Is car rental a good business idea? Is a car rental your dream and business idea? Check if it pays off at all.
Which car rental is best for you?
The first thing to consider when starting a business is the type of rental business you intend to run. You will need to know the types available – Long Term Rental and Daily Rental, and decide which one you want to continue. The rental agreement is usually intended for business clients who rent vehicles on a fixed-term basis, while the daily rental is for individual clients who rent vehicles usually for a shorter period.
The next thing to consider is how to get your car fleet. The options are direct purchase or leasing. Direct purchase is usually more expensive than leasing. You also need to decide how many cars you are going to start with, bearing in mind that the more cars your company has, the more you will earn from it.
Car rental is primarily well-maintained vehicles. You can choose to outsource maintenance or hire your own cleaning and minor maintenance staff. In the first phase of your business, it will certainly be a noticeable expense, so include it in your business plan.
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Car rental – industry overview
The car rental industry has grown sharply in the five years following previous years of recession. This was mainly due to the fact that airlines that previously experienced a decline in customer numbers have seen an increase in recent years, thus combining air travel with car rental.
The car rental industry is expected to grow until 2021. The largest car rental companies in the industry have an advantage over smaller companies, especially as they have strategic alliances with airlines and hotels that smaller car rental companies do not have.
More people can now rent cars via offline mode, mobile app and other form of internet access. If your bus rental wants to be modern, it should also give you this option.
Car rental – how to start?
Starting a car rental business is not an easy undertaking. You need a huge source of capital to buy the cars you need for your business. In addition to needing money to pay for the car purchases, you need cash to keep them and you need to make sure you have enough employees to help run your business stable.
While small car rental companies can easily compete with other smaller car rental companies in the region or locally, they may not be able to compete with the larger car rental companies.
As a small car rental company, your greatest hope is to build relationships with local customers regarding your business as well as seek to partner with medium to large scale car rental companies. Large-scale car rental companies often outsource some sites to small businesses.
Starting a business in any way can have its advantages and disadvantages, which means you need to have your plans in place before starting the business. Starting your business from scratch will help you grow as an entrepreneur and give you an experience that a franchise would not give you. Car rental is a type of business that is worth learning from your mistakes at the beginning.
Running your business from scratch means you’ll have to deal with paperwork as well as design strategies to get customers while you’re running your business. This in no way means that all businesses that start from scratch are successful. Unfortunately, the specter of failure is considerable.
Car rental – franchise
Buying a franchise is for those who don’t want to deal with paperwork and worry about customers. When you buy a franchise, you buy all the strategies, equipment, structure and techniques in a given location and all you have to worry about is providing service to your customers.
If you are only interested in services and have no head for other technical issues, you should buy a franchise. Before you decide to do so, however, do a detailed research of the company that best fits your vision and generates income. Then car rental will be a lucrative business.
On average, ten percent of the rental company’s revenue comes from additional fees such as car seat rentals, full gasoline, insurance costs, and GPS, which customers choose at the counter for convenience. Additional fees will apply, for example, for picking up the car at a location other than the rental location or for dropping it off at a remote point. Therefore, the car rental company should have a flexible offer in order to have the chance to earn that extra money and better suit the preferences of customers.
