Business Tips for Starting a Car Rental

Today, it is increasingly difficult to find someone who is not considering opening their own business. And if everything is properly organized, it is possible to receive high and, most importantly, stable income.

One of the most promising and popular directions is the car rental industry. There are many car rental companies on the market, but some of them are successful in their business, while others lag behind.

Most people today own a car. However, they turn to a rental company when their car is out of commission. Another type of customer is those who rent a car for business trips for a day or more.

In any case, the target audience for a car rental company varies. When choosing this niche as a platform for your business, it is necessary to take all nuances into account.

In this article, we will examine in detail tips for starting your own car rental company.

Car rental registration

As with any other business, in order for everything to be legal, a car rental business must be registered in the appropriate manner. There are different forms of registration that can be chosen, but it is important to base your decision on the details that will be used in your company.

There are four main forms of activity:

  • Sole proprietorship;
  • Limited liability company;
  • Partnership of owners;
  • Joint-stock companies.

Sole proprietorship is a form of business organization in which the firm is owned by one individual. The owner has the right to dispose of the profits earned during their business activities.

This form is the most common due to its positive qualities, including simplified registration procedures, no need to register as a legal entity, simplified accounting, and autonomy in making business decisions.

A limited liability company (LLC) is created by a group of individuals with a common goal of making a profit from their business activities.

LLCs are considered legal entities, and as such, they are trusted more by partners and suppliers. The advantages of an LLC include clear tax payment rules and reporting requirements.

A partnership of owners is a form of business in which two or more individuals join together to conduct entrepreneurial activities. The distinguishing features of this form of business include separate property, joint affairs, and a common interest in the business.

The advantages of this form of business include a simple registration procedure, the ability to attract financial resources at any stage of the business, and a reduction in risks due to the pooling of financial resources.

A joint-stock company is a legal entity that owns property and has limited liability. The advantage of this form of business is the ability to attract financial resources by using shares.

There are two types of joint-stock companies: open joint-stock companies and closed joint-stock companies.

Car rental location selection

We’re talking about finding a place for parking and an office. First, it is necessary to thoroughly study the market and understand where it will be most profitable.

Car rental booking systems are often profitable in large cities, preferably near auto service centers for the convenience of car maintenance. Another good option is to find an office at the airport, train station, hotel, or resort – places with high traffic.

A large office is not necessary – 20-30 square meters will be enough. However, the size of the parking lot can be calculated depending on the number of cars.

On average, one car takes up 8-10 square meters. We recommend looking for a place where at least 10 vehicles can fit, even if you plan to start with much less.

Car rental equipment

It is not enough to simply rent an office space. To work even with a small group of people, equipment will be needed.

First of all, this is organizational equipment – laptops, printers, and other devices for physical work with documents.

Car maintenance also has its own nuances. It is better to purchase automotive oils on your own, as there will be large mileage.

Also, buy brake pads, wiper blades, and washer fluid. And you also need to conclude a contract with the nearest car service. Sometimes you can meet the owner of a car rental who also owns a car service.

When providing a vehicle for rent, it is also necessary to think about additional equipment for customers. This can be a child seat, GPS navigator, roof rack, car router, and even a holder for a phone/tablet. This type of equipment will make the client’s trip by car more comfortable.

Buying cars

One of the most controversial aspects of starting a car rental business is whether to buy new or used cars. On one hand, purchasing new cars from a showroom can ensure that they will not require significant repairs for several years.

However, using a car rental booking engine entails constant risks from drivers. Therefore, it may not make sense to invest in new vehicles if clients are likely to wear them down during use.

Choosing well-maintained used cars is an optimal solution, while new cars can be considered for the luxury class. Ultimately, the decision depends on the initial capital of the company.

The following car classes are typically used for car rentals:

  • Class A: Compact mini cars designed for city driving.
  • Class B: More comfortable cars with larger dimensions.
  • Class C: Mid-sized cars that can transport up to 5 passengers.
  • Class D: Sedans and station wagons designed with passenger comfort in mind.
  • Class E: Cars that offer both comfort and status for the driver.
  • Class F: Large sedans up to 5 meters in length that have a prestigious status.
  • Class S: Sports cars designed to provide maximum speed and maneuverability.

Car rental staff

A car rental business is impossible without qualified employees. Since your startup does not initially require a large investment, you can start with just a couple of people, not including the business owner.

Your first hire should be an auto mechanic, whose duties will include handling maintenance issues for the car fleet. It’s important to choose a specialist who has a good understanding of automobiles.

The second person on your team should be a customer service manager. They will be responsible for answering potential customers’ phone calls, taking bookings for car rentals, monitoring payments, and verifying the authenticity of drivers’ documents.

By the way, you may not need to hire a customer service manager, as all of these functions are already performed by specialized car rental booking software.

Promotion options

Without promoting as a car rental brand in the market today, it is impossible to build a successful business. In order to increase the company’s recognition and attract customers, it is necessary to implement a range of special measures.

The most effective tools for promotion are:

  • Advertising in the media: radio, TV, press
  • Promotion on the internet: website, social networks
  • Properly configured marketing policy: pricing, discounts, and promotions
  • Presentation of the company at special exhibitions and festivals

To retain customers, you can make calls and mass mailings of commercial offers. Phone calls are an outgoing targeted communication that is necessary for effective business management. With their help, you can promptly respond to changes in customer needs and plan further advertising campaigns.

Today, more and more people want to start a car rental business. However, not everyone can make it successful. To compete in the market with experienced players, it is necessary to follow some business tips.

Register your company, choose a suitable location, purchase office equipment. Deal with the purchase of cars in the fleet, hire staff, and make sure you have a special car rental software. And to promote your company in the market, choose special advertising tools and don’t forget to make calls to your customers.

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