Originally published on: How to Start a Car Rental Business?
These days the expenses of living are sky-scraping. Living costs, food, commute, and other things are all exceedingly difficult to manage for most of the populace. among these expenses, owning a car or vehicle adds up to the menace. But there are times when one desperately needs a car to avoid public transport; there are times when public transport cannot really help us get what we want. Renting a car is a more convenient option in such a situation.
Thus, renting a car is the best alternative in such times. Thanks to modern times, we have a provision for such a concept in these times. So, it is not exaggerated to say that the car rental business is one of the best rental business ideas.
The car rental business is new, yet has been doing well. This segment has been projected to reach a sum of around $99.54 billion US Dollars by the end of the year 2023. The same is about to grow by a share of 4.65% from the CAGR 2023-2027.
Why is the car rental business lucrative?
People are shifting from the conventional way of owning and committing in terms of their possessions. People these days have very calculative moves when it comes to buying something.
So, in any case, a car is often seen as an asset that might be subjected to depreciation. This is where car rentals come into the frame. Simply put, there are many business models for startups, and car rental could be a potential one to meet the surging demand today. Renting a car is a non-commitment, easy solution to all those needs that public transport can’t fulfil.
- The car rental market size is about to reach a huge number of 616.5m users by 2027.
- Though it still might be in a transformative stage, the car rental segment is bound to grow in the upcoming years.
- People dread the monthly and yearly costs of maintaining a car once bought.
- Also, it comes out as an eco-friendly alternative to commutation.
- People prefer renting a car they cannot afford to buy, which is the best way to have memorable experiences.
- For those who have a travel-heavy job, it is considered better to rent a car than to invest a huge amount in buying and paying the maintenance costs of a car.
Why is it important to start a car rental app or website in growing the business?
Traditional ways to rent a car aren’t in practice anymore. Since you have everything manageable through mobile applications and websites, on-demand car rental app development shall add fuel to your business on the ground. As the stats mentioned earlier in this blog, more and more people now prefer booking cars and cabs through mobile applications. This is high time you should think about developing a customized software solution for your car rental business.
Steps to start a car rental business
A car rental business is, no doubt a profitable business and has a lot of scope in the coming years. These days, the global working population is humungous and has a big contribution to businesses like this one. Thus, to help you get started with a car rental business, we have computed a few steps:
Step 1 – Market research
Before putting your money into any business, put your brain to work and do a lot of research about the market of the industry you’re thinking of diving in. Indulge in deep research of the market size, the trends, pros and cons, get a reality check on the figures, look for the costs of starting the business, and a lot more. Here are some things to wonder about:
Step 2 – Determine your services
Now that you are certain that you want to move ahead with an idea, you should hone your idea. For that, you need to think more about what kind of services you are willing to provide and what additional products will you have in your fleet. If it’s going to be a bargain rental service, pick on the cars on the lower end of the budget and if you’re enthusiastic about a luxury rental service, you’ll have to look on the upper side.
Step 3 – Come up with an attractive name
Now comes the brainstorming part. You need to come up with a unique name for the business as it will be your identity. Remember, a name that is distinctive to ears, yet easy to remember and describes the motive of the company is what we are looking for. The name should be short, catchy, and easy to spell and locate in the memory.
Step 4 – A foolproof business plan
Now that you have a name and a determined decision, you can go on and start making a business plan. The business plan is needed to include everything from scratch. You need to understand the goals of your company along with its objectives and vision for the future.
Step 5 – Registration and licensing for Car rental business
Different states have distinct permits and licensing requirements for car rental businesses. Make sure you get in touch with an expert regarding the permits and licensing procedures. Also, you need to pick up a business entity that suits your business plan and get your company registered.
Step 6 – Tax registration for car rental business
The next step is to get your company registered for the taxes. You need to get an Employer Identification Number (EIN) for the purpose. This can be done manually on an online website or you can simply contact your legal advisor to get this done in no time. Once the EIN is allotted, the tax year is to be chosen.
Step 7 – Get an official business bank account
To keep all your expenses, separate for your business, you need to apply for a distinct bank account for your company. This helps organize all the expenditures, gains, and profits. You can easily track your company’s financial growth if you have a different account for your business.
Step 8 – Funding for car rental business
Now, the truth be told, unless you hail from an extremely rich, wealthy background, you will need to raise some money from investors in this business. being financially secure is significant for a business to start smoothly. You can either opt for bank loans, SBA-guaranteed loans, government grants, angel investors, bootstrapping, venture capital, get money from family and friends, or do crowdfunding.
Step 9 – Spread the word about your car rental business
When the business is out there, on the track, it is your duty to give it the push it needs for a smooth upward ride. You need to put some effort into the marketing of the company for it needs to be known among people. Only if people know about the existence of your business would they make up their minds to put in some money to buy the services.
Step 10 – Build a car rental website or application
What better than people having an app or website to hire a car from the comfort of their couch? Give them the convenience to rent a car the moment they are planning on something while sitting in their beds. You need to have a clear idea about the car rental application you want to develop and inform the experts you hire about your idea. Now, all you need is an automotive software development company beside you as your tech partner.
The business models for car rental platform
- Owner’s fleet
- Self-driven car rental
- Commission-based revenue
- Corporate rental service
- Outstation car rental