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Having quick access to a rental car is a life-saver in the constant hustle and bustle of daily life. Whether you’re traveling in an unfamiliar place or your car’s in the shop, a rental is a convenient alternative to ridesharing apps or purchase. In short, a car rental business is an attractive proposition for budding entrepreneurs. Setting up a fleet of rental cars might seem daunting, of course, but others in your position have done it before. You can benefit by learning from their mistakes and successes. With that in mind, let’s look at how to start a car rental business.
Create your Business Model
You’re not going to come right out of the gate with a thousand-car fleet, ready to compete with Hertz and Alamo. But that’s okay. You’re starting with a clean slate, full of opportunities, and you’re not beholden to any one approach.
First, you’ll want to design a business strategy that identifies your target clientele, accounting for the types of cars they use. Maybe you want to rent limousines to high-end clientele, form a car sharing business that lets people rent their personal cars or offer party buses to and from a given destination.
Look Into Costs and Liabilities
Each of these different models have varying costs and liabilities. It’s essential to review some hypothetical situations and how you’d handle them.
What would you do if a customer drives away with one of your vehicles? Will you have theft insurance for reimbursement? Many rental car companies will install GPS tracking systems that can give you peace of mind and protect your investments. If you don’t have them, you’ll be in constant worry about where your cars are.
The answers to these questions and more will depend on the type of cars you want to rent. A service for renting luxury sports cars will require a higher initial investment in rental stock, which will in turn incur higher insurance costs than a rental car service for minivans. You’ll be able to charge more for the exotics, but will the difference in what you charge offset the difference required in your initial investment?
These are the types of questions you have to ask. Understanding how money will flow in and out of your company once it’s up and running — and being able to model that cash flow against different volumes of business — helps you answer the all important question. What’s your bottom line? A company that’s not profitable won’t last long in the rental industry or any industry, so you should spend plenty of time considering this one.
Go to Market With Your Idea
When you know exactly how you plan to make money, it’s time to pursue your dreams. Bringing your business model to life without burying yourself in startup costs can be a tricky procedure. It helps if you’ve got some personal funding to back your venture. If you don’t, make sure you’ve done plenty of calculations about profitability before seeking a loan.
Once you have money, it’s time to invest in your rental fleet, market your new business and enable access for consumers. The car rental business is all about ease-of-use and cost effectiveness. People are looking for a convenient way to get some transportation, so give it to them! A good suggestion is to invest early in an app that makes the process of renting from your company simple. Your website should also allow renters to quickly and easily learn about your company and rent cars.
You’ll also have to find a place to park your cars. Even if you don’t plan to be in most major international airports, the cars need somewhere to go for safe keeping and service when they’re not in use.
How to Start a Car Rental Business
Those are the basics of revving up a car rental company. There are a lot more things you’ll need to do, but if you accomplish these basic items, you’ll be off to a good start. Have you got tips for potential car rental entrepreneurs? Leave them in the comment section below!