Have you identified a need for a car rental service in your area? If you want to dedicate the next few years of your life to this business, you might as well lay the foundations right from the start. So let’s take a look at everything you need to know about starting a car rental company.
1. Work on your market research
Market research is a must for any business project and creating a car rental agency is no exception to the rule. The idea is to survey the market before you launch, in order to know if there is a real need, that is to say, prospects who are waiting for an offer such as yours to solve their problems.
If, for example, you want to reach a tourist clientele but your region has been shunned by travelers or has been under lockdown since Covid... it may not be a good idea to create your car rental company for this market.
And who are these prospects? How do they get information? What are their selection criteria? What is their budget for this type of service?
Secondly, the market study allows us to have a precise idea of who the competitors are , what threats they represent and, on the contrary, what car hire lahore market opportunities are.
The market study also allows you to analyze your catchment area (roughly, where you are going to set up), with the aim of determining whether the location is relevant in relation to traffic, major roads, etc.
If you are targeting tourists again, but position yourself away from the tourist hotspots, your business may not attract enough people.
2. Develop your skills
Inventory management, reception, sales, customer relationship monitoring , after-sales service, yield management : here is a brief overview of the skills required by any car rental company, not to mention marketing or administrative management. These are all skills that you can develop through training or experience in the tourism or hotel industry, or simply through a position in a car rental agency. But to summarize, being a good salesperson and a customer service professional are two essential qualities for rent a car lahore companies.
However, the more vehicles you have, the less easy it will be for you to take on all the tasks necessary for the proper functioning of your car rental agency on your own. If recruiting is not really an option at the start given the launch costs and in particular the acquisition of vehicles , you will probably later need to recruit to surround yourself with competent employees in a certain number of areas: accounting, fleet management , reception, inventory control , human resources, partnership research, as well as digital and offline marketing .
3. Anticipate material needs
In terms of material needs , we will start with the basics: vehicles. Given the conclusions of your market research, you should have a fairly precise idea of the reasonable number of cars to acquire . This data depends both on the needs of the market and your financing capacity.
In any case, a good rule to keep in mind is that it is better to start with a few rather than too many vehicles because you can always increase your fleet gradually by approaching dealers, leasing or LLD (Long Term Rental) organizations .
If you have more vehicles than necessary on the other hand (which you will be able to see thanks to your turnover rate ), in other words, if a good part of your vehicles do not move from the parking lot, you will have to work on your customer acquisition levers :
Develop a website and work on its natural referencing on search engines
Integrate your fleet with car rental platforms , such as Zotcar for example
Communicate on social networks , advertise, set up partnerships, consider paid communication, etc.
It is best to think about your marketing strategy as soon as you create your car rental company, in particular to anticipate training or recruitment costs in this area.
After looking at the vehicles, let's now look at the other material needs, namely the agency premises and the office and IT equipment. The essentials are therefore premises with sufficient secure or securable parking space. As for office and IT equipment, we can mention telephony, cash register equipment, computers, tablets possibly for the inventory , not to mention all the fleet management applications and software solutions .
4. Refine your business plan:
You know your market needs your service, you've researched your catchment area, you've mastered the key skills of sales and business management or you're planning to recruit.
As with any business creation, the business plan allows you to determine:
the projected costs (spoiler alert: acquiring and maintaining a fleet of vehicles does not cost peanuts)
forecast revenues , depending on the market
the profitability of the project
Financing . Here you will assess whether your Livret A account will allow you to finance your project or whether you will need to call on, at your choice, a bank, an organization what gives exemption in tax, crowdfunding, family, a business angel, etc. It is also possible that state subsidies and aid are available in your area, do not hesitate to inquire about this.
This is therefore a step that should not be overlooked before going to buy your first vehicle. The business plan is also essential for any financing request because it is the key that will allow you to convince potential financiers of the viability of your project.
5. Choosing between being independent or franchised
Go it alone or rely on a structure that has already proven itself? At this stage, it is up to you to consider, in light of your business plan and your market study, whether you have the financial backing (and a concept that is sufficiently different and original) to become an independent rental company; or whether it is better to join forces with an existing car rental company to launch as a franchisee .
Without taking sides for one or the other of the solutions, here are the advantages enjoyed by franchisees:
Initial investments are reduced because the parent company is already structured and you can receive assistance in setting up your fleet of vehicles.
You don't have to worry about timid insurers; the reputation of the franchise network makes the process easier.
You benefit from the marketing efforts and branding of the franchise network and therefore have fewer resources to devote to customer acquisition.
Thanks to its already established processes and its knowledge of the market and the sector, the franchise network can train you in the management of your company.
Becoming a franchised car rental agency, however, has the disadvantage of requiring a fairly significant financial contribution:
The personal contribution requested is on average €20,000 and can exceed €100,000
Entry fees, which may include training and a starter kit, typically range from €10,000 to €30,000.
The royalty can be 1% of turnover but can also reach 15% of turnover.
On the independent rental side, in terms of advantages, you have the freedom to test an innovative concept, to go beyond pre-established frameworks, and do not have to pay the high entry fees of franchise networks or royalties.
6. Choose the right legal status
Anyone who says they are creating a car rental company necessarily says they are choosing a legal status . A quick overview.
In the case of a SASU (Single-Member Simplified Joint Stock Company), you benefit from a more protective social security system than that of the self-employed.
Sorry, there are none for a car rental company creation project!
You are subject to corporate tax
You have accounting obligations to meet
You are subject to corporate tax
You have accounting obligations to meet
You cannot recover VAT on your purchases
You can't amortize your investments
Your personal assets are not protected in the event of your business failure
Although this table allows you to have an idea of the advantages and disadvantages of the different statuses , we still prefer to warn you: in this area, nothing can take place of the advice of a lawyer .
7. Stay up to date with regulations
If you wanted to embark on a somewhat challenging business project, you've come to the right place. The car rental business is in fact particularly regulated .
Among your obligations as a car rental company
Take out liability insurance .
Make available to your customers, by all means, the general conditions of sale . This includes both the rates, the rental options, the rules regarding the cleaning of the vehicle, the times of collection and return of the vehicle or even the need or not to fill up with petrol when returning the car, the insurance and its conditions of application...
Provide a quote in addition to the mandatory rental contract , which must be duly completed, include the mandatory information and be supplemented by the general conditions of sale.
Require a deposit .
Maintain your vehicle fleet and organize an inventory before and after rental.
8. Equip yourself with the right tools
Finally, anticipating the daily management of your car rental agency is essential to remain efficient and be able to sustain your business.
When we talk about good tools, we are referring to:
a website to free up your time and automate bookings
a billing solution
a rental planning management tool
a contract generation solution .
But also to an inventory application , to customer fine management software, and a fleet monitoring dashboard in order to know what your turnover rate is , what your turnover is to date or even where the maintenance of your vehicle fleet is at.
To find out more , don't hesitate to download our free guide to the 4 steps to becoming a car rental company .
