Of course, you can start with an already successful car rental franchise. Or, you can create your own car rental company. That way, you can tweak a proven money-earning small business model into one that best suits your location and desired business scale. This blog will discuss how to start a car rental business.
The Car Rental Industry in 2023
The global car rental market is booming. North America is the most significant player, with the United States leading the way. Overall, the car rental company’s operations will be $92 billion in 2021, most of which ($57 billion) are related to travel. By 2027, it is predicted that the rental-car industry will be worth $140 billion.
Why Should You Start a Rental Car Business?
- More and more people are buying fuel-efficient small cars for daily use. These people still need a large truck or van for particular purposes occasionally.
- You have always loved cars.
- It is profitable.
- You can start small and build. You can create a car rental service with just one car.
- For your chosen activity, you have a lot of options. Vehicle rental companies can specialize in truck rentals, classic and exotic cars, luxury car rentals, or vans and delivery vans.
Start a car rental business in 10 easy steps.
Purchasing a franchise from a well-established company with a successful brand and business plans, such as Avis, Hertz, or Enterprise, might be considered buying an existing business. Alternatively, you might buy a current rental company that the owner wants to sell. Alternatively, you may launch your own company and customize that tried-and-true organizational structure to your preferences.
With our chosen steps, you can learn how to launch a car rental business:
Find other car rental companies.
As part of your market research, look at other car rental companies and note which aspects of those activities you think are relevant to what you intend to do. For example, you can change the standard lease if you’re offering vintage or specialty car rentals.
Decide what kind of vehicle rental business you will start.
Car rental companies have traditionally focused on serving business customers. However, according to recent data, the industry’s fastest-growing segment is tourists. If you can buy into an existing car rental business and take it over, do your homework. Why is the company being sold? How old are the cars? How much revenue does the company bring in? Are they profitable?
Determine Your Target Marketplace
Before starting a new business, think about who you think your target market is. Before starting a car rental business, you need to know who will be in charge most often.
Choose a Proper Business Name
First, check that the name still needs to be taken. Select a name that matches your target market.
Write About a Car Rental Business Plan
Your business plan will share similarities with most business plans, with a few key differences:
- You will need a strategy to implement Covid-level cleaning and disinfection for your fleet, which is necessary for any successful car rental business.
- Your primary expense will be transportation. How many cars you can afford will determine your startup costs.
Select a Business Structure
The limited liability company, or LLC, is the business structure of choice for new car rental companies.
Choose a Location for Business
Another factor is the cost of the registered vehicles, as well as the business tax that will be levied on your operation. The Small Business Administration is where you can find this information. With these figures, the Small Business Administration has a fantastic chart.
For example, if you locate your business in Vermont, the state will add a 15% rental tax to your rental fee, plus an additional 9% and 6% state tax. Or, if you choose nearby Connecticut, there’s no rental tax, and you’ll pay a state tax of 6.35% and a state tourist fee of $1 per day.
Open Your Business Bank Account
Make a separate business account and a dedicated business credit card in your company name. Money/assets and personal statements should always be different from business accounts.
Fix Your Business Finances
You will likely need a business car loan when you start your own business.
Many car rental companies are affiliated with car dealerships, where they initiate a purchase or lease agreement. Using local auto dealers makes pick-up and delivery more convenient. Of course, the vehicle (business loan) will be the most significant expense for small businesses in this area. Loans are expensive but a great way to build business credit and support future fleet expansion.
Buy a Business Insurance
Insurance is another high expense. At the very least, your company should have general liability, business, and commercial auto insurance. You’ll also require property insurance if your business owns or rents a space.
Organize your taxes
Even if you’re operating a sole proprietorship, you’ll need it, as an EIN is required for state tax returns.
This is where you may need to seek the services of professionals, such as accountants and business attorneys. The central taxes you might owe are listed below:
- State tax
- workers compensation tax (if you have employees)
- taxes by locality, such as city and county
- Leases of Personal Property – Must be reported on Schedule C as required by the IRS
Build a Website for Your Business
Search Engine Optimization (SEO) is essential for any business website. If you need more knowledge or time to do this yourself, hire a professional. Your goal should be to make your site easy to find with a Google search. You can also promote your site on social media sites, such as Facebook, Twitter, LinkedIn, and others.
Market Your Business
In addition to your website, social media platforms, and digital marketing, you can link up with local businesses. For example, a local lumberyard or furniture store can issue your card to customers needing a delivery vehicle, or a vehicle repair shop can do the same for customers with local short-term or long-term car rental needs. Build customer loyalty but react quickly to issues, especially incidents.
How much does it take to start a car rental business?
Startup expenses can vary from $50,000 to $100,000. There are variations, including the value of the vicinity to lease or lease and the kind and variety of condo vehicles.
Is a car rental company successful?
Low-end daily mini car rentals are $40 or more, with premium car rentals costing $100 to $200 daily. You can spend $500 to $1,000 per month on insurance costs. Your monthly fleet costs will vary depending on the number of vehicles you have.
Also read: Know Everything About Sec Lawyer Salary