Taxis are often in high demand – IBIS reports that by the end of 2019, in England the industry should be worth roughly £9.7bn.
However, competition is tight, especially since the likes of Uber popped up.
In 2018 the number of private hire vehicles and licensed drivers soared to record levels, according to the Department for Transport.
It’s still possible to set up and expand a thriving taxi fleet, you just have to pick the right time.
Whether you buy or lease vehicles, the expansion of your fleet is a considerable investment, so reliable cover is a necessity.
Taxi Insurer understands how challenging running a fleet can be, with your vehicles and drivers facing a multitude of risks every day.
We offer quality taxi fleet insurance, tailored to match your specific needs and budget.
The idea of expanding your existing cab company may be daunting, but the payoff could be well worth the effort.
We’re here to help you decide whether now is the right time to act.
It’s important to build a financially healthy cab service before considering expansion.
In the initial stages, you want to focus on finding your niche, establishing a solid marketing strategy, hiring great drivers and securing reliable taxi fleet insurance.
Until you have the necessary licensing, do not hit the road. You’d be breaking the law, and could end up with a hefty fine.
Always check with the local authorities before launching your cab service, as licensing requirements differ from region to region.
Your drivers are key to the success of your fleet, so you want people with strong driving skills, detailed local knowledge, and the correct licensing – they’ll be the face of your company after all.
Take a look at the local area you hope to operate in, and identify the competition, as well as customer demand.
Are you based in an urban or rural area? Aiming to win customers in the luxury end of the market
Factors such as these will determine the type of vehicles you invest in and the services you offer.
Before expanding your taxi fleet, ask yourself some tough questions:
Over-stretching your resources could spell trouble down the road, as customer demand ebbs and flows.
You’ll also need to adjust your taxi fleet insurance accordingly, so investigate the best possible options before committing, and make sure you have adequate cover.
Here are some of the signs it might be time to expand….
If you’re receiving more bookings than your fleet is able to accommodate, expansion may be beckoning.
While it’s a great problem to have, you don’t want to risk disappointing customers or losing them to rival minicab companies.
First, examine why business is booming.
Is growing demand a consistent theme, or is the spike caused by seasonal trends?
Having a considerable cash reserve is always sensible, but an excess of funds is wasted sitting in your account – it could be invested in the growth of your business.
The taxi industry is increasingly centred on digital and technological innovation – the tech-savvy minicab companies tend to win the most business.
If you’ve got extra money to hand, investing in taxi fleet management software, a new website or online marketing strategy or the latest eco-friendly vehicles could put you ahead of the competition.
Keep getting calls asking for early morning pick-ups?
If you don’t already provide the service, consider adding it to your current offering.
A great way to boost business is to absorb corners of the market other rival firms aren’t dominating – it makes you stand out from the crowd.
Make sure you and your drivers can accommodate such services.
If you know you’re unlikely to find enough drivers willing to do airport runs, for example, it’s not a good idea to offer the service, as it could affect the consistency of customer service.
If your business premises are fit to burst with drivers and vehicles, it might be time to scale up.
Pace yourself, though, and weigh up whether you have the funds to stretch to a bigger site.
Consider whether business is likely to continue rolling in at its current rate – you don’t want to commit to more expensive premises and cars unless they’ll be fully utilised.
Knowing a good opportunity when you see one is key to business growth.
If a prime business site becomes available, or you’re offered a fantastic finance deal, you may need to be flexible and grab the chance before it passes.
Likewise, sometimes a product becomes available that perfectly fits your market.
For example, there are many benefits associated with electric or hybrid cars – such as tax savings – so the time may be right to expand your fleet to include greener vehicles.
While it’s good to step outside your comfort zone, assess all possible outcomes.
Things often don’t go to plan, so make sure you can realistically handle issues that may arise and get professional financial advice before embarking on any expansion plans.
It’s important to recognise when you need help.
You may be a whizz when it comes to fleet management, but lack knowledge in marketing or accountancy.
You may decide to take on the challenge yourself.
However, if your business is growing at a faster rate than you can handle solo, creating new roles, specialising in areas you lack knowledge, can help your company thrive.
To thrive and survive, your business should be moving forward at all times.
While growing your business demands extra time and effort, sometimes it’s necessary to avoid stagnation.
Even if your fleet’s doing well, it’s good to set goals and aim higher, adapting so you can dominate in an ever-changing marketplace.
While expansion may not be the right move, progression and improvement is always important.
Set time aside to examine your cashflow every month, and pay attention to the source.
If a large portion of income is linked to just one or two accounts, this is a red flag.
If you lost one or both of these accounts, you could find yourself in hot water.
A limited customer base dependent on a few lucrative accounts is risky for the long-term health of your company, so it may be time to expand by offering new services.
When adding to your fleet of vehicles, you have two main options: buying or leasing.
Do your research before you commit – the calculation of your taxi fleet insurance takes into account factors such as vehicle safety ratings.
Purchasing new vehicles for your fleet requires considerable capital.
Owning your assets can come in handy when repaying outstanding debts or applying for finance, but after just one year of ownership a new vehicle loses a considerable chunk of its original value, depending on the model.
You could look into purchasing second-hand vehicles, but be sure to check they’re in tip-top condition.
Think it through before taking out a loan to cover new vehicles, as this could affect your eligibility for other lines of credit, should you need them.
If you decide to lease extra vehicles, you can do so with or without an initial deposit.
You’ll make monthly payments, and can opt for new or used cars.
Leasing new cars has its perks, as they’ll come with the current safety technology and the manufacturer’s warranty cover.
You’ll also be able to claim back all or part of the VAT, as leasing counts as a business expense.
Better yet, under the latest lease rental restriction rules, if you’re leasing new cars with emissions of 110g/km or less, you’ll be able to offset 100% of the lease payment against your corporation tax.
You can claim back 85% of payments for vehicles with emissions over 110g/km.
Leasing also has its drawbacks.
It may be harder to qualify for finance, if the need arises, as you cannot name leased vehicles as assets.
Your monthly leasing fees will factor in your annual mileage, which can be erratic for many minicab fleets.
If you lease a lot of vehicles, the monthly charges can quickly add up, so do your sums before you invest.
You could consider purchasing another minicab company and merging it with your own – potentially, this could save a lot of time and energy looking for drivers, buying new cars and so on.
Before you commit, thoroughly look over the business’s turnover, and find out why it’s up for sale.
Expanding your fleet comes with both pros and cons.
While an expansion means extra financial burdens to bear, your previous experience, mistakes and learnings will likely influence your choices, optimising your business structure and strategy.
When buying or leasing vehicles, you can be strategic, choosing vehicles with lower insurance rates, rigorous safety testing and low CO2 emissions.
When you originally set up your fleet, there may not have been the facilities available that now exist for electric cars.
Fluctuating fuel costs are a major threat to taxi business success, so investing in electric or hybrid vehicles could save you money and improve your eco credentials.
Expanding your fleet to include vehicles suitable for disabled customers can bring you extra custom, too.
If you have a solid customer base, watertight marketing strategy and good local connections, you could find an expansion boosts your profits. However, with increased investment comes added risk.
Recruiting new drivers requires time and effort. Ensure they come with the necessary credentials and clean driving records – they’ll need to uphold your customer service standards.
Your taxi fleet insurance costs will rise the more vehicles you add to the policy, but Taxi Insurer can help find you the best possible cover suited to your newly expanded fleet, which can include driver cover, too.
The cost of extra vehicles will likely mean more thinly spread finances, and if business takes a dip you may find yourself struggling – this is why it’s vital to implement a thorough business plan and maintain an adequate reserve of funds.
A bigger fleet enables you to accommodate more customers.
There are plenty of savvy ways to attract new clients, and in the digital age it’s easier than ever.
A strong online presence should form a key part of your marketing strategy.
Ensure you pay attention to local SEO, claiming your Google My Business account, as well as other social media profiles.
An attractive, easily accessible website and app will put you ahead of the competition, as nowadays people are looking for quick, easy booking services they can access from their phones, tablets and computers.
Make sure you include clickable numbers, and check your address is accurately displayed sitewide, as this will boost your online searchability.
Fleet branding is basically free advertising for your minicab service, so ensure all fleet vehicles feature consistent, eye-catching branding.
You could also partner with local businesses, offering exclusive cab services to local hotels and restaurants.
Whether your fleet consists of minicabs, black cabs, minibuses or a variety of vehicles, Taxi Insurer can help you find dependable cover tailored to your business and budget.
A larger fleet means increased exposure to risks on and off the road.
Avoid the headache of managing multiple policies and opt for quality taxi fleet insurance, protecting you, your drivers and your vehicles – all under one policy.
Sadly, accidents, theft and vandalism happen all the time – this is why taxi fleet insurance is so vital, whether you plan to expand or not.
Protect your livelihood and get a quote today.