Vehicle rentals exist because there’s a real, constant and stable need for them. Businesses sometimes want a vehicle to convey guests; wedding attendees might prefer to travel in a van that’s headed straight for their specific destination, and sports teams would pick a bus that’ll go the distance and keep their team talks and banter uninterrupted by outsiders.
These needs are fueling a demand that’s growing even as we speak. Entrepreneurs are being drawn into the vehicle leasing business by the different sorts of opportunities it offers them. They could be renting out high-end rides to top executives for a premium, or they could let groups of persons hire their buses for one-off trips, and be paid fairly good sums in return. When all goes well, the revenues are usually quite good.
Perhaps you’ve been thinking about starting a vehicle rental service. Maybe you’ve already made up your mind to build one. You’ll find this article a helpful guide to sketching your idea and bringing it to life.
Here’s how to go about setting up:
1. Get real about your motives and expectations
Let’s backtrack a bit.
It could be that you’re about to launch into this business because you believe it’s a quick way to multiply the money you’ve saved up (or borrowed). The truth is, the vehicle rental business doesn’t guarantee you this. This venture requires a lot of capital to start up, and you’re not likely to recoup your initial investment for a while.
You should have a long-term vision going in. You need to be willing to stay for the long haul and deal with the initial costs. This is why you have to weigh your options at the very beginning before you decide whether to take the leap or not.
2. Size up the market
While you have your eyes on what your business could look like, you should also be concerned about who your customers will be and how you’ll cater to their needs. The answers you get will help you decide what kind of vehicle rental service you’ll be offering, and where it will be run.
Take a look at the typical customer base for this sort of business. Schools, social events, and religious organizations will want buses for purposes unique to them. How big is their demand for rental services? How much are they usually willing to pay? Is it a saturated market (i.e. with too many ventures offering the same service)?
You should ask these questions about leasing cars and buses to corporate organizations as well. Find out what these different types of customers want, and decide whether you’re able to meet their demands.
3. Calculate the costs involved
Draw up a list of things your business requires to start up. Find out their market prices, and determine the total cost by adding these prices up.
This list would include the cost of vehicles, staff salaries, office space, as well as equipment and furniture. Factor in the cost of running the business in the first few months or year, or until the business gets into positive territory.
When you’ve laid out your expected costs (and projected revenues), you’ll have a good idea what financial commitments you’re going to be making.
4. Have a business plan
Your financial projections may be incorporated into a business plan. It’s a general document containing your vision for the venture, a description of the market you’ll be reaching, estimates of the costs you’ll be incurring on the business, and returns you expect it to generate. In a nutshell, it’s a road map for your business.
You can read about developing a comprehensive business plan here.
5. Secure a business location
Go for a location that’s accessible by the sort of people your business is targeting. For instance, it’s ideal to set up in or around a business district (or districts) if you will be having corporations as clients.
There’s more on finding the right business location in our article, 10 Tips on Selecting a Location for Your Business.
6. Acquire vehicles
The sort of cars or buses you purchase will depend on the kind of rental service you choose to run. Moderately priced bus models will be fine for a service that caters to schools or persons attending social events. But if you want to be the go-to company for higher-end business executives, you’ll have to go for cars with a reputation matching the tastes of these sorts of customers.
7. Get registered
The Corporate Affairs Commission (CAC) is responsible for registering businesses in Nigeria. Your business gets legal recognition when it’s registered with them.
You may also have to register with other bodies, such as the vehicle owners associations where you’re at.
8. Insure your vehicles
Having your vehicles insured protects you against the costs you’ll incur if they get damaged or wrecked beyond repair. Many people skip this part of the planning process; you shouldn’t. It’s wise to hedge against losses of this sort because it could have a big impact on your business if (or when) it happens.
Insurance companies offer a range of vehicle insurance packages with varying degrees of coverage. You may find one that’s just right for you if you do a bit of looking around.
9. Put business structures in place
10. Get marketing
These days, you can spread the word about your business through many channels, and reach far more people than ever before.
There’s the old media (radio and television), which you can advertise on if you have the funds. But there are also less pricey options, like handbills and posters, best distributed and mounted in locations with high human traffic.
It’s equally important to have a presence on the web. Set up business pages on social media. Have a user-friendly website, which has all the basic information a potential customer will need, as well as a booking system that allows them to hire your vehicles online.