With the advent of science and technology, India is progressing in fantastic strides and as a result the standard of living of people has increased. Gone are the days when people used to travel to work in crowded buses and one had to search for an auto or rickshaw in the summer heat to go to the nearby market. While the number of people owning their personal vehicles is constantly on the rise, the use of these modes of public transportation such as buses and autos is decreasing. People, whether those in ultra modern metro cities or those in small towns, all want to travel in comfort and luxury. With a smart phone in each hand, you just have to book a cab online and within minutes you are seated comfortably in a luxurious AC car, cocooned from the traffic and heat of the outside world.
These online cab companies are on the rise in India. From middle class population to the super rich, these car rental and cab companies cater to everyone. Apart from the very popular and common Uber and Ola cabs, there are luxury car rental agencies providing nothing below Audis and Limos to pick up and drop the super rich of the society.
So what exactly is a car rental agency? A car rental agency is a company that rents vehicles for short periods of time ranging from a few hours to a few weeks. They have several branches from where customers can pick up and drop the rented cars after use and they are often complemented by online websites with pre payment facilities thus allowing online bookings. Car rental companies serve people with vehicles for a temporary period of time. The need may arise due to various reasons such as: tourists in a city, when our own vehicles are damaged or being repaired in the garage or when we do not own a vehicle such as a car.
- Starting up a car rental business in India:
Today in India, car rental business is a competitive industry, but if you can learn what steps should be taken in order to maximize your odds of success before entering the business, it can also be quite lucrative and profitable.
1. Step 1- Do a thorough research and carefully consider the various options available
A good research, right planning and forward-thinking can help you greatly minimize the risks. You must do a research on what supplies you’ll need, what permits and licenses you will require, what are the trends of the market on which you will work and what are the challenges posed by the competitors in this business. You must do thorough research on all the available car rental businesses and try to learn from their mistakes.
2. Step 2- Choose your car rental business model
After a thorough research, you will need to choose the type of rental operation you’ll run. Two major types are available: Contract Hire where customers lease vehicles for a set time and Daily Hire where customers hire vehicles for shorter periods of time. Here, you will also be required to choose the location of the operation of your business. You will have to consider whether you’ll associate with big brands like Ola and Uber or remain independent and also whether you’ll go online and operate via website or mobile application or both.
3. Step 3- Build up your business
The next important step is to actually start building up your business. You will be required to amass your fleet of vehicles. The most important consideration will be whether to purchase all your vehicles or to lease vehicles for some time in the beginning. Providing good maintenance to the cars and finding experienced drivers would be your next task.
Management of day-to-day operations is also very essential. Earlier, it was common to maintain diaries and logbooks but though this method will suit in the immediate short term, but the disadvantages of a manual system will make your business inefficient. To be able to compete in this 21st century, advanced management software and a working website is essential to achieve success.
4. Step 4- Register your car rental business
The business must be registered as a legal entity in India. This can be done by registering it as sole proprietorship firm or a partnership firm or as a limited liability partnership or as a private limited company. This step also includes the following: applying for trademark for your brand name, creating legal agreements between aggregators applying for proper tax registration such as service tax in India for the Car Rental Business Service Providers.
5. Step 5- Apply for insurance
Lastly, the most important step in starting a car rental business is applying for and getting insurance. Some of the basic insurance policies that one should put into consideration when starting one’s own car rental business are:
- Liability Insurance
- Personal Effects Coverage
- Personal Accident Insurance
- Worker’s compensation
- Collision Damage Waiver
- Commercial Auto Liability
- General Liability
6. Step 6 – Open a business bank account-
A dedicated checking account for your car rental business keeps your finances organized and makes your business appear more professional to your customers
7. Step 7 Set up business accounting-
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
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