Owning a car is a must in industrial cities. You should definitely take this observation into account if you are looking for a new business idea.
A car rental business has its pros and cons. On the one hand, competition is very high in cities like New York or Los Angeles. Also, let’s not forget about solid startup funding you will need to find. On the other hand, this type of business is lucrative and easy-to-operate, but only if you have a good strategy. To rent dealership cars, you need to choose the business model that will work in your region. At the very beginning, you will have to surround yourself with a business advisor, marketing specialist, and lawyer. Feeling intimidated? Already?!
Indeed, starting a new business is a real challenge, especially in times of pandemic. But as the Assyrian proverb states: he who doesn’t take risks, never gets to drink champagne. Check our guide to learn how to get your first car rental business off the ground:
Research Car Market
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You will need to check some things concerning the business before getting into it. First of all, check your area and find a place where you can locate your business. Secondly, find out what your customers really want.
You have to decide whether or not you have enough money to start a car rental franchise. If you do not have enough capital, it is better not to commit to this idea. The thing is that most franchises require a lot of capital for operating. If you decide to borrow, you have to pay the loan back, which could be very expensive if you do not have enough revenue coming in.
You need to get enough information about your potential customers before starting a car rental franchise. Site your business in an area where most people will visit, such as hotels or airports.
Write Your Business Plan
Once you know what kind of car rental business you want, create a business plan. First of all, decide on a structure. You can either go through the small business programs available to you or register as a sole proprietor. As a sole proprietor, you will have the most flexibility in how you run your business.
However, if you want to raise any sort of loan or more than $1,000 in the financing, you will have to register as a corporation. Just be sure that whatever is being rented is covered by your insurance policy; otherwise, if the vehicle gets damaged while it is in your possession, you may not have any recourse for the damage.
Decide who and how many employees will work for you. Incorporate some personal traits that are required into the job listing descriptions.
Request a permit to rent from the local taxation board if you live in Florida, Louisiana, or Texas. The application process may change due to local laws and regulations; if it does, refer to the regulation handbook that applies to your area.
Register Your Business
Obtain a proper business license to operate your car rental business. This is essential because if your city codes department catches you without the proper license, it will issue citations that can harm your business.
Follow these steps to get your business license:
If you know the city’s services, call the office called “Departments,” or “Codes,” for the various types of licenses available. If you’re not sure which office to call, look in the local government, or “city” section of the phone book. Once you determine the location of your city office, go to the city offices in person to enter the application process. Bring a copy of your auto dealer’s license, proof of insurance, and your $30 fee for the operator’s license.
Once you receive your license, contact the local government again to obtain a business tax registration certificate. The tax registration portion is optional – it costs $50, but if you want to operate legally, you’ll need it.
Choose the Marketing Strategy
The right marketing strategy is the key to success in business. Research your competitors and define your target market. Build a strong online presence for your car rental business. For example, you can connect with potential customers and let them know what you do. Also, make sure to include your contact information on all marketing material.
Consider the benefits of using email marketing. With email marketing, you can reach your customers without breaking a sweat. You can even send newsletters to keep customers up to date on the happenings with your auto rental service.
Rewarding positive customer feedback will bring you more business. Initiate contact with your customers in order to get even more reviews.
Tell a story that can get customers to engage with your brand and help others who might be thinking about using your services. Another good idea could be loyalty programs — for example, you may want to offer your returning customers significant discounts for each subsequent rental.
The Bottom Line
Starting your own business may be a risky and scary endeavour, especially if you are only taking your first steps as an entrepreneur. This is why you might want to consider buying a franchise, to minimize the risk and have a support structure.
When it comes to car rental businesses, with a franchisee you will also have a car fleet at your disposal from day one. Finally, it may be a bit of a pain to go through the mundane process of registering your business at the city hall and paying all of the registration fees, but it should be your priority. Otherwise, you might land yourself in some serious legal trouble!