra depending on the different levels of your auto insurance. Another strategy you cannot afford to neglect is establishing a good relationship with local mechanics or car dealerships so that they can direct customers to your business if their cars are being repaired or serviced or if they need a rental.
How will you promote or market your business?
Never underestimate the power of good branding for getting your new business out there. Make sure you have a catchy name for your new company and a brand identity that’s impossible to ignore or forget. Ensure that your business can be easily found through tools like SEO and that your social media accounts and websites are constantly updated.
Once you know your whys and hows for starting a car rental business, the rest can easily fall into place. Leave no stone unturned when filing for paperwork, insurance, and other documents to ensure that you and your clients are protected, and let your passion for cars motivate you along the way. Good luck!