The 11-step guide to begin your car rental business: Part -1

Oh! So this start-up idea clicked you. That's appreciable. But how about converting this idea into a complete business with the right action plan. If cars are your passion then welcome to this 11-step guide to begin your car rental business because we admire and help people who follow their passion and convert dreams into reality.

But before you embark on this roller-coaster journey of starting a car rental business, you must be aware of its pros and cons. Since you have committed to start this business, here are some facts empowering your decision against all odds:

After the pandemic in 2020, there is a downfall in the rental industry. In spite of that, the demand for rentals or personal rideshare is still high due to more people saying no to public transport. So you can analyze that the industry will see growth in the coming years. According to the predictions, the expected revenue by the year 2024 is USD 105,285, due to the annual growth rate of 18.5% CAGR in the years 2020-2024. You can get better clarity on how this business is beneficial to you by clicking HERE.

So keep your head high and keep moving further both in the article and in turning your dream of beginning your car rental business into reality.

Let’s start this 11-step guide to begin your car rental business

There are a lot of factors that need to be considered before beginning a business. It’s not just about registering your business with the state but also about analyzing the market, checking the target audience, performing legalities and documentation, employment, and whatnot.

So we have prepared this 11-step guide for including all actions that you need to take before actually beginning your car rental business.

1. Choose the category for your car rental business

There are a few options available to start your rental business. You need to first select the category among the options you have which are as follows:

• Buying a franchise of an existing business.
• Purchase an already existing business.
• Create your own company.
• Join hands with a car dealership.

Before choosing among them, first, define your goals and check which one suits your requirements best as each has its different advantages and disadvantages.

Let’s dig deeper into it:

Creating your own company:

Having your own business is beneficial in the long run. You have an individual right on everything, any decision, any profit or loss, decide your brand logo, r image, and anything else will only be yours without answering to anyone. But while enjoying the freedom to do all this, you get higher responsibility as well.

Creating and keeping up with your brand image will not be easier especially when you are competing with high renown and established companies. Moreover, you will surely need some stakeholders for the financial support to execute all operations of the business.

Join hands with a car dealership

You can consider this as a replacement rental. Initially, if you don’t have enough budget, you can start with this step as not a high number of cars are required in the beginning. Just offer a deal with a car dealership to provide rentals to customers who visit to repair their vehicle. But in such a scenario you will be limited to a number of customers and crossing that number will become quite difficult.

Purchase an already existing business

Purchasing an already existing business is quite beneficial as they will already have a good customer base, popular brand image, and the freedom to all those things mentioned in the point “a”.

But before you blindly begin your journey in this way, there are some things that you need to consider about them. So do some research into their car rental company regarding:

• Know their customer base.
• Do their goals match with yours?
• Know their “whys” of being successful.
• How will your partnership boost their business?

Buying a franchise of an existing business

Buying a franchise means that you are directly purchasing the rights to their brand and business model. You must have heard about some of the reputed franchises like KFC, Enterprise, AVIS, etc.

There are some benefits and demerits of buying a franchise which is as follows:

Benefit: If your budget is very low, then it might not be a perfect choice for you as the entry fees will be quite high. However, as this rental business will be completely set up with an established brand name, you will get full support to launch and manage at your location. For the budget, you can take the advantage of franchise financing options.

Demerit: if you are not comfortable with their financing options then consider any other step as their initial franchise entry cost will lie somewhere in 10s thousand dollars. As well you will not have autonomy and individual decision-making power. The major power for making decisions will lie in the hands of franchisors and all locations are obliged to follow their decision and business model.

2. Identify your potential customers and targeted audience

Marketing your services and creating a reputed brand image depends completely on your target audience and potential customers. For instance: there is no sense in selling bananas to those who are looking to purchase burgers.

So the real results are in identifying your targeted audience when you are beginning your car rental business. For this industry, the general target audience is:

• Business travelers,
• People working in long shifts away from their homes,
• People wanting long-term rentals,
• Tourists,
• Airport travelers,
• Loaner cars for dealerships, etc.

While creating marketing strategies keep them in mind. You can find your target audience by analyzing the location where you will start your car rental business and the market demand in that area.

3. Create a business plan

To take the next action, you must create a plan to execute. Know your goal and requirements to create a plan. Planning a business model will help you research various ideas, benefits and demerits, and other factors that you will face in the future. You will also need a solid business plan while looking for business partners and investors.

But you must be wondering what factors you should think about while beginning your car rental business. Here are some factors and costs needed to operate the business:

• Vehicle repair and maintenance
• Marketing strategy and plan
• Rental fees to be charged from clients
• Security and insurance
• Employment and their salaries
• Keep a separate budget for purchasing vehicles.
• Incorporation fees
• An office area: internet connectivity with fast speed, office infrastructure and equipment like computer and printer, budget for rent.
• The yearly budget for the smooth operation of the business for the next few years.

It is not over yet

This much was not at all enough to begin your car rental business idea. But we do not wish to burden you with a lot of theoretical ways instead of practical steps. As they say, starting is always tough, so is the case in beginning your car rental business.

So before we move to the next action steps, I request you to first implement these steps as per your conditions and then move on to the 2nd part to implement the next action steps. This was the main aim of dividing this article into two parts. So wait for part 2 of “The 11-step guide to begin your car rental business” and until then create your business plan.

You can also send your prepared plan to us for suggestions to: superiorrental22@gmail.com or give us a call at +61 451 616 862.

See you soon! All the very best for your startup.