How to Start a Car Renting Business [Complete Guide]
If you have enough capital to start a car renting business then this article is a guide to assist you in getting into the car rental business.
An Overview of the Car Rental Industry
The car rental industry has started to develop again in the last five years after a few years of pause. The reason for this decrease was due to the loss of customers of the airline’s companies. So, we can say that the car rental industry is directly linked to air travel.
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Interesting statistics about the car rental industry: As corporate profit rates and per capita income are increasing, the number of air travelers is also increasing. This will undoubtedly contribute to the development of the car rental industry. In the car rental sector, which is expected to develop rapidly until 2021, large car rental companies are more advantageous than small companies. These large companies, which have strategic partnerships with airlines and hotels, can easily earn money.
Big companies in the industry enjoy this because they create brand awareness. Getting permanent customers creates difficulties for small businesses that are just starting out. Also, small businesses cannot keep up with this race, as large companies constantly renew and maintain cars.
The industry grossed $ 43 billion from 2011 to 2016, and grew by 5.2% annually. A total of 2907 businesses employed approximately 135,000 people. Car rental businesses are gathered in four different segments: the inner-city, intercity, airport and others. The most prominent airport car rental companies in this quad. This segment, which covered 49.5% of the market in 2014, seems to maintain this title for a long time.
Car rental operations are generally divided into two for business and travel purposes. Business car rental is more common than travel car rental. However, it is thought that renting a car for travel will increase as the number of people on vacation increases. The types of cars are generally divided into economic cars, mid-range cars, compact cars, premium cars and luxury cars.
Nowadays, many people rent a car through phone apps or the internet. Between 2019 and 2020, there was an increase in phone apps. In addition, the car rental business is divided into unionized and non-unionized workforce. The unionized workforce increased the most between 2019-2020.
In addition to the increase in international travel, the increasing population and the widespread use of the internet have also led to the development of the car rental market. Online car rental businesses started to make more revenue with the spread of the internet.
One of the biggest problems facing the industry is environmental regulation sanctions around the world. The environmental pollution caused by cars played a big role in the creation of these regulations.
Executive cars and multi-purpose vehicles are the most preferred types of rental cars worldwide. Economic cars, sports cars and luxury cars are on the list behind the duo. Car rental companies operating outside the airport segment earn money from needs such as transportation to the city center, local travels, event transportation, employee service and personal driving.
In-Market Applicability Research
Demographic and Psychographic Segmentation: When we look at the demographic and psychographic distribution of the people who use car rental services, we see that these people are generally corporate managers, foreign tourists and people travelling in the country.
Young adults, working-class and senior citizens stand out as economic people who will benefit from car rental service.
Choose a Place for Yourself in the Car Rental Sector: Since the main purpose of car rental businesses is to provide a vehicle for the customer to go from one point to a certain point, all services are similar. But still, here are some areas where you can customize in the car rental industry:
• Other services
Competition Level in the Car Rental Sector: Of course, opening a successful rent a car shop is not an easy breakthrough. In the beginning, one needs a large source of capital to be able to buy the necessary cars. Of course, it would be beneficial to thoroughly investigate the competition in the market before making such a large investment.
While smaller car rental companies can deal with other regional and local businesses, they may not easily compete with large car rental companies.
As a small car rental business owner, you should build good relationships with your local customers and try to partner with medium or large car rental companies. These large-scale car rental companies can provide resource assistance to problems that small car rental businesses have difficulty solving.
Economic Analysis: You must do a feasibility study before starting this business. There are many factors you need to consider so that your business doesn’t fail as soon as it starts up. It is very important to think about how to leave your competitors and to come up with some strategies in this way.
You should also make sure you find a suitable position in the industry and open your business at a point of sale that will be noticed by customers. You should see if it is worth the risk to start a car rental business with a business plan.
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Another thing to consider is where you will meet your capital. Keep in mind that banks and major financial institutions will be giving money to already existing successful car rental companies rather than new businesses. So, if you want to start a new business, you have to stick to the funding issue.
Another important issue is where your business is. If you want to start a medium or large business, you need to make sure your location is large enough for your fleet of cars and accessible to your staff and customers.
Should You Start From Scratch or Buy a Dealership?
Whatever the method to start a new business, it’s something that has both pros and cons. So before starting work, you should make sure that you have made your plans in detail. Starting your business from scratch will help you develop your entrepreneurial personality and gain an experience that franchise can never give you.
Starting from scratch means that you will be dealing with a lot of paperwork and will develop strategies for attracting customers while running the business. But these are not enough for your business that you started from scratch to succeed.
Buying a dealership will save you from dealing with the paper business, you will only deal with customers. When purchasing a dealership, you buy all the strategies, equipment, structure and technique ready. The only thing you need to think about is how you will serve your customers.
If you are only interested in providing services and are reluctant to deal with other technical work, you should buy a dealership. But before you buy the dealership, you should make sure that you do good research, find the company that suits you best, and that the return on your investment is quite reasonable.
Possible Difficulties You May Encounter in the Rent a Car Business
Every business has its challenges. One of the biggest difficulties you may encounter while setting up a rent a car will be the general economic situation of the society. If the economic situation of the people is not very good, the per capita income will also decrease, so the number of people who want to benefit from car rental services will decrease.
Another challenge you may face is having trouble finding the money you need to start a business or expand your fleet. Money is a must for every business, and if you don’t have enough money, your business may be disappointed before it can start operating.
How to Start a Car Renting Business?
1- Consider the options available. The car rental industry is an intense competition sector, but you can minimize your risks with the right planning and forward-thinking. Remember, if you fail in the preparation phase, you must be prepared for the failure. You must do your research at the beginning, so this article will be a good starting point for you. With the right research, you will become a company that is always in demand and you can earn good money.
2- Decide what kind of sales operation you will perform. There are two main ways you can do it. In the first, customers – usually companies – rent vehicles for a certain period. In the second, customers – usually individuals – rent vehicles for a daily or longer period.
3- Set up your vehicle fleet. The most important thing to think about here is will you buy or rent the vehicles? Your fleet does not need to be large at the beginning but keep in mind that the bigger your fleet, the bigger your earnings will be. Always put yourself in your customers’ shoes. Your fleet should be well protected and ensure high turnover. Your maintenance staff must find the right solutions and do a good job otherwise you will have to work with local mechanics.
4- Find a place for your rent a car shop. This is the key factor. Research the market around you well and understand the competition as well as possible. As an independent business, you need to position yourself differently from your competitors. Some international brands rent out cars very cheaply, so to compete with these companies, you must differentiate yourself and build your local customer base. Find a place near airports, hotels and train stations. Remember, the place you find must be safe. It is a good idea to invest in CCTV cameras and alarm systems.
5- Get insurance. One of the most important issues for rent a car company is an insurance. It would not be legal to trade this business without having fleet insurance. Find out what kind of procedures you need to take by contacting the relevant insurance agents.
6- Plan your daily work. In the past, all jobs were written in logbooks and thick diaries. This system works in the short term, but the disadvantages of this system are more than its advantages. Manual systems waste time and paper are often lost so your productivity decreases. Which vehicles will enter and exit becomes confused and dealing with invoices turns into a nightmare? You need to use fleet management software to increase your efficiency and avoid such hidden dangers.
7- Open a website. If you want your business to proceed properly, you must have a website. Many people can afford to use the Internet and want to buy services. Nowadays, many people buy products and services, especially by searching on Google. If you have a website, people can get information about your business 24/7, outside of your working hours. Especially newly established businesses want to introduce themselves. If you don’t have a website, potential customers will knock on other companies’ doors. Don’t send people a few of your prices with your contact information and then expect good results.
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The people of the 21st century are impatient and want to use it immediately when they find a suitable opportunity for them. For example, they want to reserve the vehicle and pay online immediately. That is why there should be an online vehicle reservation system for customers entering your website (your storefront). You can do this by hiring a web designer, but remember that this job will be expensive. The web reservation system is completely installed on the existing website within one hour. All that needs to be done is to enter a code on your website. It will then be easy to edit the tariffs and groups. Automatic booking confirmations and e-mail reminders will be sent to customers, so you will avoid confusion. Just enter a code on your website. It will then be easy to edit the tariffs and groups. Automatic booking confirmations and e-mail reminders will be sent to customers, so you will avoid confusion. All that needs to be done is to enter a code on your website. It will then be easy to edit the tariffs and groups. Automatic booking confirmations and e-mail reminders will be sent to customers, so you will avoid confusion.
Rent A Car Opening Conditions
a) It will have at least 80 m2 closed area.
b) And no vehicles will be put on the road with building hauling distances (including bicycle, motorcycle).
c) No flammable explosives will be kept in the rental cars
d) A technical person to be drawn a detailed workplace layout sketch.
e) Will not be able to change this settlement without permission.
It is forbidden to keep LPG vehicles in closed areas
Documents Required To Open Rent A Car
1-Copy of identity card and residence certificate
4-Building occupancy permit paper.
5-If it is leased, the original or notarized copy of the lease contract.
6-A photocopy of the tax certificate.
7-A copy of the relevant Chamber of Tradesmen or Chamber of Commerce. (Alanya)
8-A copy of insurance or bonding certificate, or pension card.
9-Water subscriber card counter will be installed in the workplace
10-If there is a working license previously given to the same address, it will be returned to the municipality.
11-A report of fire precaution taken from the fire department will come.
12-A copy of the identity statement document stating that he/she gave an identity notification to the police.
13-Signature circular, copy of Trade Registry Gazette (In case of a company)
14- New dated criminal record from the C. Prosecutor’s Office
Note: These documents are for informational purposes only and may differ from municipality to municipality. For exact documents, please contact the relevant municipality.
Rent A Car Opening Cost
To begin with, how many vehicles you will have in your fleet and how you will obtain the vehicles can make the cost very variable. Apart from this, the size and location of your shop are also important factors affecting the cost. If you have trouble finding capital, you can agree with your acquaintances and rent their vehicles by giving them a certain share in the first place. It is not correct to give an exact figure for the cost. For a healthy cost calculation, you should provide us with detailed information about the rent a car shop you want to open. If you comment on this article, experts will calculate a cost for you.
Financing Your Car Rental Business: Everyone knows how important money management is when running their daily activities. Entrepreneurs are also aware of the importance of financing their businesses. No business can survive without financial resources. Since it is not easy to open a car on the Rhine, finding capital is extremely difficult.
That’s why you need a very good business plan. With the business plan, you can find possible resources that can invest in your business. If you have a good business plan, you can convince investors that you will make money and benefit them in the long run.
Here are some things you can do when looking for financing for your car rental business:
• You can approach angel investors and share your plan with them.
• You can get money from venture capital companies.
• You can apply for credit to financial institutions (Kosgeb etc.) and banks.
• You can set a plan according to your financial situation and real estate sales.
• You can approach certain investors.
Choosing a Suitable Place for Your Rent A Car Shop
As an entrepreneur, you should know that the location of your business plays a major role in success and growth. There are many things to consider when choosing a suitable place for your car rental business.
For some businesses, finding an affordable place is enough, but for car rental companies, that’s not just the case. Because your customers need to be able to reach you easily.
If you have a single car, there is no problem, you can work from your home. But if you’re aiming for more than that, you have to find a venue that will highlight your business.
The place you want to find should be convenient for you to grow comfortably. At this point, the business plan comes into play again. Since your goals will be included in the business plan, your business plan will guide you in choosing the place to rent.
Preparing a Business Plan for Your Car Rental Business
The business plan is extremely important for all businesses. No matter what field your business is, you need a business plan. We do not claim that every business has a business plan, but we can say that businesses with a business plan perform a more serious business than others.
So if you want to start a car rental company and be taken seriously by investors, you need to create a detailed business plan. Setting up a car rental business without proper planning means your business can fail before it can get up and running properly. But if you make a business plan, you will be able to see the strategies that will make your business more effective in the long term.
The business plan is also very useful in seeing the decisions you will make about your business in the future. You will be able to easily determine your strategies since finding capital resources, attracting customers, and how to manage the business will be included in your business plan in detail.
Since preparing a business plan can be boring, many people quickly write a business plan without doing any research. When their business fails, they find the business plan to be an unnecessary thing. You should prepare your business plan based on realistic calculations, not imaginary numbers just to feel good. This way, you can avoid a venture that will not be profitable for you, and return from the brink of the abyss.
A business plan to be prepared for a car rental business should include:
Every business plan must have a management summary. In this summary, you will clearly state the purpose of your car rental business, your sales and marketing strategies, your marketing goals, your target audience and how you think to differ from your competitors. You also need to provide information about your company’s vision, goals and the area it will specialize in.
Your business plan should include the market size and share, and the growth rate you set for your car rental business. In your business plan, you should specify the number of cars you will start to work, the number of people you will employ, whether you will handle maintenance support with your team or from outside.
If you are too lazy to prepare a business plan, you can create a business plan for your rent a car business with the help of a consultant. You can also find a sample business plan template online and edit it to suit you.
Marketing Ideas and Strategies for Car Rental Businesses: Any business that wants to make money should make sure that its marketing strategies are sound. You will advertise your products and services through marketing methods. Every marketing strategy should be able to monetize you using both traditional and non-traditional sources.
If your rental car business is medium or large, you can make money offers for the deal whenever possible. If you have a large-scale business, you can reach a wider audience and increase your brand awareness by partnering with small businesses.
Here are some marketing ideas and strategies you can apply:
• Making offers to corporate companies, airline companies and government authorities
• To send informative brochures to your customers
• Advertising in relevant magazines and newspapers
• Opening a website and providing online service to customers
• Make sure your car rental business is listed in local address directories
• Using social media accounts such as LinkedIn, Facebook, Twitter and Instagram
• Advertise your business on internet pages
• Hanging posters in areas close to your target audience
• Using word of mouth marketing method
• Direct marketing
Possible Strategies to Get You Ahead of Your Competitors: Every entrepreneur knows that competition is inevitable, regardless of the industry. Customers always prefer businesses that offer good service at affordable prices, so if you want to stay ahead of your competitors, you should find both affordable and unique packages.
You can design your strategy so that low-paying customers can access your luxury fleet under certain conditions. Thus, you can profit while your competitors are brooding on how they can use the luxury vehicles they have.
You can get ahead of your competitors by specializing in some of the areas listed above. Make sure your competitors don’t offer the same services. If they do, make sure your service is better than theirs.
Ways of Retaining Customers: Customers never give up companies that meet their needs and desires. So if you want to retain your customers, you must be able to anticipate their needs and desires. Your customers will be satisfied with you and will not go to rival companies when the combination of foresight and flawless service. Customers often turn to other companies when they feel unimportant.
Another way to retain customers is to apply discounts on certain days depending on the car type. You can also make the same discount for long-term deals. You can also offer extra services according to different package options. An example would be providing premium service to your paying customers. But don’t even think about giving bad service to your customers who pay less, as a result, not everyone can afford the same.
Strategies for Increasing Brand Awareness and Creating a Corporate Identity: Increasing the brand awareness of your car rental business and creating a corporate identity for yourself will play a big role in the development of your company. If you want to start a large-scale car rental business, you can seek help from an expert to increase your brand awareness.
Here are some methods you can apply to increase your brand awareness and raise awareness:
• You can place posters with information about your business in your car fleet.
• You can promote your business on your official website.
• You can advertise your rental car business in suitable places such as travel magazines, local newspapers, radio or television.
• You can increase the awareness of your brand on social media platforms such as Facebook, Twitter, and Instagram.
• You can attract potential customers to you by using the comments of satisfied customers.
• You can arouse the interest of prospective customers by sending mail.
• You can take advantage of websites and yellow pages.
• By making promotions, you can acquire new customers and make your brand more known.
Insurances Needed by Rent A Car Businesses
Insurance is an indispensable requirement for all businesses. Not having the right insurances can turn your business upside down as insurances protect you against possible and unforeseen events. You shouldn’t be in a hurry to get insurance You can find insurance policies suitable for your business with the help of a professional.
The main insurance policies to consider when setting up your own car rental business are as follows:
• Financial Liability Insurance
• Waiver of Accidental Damage
• Personal Accident Insurance
• Personal Property Insurance
Commercial Vehicle Insurance
• General Insurance
• Work Accident Insurance
Does a Car Rental Business Need to Protect Intellectual Property?
Because such businesses are service-based, there is often no need for intellectual property protection. Some entrepreneurs often secure intellectual property for the company’s slogan or logo, especially if their brand has become known.
But if you think your business will become one of the leading companies in the industry, you should secure the intellectual property right. It is important to note, however, that most people in the industry do not see this as a priority.
Tips for Owning a Successful Rent A Car Business
For your rent a car business to be successful, you need to manage your resources well. Otherwise, you may lose your most valuable assets, your car fleet. As a new entrepreneur, you should always be fair about prices and always ready to serve your customers.
Another way to achieve success is by paying attention to which segments will bring you more profit. You should watch out for cars that will improve your company’s financial situation and make adjustments according to the changing business world.
Finally, you need to look out for opportunities and make sure your customers understand your business logistics well. If you provide quality service to your customers, you will not lose them to competitors and increase the value of your business.
Entrepreneurs who want to rent a car and start a business in the automobile industry are a business idea that should not be ignored. We will continue to share with you the most attractive business starting ideas for everyone and every budget. Stay with love and money.
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