In the age of ride sharing, it begs the question of whether a new business taxi business can come into the market and compete with the Ubers of the world.

There’s no doubting that Uber’s arrival into the UK market has caused major upheaval for existing players, while putting off potential new competitors with its low prices and frictionless service.

In a recent report by the All-Party Parliamentary Group on Taxis, it was said that the “taxi trade is on the brink of significant modernisation and is rapidly embracing new technologies to improve the service it offers and to remain competitive.''

As much as anything else, it was a message to those people thinking about starting a new taxi business that, if they want to be successful, they’ll need to ensure that they’re offering a service that can compete with the likes of Uber.

In this quick guide to starting a taxi business in 2019, we’ll bring you everything from the current state of the UK taxi industry, to where you need to go for taxi fleet insurance.

Is a taxi business profitable?

The question of whether a taxi business is profitable is a difficult one to answer. It depends on a number of different factors including the service being offered by the business as well as the level of local and direct competition.

But you can begin to make a judgement call by looking at the current state of the UK taxi industry and its projected growth.

According to research by IBISWorld, revenue in the UK industry has grown over the past five years at a compound annual growth rate of 2.1, despite rising external competition.

By the end of 2019, the sector will be worth around £9.7bn.

On that basis, with same report suggesting there are around 15,000 taxi businesses in the UK, an equal share of the revenue would give each firm almost £650,000 per annum.

But, as taxi giant Addison Lee’s year-end figures show, the growing value of the UK market doesn’t guarantee a profit.

Company reports show that in the year to August 2018 – the latest publically available figures – Addison Lee saw a pre-tax loss of £28.9 million off sales of £390.3 million, compared with £10.5 million profits in 2016.

How many taxis are there in the UK?

The increase in the number of licensed taxis in the UK is a sign of how the market has evolved to accommodate more drivers.

Official data from the Department for Transport reveals that the total number of licensed taxi and private hire vehicles and licensed drivers in England reached record levels in 2018.

The figure climbed by 1.7% (4,900 vehicles) to 285,400 from 2017 levels, the highest number since comparable records were first collected in 2005.

The rise was driven by an increase in Private Hire Vehicles (PHVs). In 2018, almost three quarters (74%) of all licensed vehicles in England were PHVs.

What’s the difference between taxis and PHVs?

Taxis, also known as hackney carriages, are available for immediate hire, can be hailed in the street (‘ply for hire’) or accept pre-bookings.

Taxis have two types of licences: a vehicle licence (issued to the owner of the taxi) and a driving licence.

Private hire vehicles, also known as minicabs must be pre-booked and cannot use taxi ranks.

It is illegal for PHVs to ply for hire. PHVs have three types of licences: a vehicle licence, a driving licence and an operator licence.

How to stand out from the rest

Given the facts and figures of the UK taxi industry, it’s clear that in order to drive a profit from your new taxi business in 2019 (and beyond), you’re going to need to, at the very least, do things as well as your competition.

But, ideally, you would build a business that stands out from the rest.

  • Choose your fleet wisely
    One of the first things you’ll need to get right is your fleet of vehicles. You’ll need to ask yourself what end of the market you want to operate in – cost-saving or luxury travel – as this will lead you on what type of vehicles to buy to make up your fleet.
    If you’re opting to target cost-saving passengers, you’ll want to ensure you buy vehicles which are cheap to run and maintain. Conversely, if you’re going to specialise in luxury travel, your cars will need to reflect this type of custom.
  • Develop a user-friendly app
    Next on your list when starting a taxi business might be to develop a smartphone app that can compete with the likes of Uber. Customers are becoming increasingly used to be able to request and book a tax with just a couple of taps on their phones, instead of having to call for or cab or walk to the rank and wait for one there as they would’ve traditionally done.
    If your taxi business isn’t technology-backed, it could struggle. However, if you could find a way of innovatively making it even easier for customers to get from A to B, you could stand to profit.
  • Guarantee a great service
    Lastly, you need to ensure that you’re providing a first-class service, regardless of what end of the market you’re operating in. Much of your service will be dependent on your drivers; if they aren’t upholding the standards you expect of them, you could quickly lose custom and your reputation could take a hit.

So, hire only the best drivers and make sure they understand what is expected of them.

What type of taxi fleet insurance is required?

Once you’ve weighed up whether or not you should start a taxi business in 2019 (and decided to go for it), the next thing you need to think about before you launch is getting some taxi fleet insurance cover.

Taxi fleet insurance is available to fleets of three or more vehicles.

It doesn’t matter if you have a fleet of black cabs, minicabs, minibuses, or a mix of vehicles – Taxi Insurer can help you find a policy that matches all your needs and covers all of the vehicles in your fleet, for a price that fits.

Taxi fleet insurance might also include driver cover; just remember to tell us about the age and experience of the driver when you come to get a quote.

With only one policy to remember to renew each year, you can put all your effort into making your taxi business a success. Get a no-obligation taxi fleet insurance quote today.