The most important thing in the taxi business is customer experience. If you provide a superb service, your customers have more than one reason for coming back to you. The more they come back to you, the more likely they are to recommend you to friends and family. That word of mouth is a virtuous circle.


As you generate a larger customer base, you are then in a position to use your reputation to approach local businesses like pubs, clubs and hotels to create business partnerships beneficial to both sides.


Partnerships that will, hopefully, last long-term and provide a steady revenue stream. But how do you reach that position?


Here, we’ll take a closer look at the key factors to consider when taking steps to expand and improve your business, whether it’s a minicab or cab service or an entire taxi fleet business.  


How do I start a taxi business in the UK?


Let’s start at the beginning and assume you are setting up for yourself, alongside other drivers who are keen to work for you on a freelance basis. How are you going to set about this endeavour?


The best way to begin is by making a business plan. Just like any other start-up, having a very clear vision of what you want to do and where you want to be is fundamental.


You can find multitudes of templates for business plans online, but this online guide is targeted at private hire vehicles (PHVs) in particular.


Your systematic approach to completing this plan will assist you greatly when you start your search for start-up capital. Here are some of the areas which you will need to focus on most;


  • Market research into the area where you wish to set up. This means getting as much information as possible from a variety of sources in order to confirm that your vision is feasible or not. Look at areas such as the volume of customers, the competitors in your area, or, in particular, any unmet need which might allow you to set up a more specialised offering (such as airport pick-ups and drop-offs).
  • The amount of money you need to set up and start operating. Be realistic and give careful thought to how and when you are going to repay any loans.
  • A plan for promoting your taxi business. Website, social media ads, business cards, ads in local press, apps and so on.
  • Recruiting (and, most importantly, retaining) the right drivers for your business. This includes both the initial recruitment drive, training and retention.


Above all, you need a vision – the passion, drive and ability to set up a business which is quality-oriented, customer-centric and of a very high standard in general.


Gone are the days of potential passengers settling for any old driver in any old car. The bar has been raised by the influx of market disruptors and customer expectations are higher than ever.

A new taxi driver holding the key to their new private hire taxi

How much does it cost to start a taxi business?


Finding out about the specifics when starting your taxi business is clearly the key to your research.


Firstly, write a business plan. Even if you aren’t borrowing money to help you start up, it’s a very useful exercise to sharpen your mind and identify why you want to do it in the first place.


Make a projection of your fixed and variable costs (fuel will almost certainly be the biggest variable). Check the vehicle’s fuel usage figures to work out the overall costs. After your vehicle(s), your next biggest fixed cost is likely to be taxi fleet insurance, so make sure you research reliable advice about that area.


Buy a taxi or car - remember, this is the single most expensive item you will buy and therefore, the most important decision you’ll make regarding your business – because your vehicle (or vehicles later on) – style, condition, cleanliness, spaciousness - will set the tone for what you are offering.


Obtain your taxi licence - This means fulfilling the following requirements;


  • Demonstrating you have the right to work in the UK
  • Possessing a full UK driving licence
  • Undergoing an enhanced criminal records check (many local authorities around the UK insist on this)
  • Having an authorised medical check (for eyesight and general physical condition)


Fitting your vehicles with the necessary taxi equipment


Depending on where you are setting up in the UK, this means certain modifications for your vehicle. This includes adding signage, a taximeter, GPS positioning and, if you are planning on using taxi fleet management software, space to put your smart device for accepting jobs and taking payment.


The taximeter is a key piece of equipment, as it calculates and displays the fare over the distance travelled. Be aware that in London, there are certain specifications for this piece of equipment which do not necessarily apply in other parts of the country.  


Putting a figure on the cost of setting up a taxi business is, therefore, dependent on the various factors.  One way to get clear on this is to do a cost breakdown, as only by entering specifics such as vehicle make and model and area licensing costs can you really get a true impression of the overall cost.


A taxi dirver using his phone for navigation while driving along a motorway

How can I improve my taxi business?


Selecting the right vehicles


The type (or types) of vehicles you use for your taxi fleet is partly determined by local road layouts and conditions.


A peculiarity is that in London and in a few smaller towns, a taxi still needs to demonstrate it’s able to execute a very tight turning circle. That means black cab owners in London can only choose from a limited selection of very expensive vehicle types.


Taxi fleets vary all over the country because of different local authority specifications for cabs (or minicabs). Some stipulate that all vehicles need to be wheelchair accessible, while others state that new licenses issued after a specified date need to be accessible for wheelchairs.


Clearly, the cost of your taxi insurance is going to be determined to a certain extent by the types of vehicles you are operating so choose wisely.


Selecting the right staff


Staying ahead in the taxi fleet business means having good drivers in every sense. This is a customer-facing role and the customer is effectively putting themselves in your drivers’ hands when they open the door and get into their taxi.


That requires a committed pool of drivers who will give high-quality service. The key to a successful expansion apart from finding more drivers is to keep the ones you already have.


We’re all different and a significant challenge (as in any business) is making sure a diverse range of people can deliver high standards of safety and quality of service. This has a real impact on the viability of your company because keeping an existing customer happy costs only 10% of attracting a new one.


The taxi businesses that thrive are those looking for an array of personal qualities in their staff; reliability, friendliness, efficiency, honesty and trustworthiness. Apart from that, they need to be technically proficient and willing to learn – not to mention a safe driver!


If you are considering running a high-end taxi fleet service, it may be worth considering a uniform for drivers and staff, too.


Training and development


If you want to demonstrate a commitment to improving your drivers and encouraging them to become better all-round service providers, there are organisations which provide targeted training for taxi drivers.


These are not mandatory, but the group of drivers will probably appreciate the investment in their skills as it signals a genuine commitment to high standards and professionalism.


A taxi driver's hands on the wheel of their private hire car

Staff payment methods


How you pay your staff has been revolutionised by the advent of taxi fleet management software suites. There are now several taxi management systems on the market – here’s an example of the kind of package these systems provide.


Essentially, they are there to help you and your business save time and reduce costs.


The software will track and save every job completed and allow you to monitor not only revenue generated but key performance indicators such as safe driving, efficiency in routing and the number of jobs completed over a certain period.


Cash is being used less and less in the taxi industry. With cashless payment taking over and data stored securely in the cloud, the future seems to be payment by direct transfer, once the fleet operator has taken the agreed proportion. That means efficiency for both the company and the drivers.


Expanding into new areas


The issue of how to expand your taxi fleet into new markets and new activities is closely connected to your logistics capabilities. You’ll need to access your business analytics (the data you’re gathering in and around your business) in order to assess the viability of an expansion.


That’s where a first-rate dispatch system becomes a high priority, both in terms of accurate information and ensuring a smooth and seamless experience for customers – from the moment they first contact the business to the follow-up after they have exited the vehicle.


There has been notable growth in taxi and PHV licensing over the last few years. Figures from the Government revealed that there were almost 300,000 licensed taxis and private hire vehicles in the UK in 2018, up 1.7% since 2017.


The most likely reason for this is the growth in companies like Uber. We probably know them best as ‘ride-hailing’ services, based on apps, but the more official term is Transport Network Companies (TNCs). These have been the true disruptor in the market and, as the adage goes ‘if you can’t beat ‘em, join ‘em!


If you’re looking to expand your taxi business, another thing to consider is local authority-procured transport.


This is a fixed contract that a taxi service may have with a local government body to provide transport for precise purposes such as home to school journeys, non-emergency patient transport and social care.


It’s used in locations where using public transport is either unfeasible or impractical. Depending on the area of the country, this niche market could play a significant role in a taxi business’s basic business – unspectacular, but steady and predictable income.


Once your business starts to outgrow the customer pool available, another option is to move into more lucrative market niches.


An example of this is provided by a local business in the North East. It has segmented its markets and provided the option of having an enhanced corporate account.


If you are starting from a base of saloon cars as your transport vehicles, it will, again, require a large capital investment if you want to incorporate vehicles of varying sizes and grades of quality and luxury.


A red telephone box in London and time lapse of moving traffic on the road next to it

Why is taxi insurance so expensive?


Taxi fleet insurance is considerably more expensive per vehicle than regular premiums. Driving carries its own inherent risks, and compared with the average driver, a taxi covers at least three times the distance in miles, often in heavy traffic.


Add to that the fact that you are carrying passengers and are therefore responsible for their safety, and it’s obvious why a greater degree of taxi insurance protection is required.


You will probably be using a larger model of vehicle than the average car driver, too, so it’s likely to fall into a more expensive insurance category.


Note that taxi fleet insurance coverage needs to be tailored to the needs of the fleet manager – there’s no single policy suitable for all businesses. One common difference to consider is how many vehicles there are in the fleet, for example.


Depending on your legal obligations and the extent of cover you want, there are various types of cover:

  • Third-party – the minimum amount of cover by law. It protects others if an accident is your driver’s fault.
  • Comprehensive – as its name suggests, the highest level of cover you can get and it will reimburse you for any damage to your vehicle as well as others.
  • Employers’ liability insurance – you are obliged by law to take out this policy as protection against illness or injury claims by employees.


 Reducing the cost of your taxi fleet insurance premiums


It’s worth bearing in mind that you can make several decisions which could help you to reduce your taxi fleet insurance premiums.


They may require capital investment in the short term but could also save you big-time in insurance premium costs and safety-enhancement measures.


For example, installing a telematics device to collect driver metrics allows you to check your drivers’ safety and efficiency (and to encourage safe driving).


How do I get the right taxi fleet insurance?


There are a lot of providers out there, but they won’t all be offering exactly what you need. That’s where Taxi Insurer comes in. When you contact us for advice on your taxi insurance, we’ll look carefully at your specific circumstances and provide only the most appropriate coverage.


Get in touch with us and find taxi fleet insurance for your business.


Frequently asked questions


How do I get regular customers for my taxi business?


Attracting regular customers for your taxi business involves a combination of excellent customer service, competitive pricing, and strategic marketing. Firstly, ensure your drivers are professional and courteous. Your vehicles should be clean, comfortable and well-maintained. A satisfied customer is more likely to turn into a repeat customer. Remember, your reputation is everything therefore strive to make every ride an enjoyable experience for your passengers.


Is social media effective for taxi businesses?


Social media platforms provide an interactive way to reach potential customers, promote special offers and get instant feedback. It helps taxi businesses to build a loyal customer base, improve their service based on customer feedback and stay ahead in this highly competitive market. Additionally, a successful taxi business can use social media as an advertising tool. By incorporating social media campaigns on popular social media platforms it can help to grow your taxi business.


How do I increase customer feedback and customer satisfaction?


Increasing customer feedback and customer satisfaction is important for any taxi business to grow and flourish. Start by improving the quality of your taxi services, paying keen attention to customer needs, and addressing their concerns promptly.

You should also make it easy for customers to give feedback. Use online tools, surveys, or even a simple conversation to understand the customer experience. Every piece of customer feedback is an opportunity to improve. Ensure your taxi drivers provide excellent customer service. A satisfied customer is more likely to give positive feedback and use the taxi service again.


Can a strong social media presence grow your taxi business?


A strong social media presence can significantly grow your taxi business. Social media users spend a considerable amount of time on platforms like Facebook, Instagram, Twitter, and LinkedIn.

Your taxi business page can engage with potential customers, share updates and offers, and receive feedback. Social media can also help your business reach a wider audience and increase brand loyalty.


How do I market my taxi business?


Building a strong online presence through a user-friendly website and active social media profiles. You can leverage the power of SEO to make your taxi business easily discoverable online. Traditional marketing methods like handing out flyers and advertising in local media can also be effective.


Should my taxi business have a taxi booking app?


A taxi booking app can improve your customers' experience by making it easier and more convenient for them to book a ride. A taxi app can also offer real-time tracking, cashless transactions, and efficient ride allocation. In essence, it can enhance the overall customer experience, increase your operational efficiency, and give you an edge over competitors.