The idea of starting a taxi business can be an appealing one. For many, it’s a dream to be their own boss and potentially make good money doing it. The taxi industry is unlikely to experience a decline anytime soon, so why not?
It’s not a decision that should be made in haste, however, with a number of things to consider before going ahead and buying or leasing your fleet of taxis.
To help you decide whether you should switch on your ‘TAXI’ light, we’ve put together this guide on what equipment you’ll need to go out and buy first before you can open your door to customers. We’ve also included some other costs to think about such as taxi fleet insurance and a taxi licence.
Let’s start with the obvious. To get going in the taxi business, you’re going to need a vehicle. The good news is that, in this ride-sharing era, you can get away with turning just about any car into a taxi.
The choice of car, or cars, for your taxi fleet boils down to what type of service you want to offer. If you want to provide something more upmarket, then your cars will need to reflect this. Likewise, if you’re planning on being the cheapest taxi company in your area, it might be a good idea to opt for something on the cheaper side of things.
You also need to decide whether you’re going to buy your cars outright or lease them. There are pros and cons to each:
Buying pros and cons:
+ You’ll own the asset which means you can use it to secure finance
+ You can potentially pick up a bargain in the used-car market
- Buying cars outright can consume your capital
- If you decide to buy new, the asset will quickly depreciate in value
Leasing pros and cons:
+ You can put your taxi fleet together with very little outlay
+ You don’t have to worry about the asset depreciating in value
- You can’t name them as assets if you need to secure finance
- You have to be sure about how many miles you’ll do, as you could be charged for going over your annual limit
A few years ago, you would’ve needed to buy a satellite navigation system in addition to a mobile phone, but that’s no longer the case.
While not all mobile phones are Sat Nav friendly, the latest smartphones make it easy to get from A to B. The days of needing to know the road network in your area are long gone (unless you’re a black cab driver in Central London, that is).
The newer cars even allow you to connect your smartphone to the centre console, mirroring the navigation instructions on a larger screen. This makes it safer to follow when you’re on the move.
As the owner of the business, it’s up to you to ensure that your drivers have some sort of Sat Nav facility, whether that’s through their mobile or on a dedicated unit.
Clear and constant communication with your drivers whilst they are carrying out jobs, picking up and dropping off passengers, is key.
You might see some taxi firms continuing to use a CB or two-way radio to let drivers know where their next pick-up is. This is perfectly legal, provided users’ driving does not suffer in any way.
But if you’re just starting a taxi business, it arguably makes more sense to communicate via mobile phones instead, especially if they’re doubling up as a Sat Nav. However, it’s illegal to drive a vehicle while using a hand-held mobile phone, so you’ll need to ensure your drivers all have Bluetooth headsets to do their talking.
If you want to be paid for your service, you best ensure that you have a portable payment machine available to passengers. With fewer and fewer people carrying cash in their pockets, failing to facilitate card payments could see you lose out on some important trade. In fact, in Central London, all licensed taxis must be fitted with a TfL-approved card payment device.
There are plenty of card readers on the market – our advice would be to find a provider that is set up specifically for taxi firms, who will get you up and running and earning money in no time.
So that you know how much to charge passengers (and so that passengers know how much they’re being charged), you’ll need to install taximeters in your vehicles.
When looking for a taximeter supplier, look for confirmation that the device will be compatible with your chosen payment machines and that the provider can ensure that the taximeter is supplied with the correct tariff for your council district.
In order to manage your fleet effectively, you’ll need to ensure your vehicles are fitted with tracking software. This will enable dispatchers to keep tabs on their cabs and see who is best placed to do the next pick-up, getting drivers to customers quicker whilst boosting fuel efficiency.
The latest fleet tracking software, built with GPS technology, gives taxi fleet managers a view of where their cabs are in real time.
Once you’ve got your fleet all kitted out, there are a few other costs to consider before you hit the road.
Firstly, you’ll need to get your operator’s license from your local licensing committee. Licences are issued by the local council (unless you’re going for a Hackney licence) and there may be specific criteria that you will need to fulfil before they’ll grant you a licence; for instance, they may stipulate that you need taxi fleet insurance.
Taxi fleet insurance is not a million miles away from standard car insurance. However, in addition to cover for third party, fire and theft, you can also get a policy to include public liability and employers’ liability insurance.
Available to taxi companies with fleet sizes of three or more vehicles, taxi fleet insurance cover is a crucial purchase if you’re planning on starting a taxi business. Get a no-obligation taxi fleet insurance quote today.