Starting Car Rental Business: First Steps And Expenses

In the modern world, sometimes it is not possible to use a personal car. This is when car rental comes to the rescue. Rental companies are in demand these days in different countries. For example, the UAE, as a very developed country, receives many visitors, both tourists and people coming on business. Usually people arrive in Abu Dhabi, which is the capital of the Emirates, or Dubai, a very popular destination, or in Ras Al Khaimah, another interesting and large city. To rent a car Ras Al Khaimah becomes the most convenient option as visitors do not have their own car during the trip . Thanks to high competition, car rental company fleets offer a wide selection of cars, both Tesla UAE and sports car rental Dubai.

It is worth highlighting the key categories of people to whom a car rental business can be targeted:

• Car owners who, for some reason, are temporarily left without personal transport. For example, the car is being repaired, and taxis or public transport are not suitable. Or the person has already sold his old car, but has not yet chosen a new one.
• There are car enthusiasts who like to travel or go out into nature on weekends, but they do not have their own car or for some reason they do not want to use a personal car. About a third of rental customers fall into this category.
• Those who want to show themselves in a favourable light with the help of a car. As a rule, they resort to rental if there is a meeting of important guests in executive cars and other similar events. Expensive cars are also rented on the occasion of important personal events: weddings, birthdays.
• People renting cars for a long time. Those who drive a car around a foreign city during a business trip, or taxi drivers who, as individual entrepreneurs, work for themselves.

Stages of starting a car rental business

The most important stage is drawing up a detailed business plan. You must take into account all possible expense items, including maintenance, purchase of spare parts, rental costs, utility bills, advertising, and taxes.

Then proceed to the main launch steps:

• Register your company.
• Attract investors. If you don’t have enough start-up capital, consider borrowing. Another option is to buy a franchise.
• Buy cars. The effectiveness of car rental as a business will be visible if you have at least 5–10 cars. The larger and more diverse the fleet, the better.
• Do advertising. Don’t skimp on your advertising campaign, otherwise potential clients simply won’t know about you. Connect several channels at once: from distributing leaflets to contextual advertising on the Internet.
• Sign contracts with partners. It is important to find specialists or a service station ready to service your fleet. To attract customers, think about contracts with travel companies, airports, and hotels.

Project startup costs

When calculating business expenses, initial and regular investments are taken into account, which form profitability and monthly income.

The main expenses in the car rental business are:

• buying cars;
• their maintenance;
• parking fee;
• office rental;
• salaries of employees and deductions.

Renting space for business

After registering a legal entity and purchasing cars, you need to think about renting space for parking and office space.

The cost of renting an office depends on many factors, the main ones being area and location. In this case, the location is chosen taking into account its transport accessibility. As for the area, it should be enough to comfortably accommodate employees and receive visitors.

In some cases, the nature of the services influences the choice of office space. If you are going to rent out business and executive class cars, it is advisable to rent an office in a business centre or an expensive hotel. The office must match the level of cars. For renting out middle-class cars, a separate room with modern renovation in a walk-through location is suitable.

Possible risks and their minimization

When planning your work you should consider:

• idle cars;
• car theft;
• factory defects of new cars;
• road accidents caused by drivers and other road users;
• expensive repairs, which can be partially avoided with regular maintenance.

The following help reduce the likelihood of risks:

• regular maintenance;
• deposit paid by the tenant when drawing up the contract and before handing over the car;
• daily mileage limit, in case of violation of which the rental company has the right to deduct a certain amount from the temporary deposit.

Conclusion

Starting a new business is never easy. It is necessary to take into account many points and calculate all costs and risks. However, car rental will be profitable if you carefully monitor expenses and income, the technical condition of transport and regularly promote services and expand the fleet.