Tips for Starting a Car Rental Business

 In the business plan, it is necessary to indicate the number of cars that you are ready to purchase. This is a key value for calculating costs and forecasting profits. It is believed that the car rental business brings significant income if there are at least thirty cars in the fleet at the same time. The fewer there are, the lower the income from renting. Tips for Starting a Car Rental Business include making strategic decisions about the types of vehicles to purchase. It is more expedient to purchase foreign cars, since the cost of their rental is much higher than that of domestic cars. However, it is necessary to choose cars for which spare parts can be purchased without problems.

As already noted, it is more profitable to work with foreign cars, since a greater “return” is felt already at the start. The cost of renting these cars and the demand for them are noticeably higher. Due to the quality of assembly, foreign cars need fewer repairs and are less idle, which directly affects the income from renting them. Maximum profit will be brought by serviceable and relatively new foreign cars, since in the event of frequent malfunctions, the costs of maintenance and repair will also be high.

Promotion of rental services

Image Source: Freepik.com

At the stage of business registration or immediately after it, it is necessary to choose a taxation system. Legal entities planning to engage in car rental business have access only to the general and simplified systems, individual entrepreneurs can use them, as well as the patent system. OSNO has no restrictions, special modes STS and PSN do. Limits are set for possible annual income, number of employees, and for LLCs - also for the share of other legal entities. After registering an individual entrepreneur or LLC and purchasing cars, you need to think about renting space for a parking lot and an office.

Payment for a parking space GSK can be taken every day or once a month. It is necessary to calculate the monthly total amount for all cars. The cost of renting an office depends on many factors; the main ones are area and location. In this case, the location is chosen taking into account its transport accessibility. As for the area, it should be sufficient for comfortable accommodation of employees and receiving visitors. In some cases, the nature of the services affects the choice of premises for the office.

Tips for Starting a Car Rental Business

Image Source: Freepik.com

If you need to rent out business and executive class cars, it is advisable to rent an office in a business center or an expensive hotel. The office should correspond to the level of cars. For renting out mid-range cars, a separate room with modern repairs in a busy place is suitable. An accountant can also be a full-time employee, but small companies often use the services of an outsourcing accounting firm. A mandatory expense item is employee salaries, taxes on them, and contributions to insurance funds. An individual entrepreneur also deducts taxes for himself.

Cars need regular maintenance. These expenses should be taken into account and not neglected. Skipping maintenance can result in serious breakdowns and expensive repairs. It is necessary to compile a database of cars and take into account the cost of each of them. For example, you are opening a car rental business and are ready to spend about 14,000,000 rubles on their purchase. For starters, you can do without expensive foreign cars and stop at the middle class. The approximate cost of one transport unit is 1,300,000 rubles. That is, you can start implementing the idea of ​​​​a rental business with the purchase of ten cars.

Possible risks and their minimization

Image Source: Freepik.com

However, the expense item will need to include lease payments and interest payments. The standard payment period is 2.5 years. When the lease agreement ends, you can buy the car or leave it with the owner company. The car can be returned before the end of the contract—this is provided for by the leasing terms. An acceptable amount of monthly payments can be considered profitable for beginning entrepreneurs who are mastering the niche of the car rental business. Usually, the car rental period is limited to two years. Since rented cars are used more actively and less carefully than personal ones, their value drops significantly during this time.

A successful rental business is facilitated by a good choice of location for an office, a fleet of cars and a competent advertising campaign. The parking space for cars should be in a busy place with convenient exit and entry. If the budget allows, choose a parking lot with a canopy. For premium cars, garages with security, code locks, and alarms are often rented. An option is paid parking in new buildings, where not only the purchase of spaces is provided, but also rent. It is advisable to rent an office near the parking lot.

Conclusion

Image Source: Freepik.com

If the rental service includes renting out limousines or premium transport, the office space should be presentable. For beginning car rental companies with mid-range cars, you can rent a simpler office and save significantly on costs. The amount of cars available for purchase must be specified in the company plan. This is an important metric for estimating costs and anticipating earnings. It is considered that the automobile rental industry generates significant revenue if there are at least thirty cars in the fleet at any given moment.

The fewer there are, the smaller the rental income. It is more convenient to purchase foreign cars because their rental costs are significantly greater than those of domestic cars. However, it is vital to select vehicles for which spare parts can be obtained without difficulty. As previously said, working with foreign cars is more profitable because the "return" is felt more immediately. The cost of renting these cars is significantly higher, as is the demand for them. Because of the quality of assembly, foreign cars require less maintenance and are less idle, which has a direct impact on rental income.