In this article, we’ll be sharing a step-by-step guide on how you can start a successful car rental business in Nigeria.
A car rental business involves renting vehicles at affordable daily or weekly charges. It is one of the most challenging startups, but if handled well, won’t take time in proving that it was worth starting.
In one of the blogs, Neil Abrams, the president of Abrams Consulting Group Inc. described the car rental business as one that is full of tough issues and great opportunities. This is because of the things involved in starting it, plus the potentials that lie waiting for you in the later run.
Business opportunities in car rental business
In running your business, you’d be meeting different kinds of people, including tourists, entrepreneurs and individuals that might want to hire vehicles for wedding parties or other events.
You can start a car rental business in the following ways:
• As a franchise of an already successful rental company. In this case, the franchisor will give you a type of license, allowing you to run your business using its trademarks.
• Dealership car rental. Do you can actually rent cars directly from car dealerships? This isn’t so popular among clients, but you can still put it into consideration.
• Launching the company with a clean slate. This involves launching a new car rental company and it requires much effort, commercial sense, and a substantial financial cushion.
How to Start a Car Rental Business
Just live every other business, you’d need to go through some steps before launching your car rental business. Below is a step-by-step guide on starting a car rental business:
• Carry out a market survey
Carry out a survey in the area you want to start your car rental business in. Things you should check include the type of vehicles people want, how many competitors you might be having and how strong the demand for cars in the area is.
To further clear your doubts on certain issues, you can also consider approaching some owners of already running car rental companies for advices.
You’ll also find out how much your competitors charge and how they protect their cars from thefts. All these will be useful in the later run
• What type of rental business contracts would you’d want to start with?
This is also another very important thing you should put into consideration, even before registering your business name. The two types of car rental contracts you can go for are:
– Contract hire rental: In this case, your customers will take the vehicles for a fixed period of time. Usually, small businesses get rental cars on a contract basis.
– Daily hire rental: In the case of the daily hire rental, you’d be hiring your vehicles to individuals on a daily basis.
While you can work with the both of them, you can still decide to venture into just one, depending on how you want to run the business.
For example, if you’d love to deal with the general public, daily hire rental would be great for you. If you prefer long-contracts with small brands, contract hires would be a great option.
• Choose a business name
Your choice business name should be able to communicate what services you offer while being unique and easy to remember. A good business name should be catchy, while giving people an idea on what your business is about.
Your name will also be helpful if you intend having a website in the future. We already shared 10 amazing reasons you must own a website for your business and I advise you check them out.
• Choose a good location for your office
The next thing to figure out is how and where to site your office. The choice location should be safe, and easily accessible. Siting it near an places like airports, hotels, tourist centres and train stations will also give your car rental business a boost.
If you’d be starting the business near other already established companies, you might have to come up with something unique and different from your competitors’. For example, starting a luxury car rental business in an area already dominated by normal transport companies will make you stand out.
• Obtain the necessary licenses for running your business
The next step will involve applying for a business licence from the concerned department. The licence is a small document describing your business and might attract a small fee.
You’ll be asked some basic questions like:
– Your business name
– Services you offer, a
– How many employees you intend hiring
After this, the next step will be to register your business with the state government, and subsequently getting a tax identification number. The both of them will help you in getting a corporate account from any commercial Nigerian bank.
• Start with a few different types of cars
You’ll be needing cars for your business, and a few different types of cars will be great for as a startup. For example, if you’d be starting with 5 cars, you can include 1 or 2 luxury cars.
Another important factor to consider while buying your cars is your locality. For instance, if you’d be running the business in a snowy area, you can consider including cars like Subaru Outback, Dodge Charger AWD, Nissan Altima AWD, Volvo V90 Cross Country or Jeep Grand Cherokee AWD, they’re suitable for for snow driving.
You can find out more on buying cars by checking out this post on 7 things to consider before buying a car in Nigeria. We have also written down a detailed, step-by-step guide on how to buy and ship a car online.
NOTE: Every serious entrepreneur should insure his/her business. Car insurance will protect your vehicles in case of accidents, thefts of other occurrences.
• Marketing your business
Thanks to the internet, you can now reach millions of customers without having to pay through your nose. Through advertising on platforms like Facebook, Twitter, Nairaland, Browse.NG and Information Guide Africa, you’re sure of reaching the best customers at affordable rates.
There are also many other ways of advertising your products to people without spending at all, you can also check some of them out.
Some Challenges in Car Hire Business
No business can run without facing some challenges, but knowing what you might be facing in the future will help you plan ahead on how to manage it.
Some challenges you might be facing in the course of running your car rental business in Nigeria include:
• Bad roads: There is no state in Nigerian that is free of bad roads, especially the ones linking to the villages and small towns. Bad roads can affect your efficiency as the business owner, and it’s not also the best for your car.
• Dishonest employees: In a country where almost every one wants to cheat someone, getting good employees might not really be an easy task. For example, an employee can instead of giving a client your business line, give out his/her number and in turn pocket any money received from the clients.
• Uncooperative customers: Sometimes the issues you’d be facing won’t be coming from your employees, but the customers themselves. They might for instance, set unreasonable targets for you to meet and failure to satisfy them might lead to something else.
• Armed Robberies and Car theft: In the past, we’ve heard reports of armed robbers holding car hire and cab operators hostage while they perpetrate their crimes. Even if you’ll later get back the car, occurrences like this might negatively affect your company’s reputation.
The key to getting customers and sales as an entrepreneur lies in your ability to reach potential customers. You can reach even more people by taking your business online today.
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