Costs are one of the first things you should consider when starting a taxi business. Unfortunately, the start-up costs to set up a taxi service can run high, which is why it is important to understand them.
Here are some things to consider:
Research
The first step is to research the business and the competition. Just like the financial markets, the taxi/ride hailing markets are complex and can be unforgiving to beginners. This will help you answer questions that you may have and help you begin to understand the requirements better. It can be helpful to speak to people involved in the business and get advice on what to pay attention to when setting up a new company, including the costs that are involved.
Think about some of the things you may need to purchase and take some notes.
Researching ahead of investing, and reading a few beginners guides online for free will allow you to avoid the investing mistakes of others, avoid investment scams and get the most bang for your buck when starting your taxi firm.
Before long, employees and their dependents will be relying upon your management skills to secure their income. It’s helpful to reflect upon this level of responsibility, and use it to constrain your excitement long enough to conduct all the background reading necessary. Consider picking up a few management books and tax saving books to ensure that you have the financial literacy to run a business lawfully and avoid any surprise tax bills. These will only cost £15 – £50.
Licence/Insurance
There are several different financial protection/insurance plans that will cover your expenses and protect you from becoming liable. The Public liability Taxi Insurance or Taxi business insurance is essential and very valuable if an accident involving passengers does happen.
Unfortunately, taxi insurance can be more expensive than other types of insurances such as life insurance, due to the increased likelihood of a payout during the policy term. The reason for this is that taxis spend a lot of time on the road and are therefore statistically more at risk of accidents. You could end up paying about £1,000 every year per vehicle, but this can vary depending on how frequently you drive and where your business is based.
The exact cost of a taxi driver license may depend on your location. For example, license requirements may vary depending on if you are in London or outside of London. As a rough estimation you could be asked to invest about £200-300 per taxi per annum, so be sure to budget for this.
Vehicles
To keep insurance costs low and make sure that you are able to use your taxis for a long time, be extra careful when purchasing your cabs. Some areas of the UK may only license certain types of vehicles and may even require the cars to be a certain colour.
There are several different types of cabs to choose from. The so-called ‘Hackneys’ are allowed to pick up a customer who stops them on the street, while ‘Private Hire’ cars have to be sent by a taxi company and can only be booked through the office.
There are also some other options, such as using your own cars. Although they must still meet all the requirements specified above, so you’d be lucky to be a position to do so.
Business premises
All you usually need to run your business is a small office and enough room for the taxis to park. It’s even possible to work from home and simply park your vehicle in the driveway. Any business book will advise against obligating yourself to pay significant overhead costs before you have scaled your business. Learn from the many start-up entrepreneurs who began their businesses from their garages before they went onto to become household names.
Start out small and grow your business over time. As you gain more experience you will have a much better understanding of what it takes to run a successful taxi company.