How to Start a Passenger Transportation Company
Keep your passenger vehicles clean inside and out to encourage repeat business.
Fuel is getting more expensive every year. In 2018, U.S. customers spent $2.60 per gallon, on average. A growing number of people are leaving their cars in the garage, seeking alternative means of transportation. As an entrepreneur, you can leverage this trend and start your own passenger transportation business.
Perform drug tests and background checks on your drivers. This is a legal requirement in most states. Also, make sure they all have commercial driver’s insurance.
Choose the Right Business Model
Before writing a business plan, make sure you have a good understanding of the passenger transportation industry. This market includes more than buses, taxi services and airport shuttles. Ferryboats, cruises, passenger airlines and limousine services are all an integral part of this industry. The same goes for ridesharing services like Uber and Lyft.
Each business model is subject to different regulations and involves different costs. A ridesharing service, for example, requires lower startup costs than a charter bus company. Assess your budget as well as your short- and long-term goals. Choose a type of business that aligns with your vision. Check out the best kenworth truck auctions.
Create a Business Plan
A passenger transportation business plan should include an executive summary that describes your services, target market and goals. It also needs to outline the key aspects of your business, such as its name and location, mission statement, legal structure, expenses and financial projections, industry description, competitor analysis and more.
Try to answer the following questions in your business plan:
How many vehicles will you operate?
Will you lease or buy your vehicles?
What services do you plan to offer?
What makes you stand out from the competition?
Who is your ideal customer?
How many employees do you need?
What are the costs involved?
How much do you expect to earn?
How do you plan to promote your business?
What licenses and permits are required?
What goals do you have for the first year?
What challenges do you expect to face?
What routes and service areas are you targeting?
This document will guide your efforts and serve as an action plan. At this point, its role is to outline what you want to achieve and how you will do it. Research the market thoroughly, study your competitors and have a clear understanding of your target audience.
Purchase a Fleet of Vehicles
Decide whether you’ll lease or purchase your fleet of vehicles. Leasing a van, for example, allows you to spread the payments over time. Plus, you don’t have to worry about repair and maintenance costs. The downside is that you might need to stick to a mileage limit, depending on the leasing company.
Buying a minibus, van or other vehicles will cost more. However, you can always purchase used cars to lower your expenses. Whether you buy new or used, check the cost of auto insurance beforehand. Older vehicles carry higher insurance premiums.
Estimate the costs involved, and research your financing options. Small business loans, bank loans, business lines of credit, SBA loans and peer-to-peer loans are all common ways to secure funding. Some states offer grants to business owners who purchase new environmentally friendly vehicles, so that’s an option too. If your passenger transportation company has a unique concept, reach out to angel investors.
License and Registration
Make sure your business meets all legal requirements. Register it with the Secretary of State; decide on a legal structure, and choose a catchy business name. You must also apply for a tax ID number and get a commercial transportation license and/or business license.