Initiating any business is as painful as trying to get over a failure. For this reason, many skillful people refrain from jumping into entrepreneurship. Some of those who have the heart to push themselves go through back-to-back pains of starting and failing in business. Starting a taxi business is no less challenging.
Nevertheless, there are ways which guarantee success up to a considerable degree. Entrepreneurs can bring down the probability of failure significantly by adopting these ways.
How to start a taxi business?
Following points in the same order present the path to a successful taxi business.
Determining the Appropriate Market
Market identification is one of the most significant prerequisites to the taxi business. Many taxi owners emphasize on marketing of business and providing the right selection of features. While both of these factors are also essential, ignoring appropriate targeted market may push all the effort in vain.
The decision of choosing an appropriate operational region should depend on various factors. Some of the top factors include:
->The quality of existing ride-hailing system.
->The time required by existing taxi services to reach the passenger’s location after booking.
->The cost of operations in the region. The inflation rate is also an appropriate measure to predict future costs.
->A startup in a market with less demand and higher operational cost will be more likely to fall into losses.
Identifying the Target Demographics
The next crucial step is to identify the local demographics. Socioeconomic classes are the primary consideration while assessing the demography.
This assessment enables the taxi owners to introduce the most suitable types of services. For instance, if the average income is relatively lesser in a country, the owners should provide low-cost vehicles. Such vehicles will require smaller maintenance and fuel costs. Consequently, passengers will also be able to get a cost-effective solution.
Moreover, research into local culture and traditions is also significant. Marketing of a business is far more productive if it highlights the native culture and popular trends.
“If people believe they share values with a company, they will stay loyal to the brand.” (Howard Schultz)
Collaboration with Potential Partners
Partnerships with notable businesses in a region serve as a catalyst to a taxi company’s growth. Both partners supplement the marketing efforts of each other. Apart from marketing, they also assist in acquiring more customers.
Some of the most noteworthy collaborations from ride-hailing industry include UberEats and McDonald’s for food delivery and Uber and Toyota for manufactured vehicle utilization.
Moreover, it is not essential to collaborate with businesses from a different industry. For instance, Lyft and Waymo are ridesharing competitors but working together for autonomous vehicles.
Such partnerships within the industry turn rivals into beneficiaries allowing every partner to grow remarkably.
Taxi App Tailored to Business Needs
After a comprehensive market and user research and attaining partnerships, owners need to develop an efficient app. Some of the taxi app features vary depending on consumer needs. Nevertheless, starting your own taxi business requires the app to perform a few unavoidable functions.
Route-planning is the most vital function which enables drivers to reach passengers in the shortest possible time. Besides, the ability to track drivers is also indispensable to outperform the traditional taxi rivals.
App speed and user experience are crucial to sustaining the high competitive index. You can get away with ordinary app performance only through either the absence of competitors or poor competitor’s performance.
Creating the Pre-launch Hype
The customers should know about your services ahead of a business launch. The passengers should be eagerly waiting for you to launch the service. This approach pushes the customers to rush and try the new option at their disposal.
It is advisable that the service remains flawless in the initial weeks. If the app fails to impress customers, the owners may never be able to repair the lost reputation. Consequently, they end-up either rebranding or, in the worst circumstances, closing the business.
Social media should be one of your primary channels to create this hype. Although ads in print and electronic media and billboards are also effective, yet social media provides a low-cost solution.
This approach is also a way to build awareness among the passengers about your services. Each person knowing about your business prior to launch is a potential passenger after launching. Stirring up this hype may not be necessary for starting a business, but it is undeniably a significant strategy.
Increasing the Customer-base
The pre-launch awareness should be sufficient to provide a considerable initial customer-base. However, your business needs to attract more customers to keep increasing the market share.
Instead of pushing more money in efforts to grab greatest share, you can use the existing customers for the purpose. Referral codes provide one of the most proven ways of increasing user-base.
A user serving as a referee can invite a non-user to download your app. As a result, you will add another customer while the customer will get a reward in the form of a free or discounted ride.
Consolidation and Expansion
After developing a sizable user-base, you may move on to expanding the business in more regions. The phrase “sizable user-base” is a relative one depending on the targeted market. A thousand downloads should be sufficient for expansion if the population of initial region is less than 0.1 million.
Conversely, ten thousand downloads would be insufficient to look into other markets if the said population is over five million.
The regions with high competition are more likely to lose a customer. A user may switch to an alternate ride-hailing service provider if one offers better services with lower costs.
How much does it cost to start a taxi business?
Cost of starting a taxi business varies with the scope of business. Some of the factors affecting cost include:
- Number of initial operational regions.
- The number of company-owned vehicles in the beginning.
- The kind of features you intend to incorporate in your mobile app.
- The number of marketing channels used and the extent of their utilization.
CabStartup has the most efficient pricing model for providing a taxi dispatch platform. The business owners can rebrand this dispatch software to use it as their own company.
You can use our software for free as a trial to evaluate its performance. Moreover, you can add as many additional features apart from the existing ones.