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How to Start a Taxi Business from Scratch to Summit

Most of the businesses from a century back no longer exist. Taxi industry is one of the businesses which did not only survive but continues to prosper. It is undeniable that technologies over the time have made a number of updates to taxi industry, but the foundation of such businesses remained same. As taxi companies are growing unceasingly, new entrepreneurs are facing a range of challenges. Thus, most of them are curious to find about how to start a taxi business.

This article coupled with the next one precisely presents the secrets of starting a successful taxi business. Apart from market analysis and top taxi business ideas, it also shares brief information about CabStartup platform.

Get to know about features of CabStartup ride-hailing solution

Market Research and Consumer demand

Before embarking on the campaign for identifying taxi business requirements, you need to determine if your chosen location requires a taxi business at all. A market already abundant with taxi companies needs massive initial investment to outrank existing businesses.

To avoid excessive capital inflow, one workaround is to identify the shortcomings of existing businesses and provide a solution to them. For instance, Via rideshare started in 2012 when Uber was already ruling the major US cities. However, Via managed to seize a part of market share by providing the solution to relatively higher fares. The only tradeoff was the fact that passengers traveling to the same locality had to travel together.

Identification of appropriate taxi business model requires assessing consumer demand. A market saturated with taxi companies may still be a decent choice if your business idea presents a unique feature that addresses challenges of passengers.

Competitor analysis is also essential in market research. This analysis is not an alternative to determining consumer behavior but a supplement to it. Competitors do not only enable you to highlight loopholes in the local taxi industry but also allow learning from their success.

Filtering the taxi business ideas

Evaluation of markets, assessment of consumers, and identification of competitors’ limitations allow you to make a list of ideas and filter the most effective ones out of them. Some of the most notable ideas emerged in recent times include:

Shared taxi or carpooling

Low-income regions are not the only ones effective enough for carpooling. The metropolitans including Chicago, New York City and Los Angeles are also proving to be productive grounds. One significant reason is the fact that passengers can divide costs without having to acquire public transit systems.

Carpooling is also noteworthy because governments around the world are encouraging it to reduce traffic volume and preserve biodiversity. Research confirms that rideshare businesses are likely to pass through registration and licensing stages far quicker than traditional taxi companies.

Venture capitalists as well as angel investors are more inclined to fund businesses aiming shared mobility model. Thus, shared taxis are likely to secure a significant capital influx at the earliest stages.

Taxi for Dedicated Customers

Instead of waiting for passengers to reach your driver and book a ride, a dedicated customer-base is a considerable option. School and college buses usually cover only a selection of routes. A large number of students require a ride to reach one of the pickup points. Dedicated rides can fill up this void by moving students between their residence and bus pickup points.

Similarly, you may also provide dedicated services to corporate and public sector employees. Another model is to offer services for dropping and picking passengers from airports. This service does not require fixed customer base. However, airport location remains fixed.

One of the decisions to take prior to starting a taxi business is to determine whether to keep a fleet or not. Most taxi companies operating in US metropolitans own vehicles. However, on-demand apps including Uber and Lyft are register vehicles from private owners. Although both models have pros and cons, yet latter is relatively better. It requires sharing profit with vehicle owners in return of prevention of purchase and maintenance costs.

Taxi Dispatch software

It is highly unwise to adopt decades old taxi strategies when on-demand taxi apps are making rounds even in the least developed countries. Current business requirements push entrepreneurs to take services at consumers’ doorstep instead of forcing consumers to perform most of the work. Entrepreneurs sticking to traditional services end up in suffering from business failure.

While going back to old-school taxi strategy is out of question, the choice to select the features of dispatch software remains with you. Some on-demand ride-hailing companies including Uber provide exclusive vehicles as well as carpooling while others like Via offer specific services only.

You can decide to broaden the scope as much as the budget allows, but need to ensure that the app includes features which are essential for on-demand taxi business. CabStartup platform provides a number of pre-integrated features for entrepreneurs who rebrand our platform as one of their businesses.

Some of the most notable features of this platform include following

App for passengers: This app enables customers to make a profile, view the data of their past, ongoing and upcoming rides, and pay via one of the payment options.

App for drivers: Each driver can have a unique profile as well with a range of features including ride acceptance and cancellation, communication with scheduled passenger and information regarding earnings of the day, week, and month.

Admin and Dispatch Panel: Although software is able to automatically connect passengers with the nearest drivers, yet admin panel allows surveillance. Administrators can also update preferences depending on customer’s urgency. Dispatch panel enables the platform to dispatch the most suitable taxi for requesting individual. The suitability depends on customer’s location, type of requested service, and driver’s consent.

Route Optimization: AI-based route planning considers aspects including traffic volume on various roads, distance to reach destination, and quality of roads on each route.

Data Analytics: Any on-demand business requires extensive data analysis techniques to determine growth over time. An efficient set of techniques would share the high-performing areas as well as those failing to perform up to the mark.

Process Automation: In a traditional setting, a customer would call taxi company to schedule rides, share feedback, lodge complaints. The admin and other staff members would perform these tasks manually. However, CabStartup platform automates these tasks and promises to perform them in negligible time with remarkable efficiency as compared to humans.

One of the upcoming articles shares details on marketing of taxi business. You would love to experience our platform. Get on-board to get the free trial version today.

By Shahrukh Satti 0 Comments

The Blueprint for Starting a Taxi Business

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.

By Shahrukh Satti 0 Comments
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